Special correspondent: Sun Yi
The first half of the performance disclosure of listed companies in the medical beauty industry has ended, from the upstream medical beauty product manufacturers, known as the "three musketeers" of medical beauty, Aimeike (300896. SZ), Bloomage Bio (688363. SH), Hao Haisheng family (688366. SH) operating income and net profit year-on-year performance are more eye-catching. However, after excluding the low base impact caused by the epidemic in the first half of 2020, the performance of the three leading companies showed obvious differentiation, of which bloomage bio's profit growth rate was significantly lower than that of revenue growth, and the compound growth rate of net profit in the past two years was only 15.7%; The situation of Haohai Biotech was even worse, and the compound growth rate of operating income and net profit in the past two years was single digits, and the growth was relatively weak.
From the perspective of the middle and lower reaches of the medical aesthetic industry chain, the profitability of medical aesthetic hospitals is still not optimistic. In the first half of 2021, Langzi shares (002612. SZ) medical and aesthetic hospital sector achieved operating income of 530 million yuan year-on-year increase of 49.52%, but the operating profit was only 0.21 million yuan, down 38.31% year-on-year, and there was a dilemma of "increasing income without increasing profits". In addition, medical aesthetic hospitals are also suffering from the implementation of the "new lease standard" and the consolidation of medical aesthetic loans.
<h3>The upstream performance of medical beauty is obviously differentiated</h3>
In the first half of 2021, Aimeike achieved operating income of 633 million yuan year-on-year, and achieved a net profit attributable to the mother of 425 million yuan, an increase of 188% year-on-year; Bloomage Bio expects to achieve operating income of 1.937 billion yuan, an increase of 95% to 103% year-on-year, and a net profit attributable to the mother of 361 million yuan, an increase of 35% year-on-year; HaoHai Biotech achieved operating income of 851 million yuan year-on-year increase of 71%, and net profit attributable to the mother of 231 million yuan increased by 739% year-on-year.
The bright report card of the upstream of medical beauty is mainly due to the impact of the new crown epidemic disturbance factors, and the new crown epidemic in the first half of 2020 seriously affected the operation of medical beauty hospitals, and the supply of upstream products was blocked, so the performance base was small. In 2021, the COVID-19 epidemic gradually weakened, and the business returned to normal growth.
For example, in addition to the disturbance factors of the new crown epidemic, the performance of upstream companies in the medical aesthetic industry has shown great differentiation, based on the performance of the first half of 2019, Aimeike, Bloomage Biology, Hao Haishengke, Huadong Pharmaceutical (000963. SZ) (International Medical Aesthetic Business Part) operating income two-year compound growth rate of 62.4%, 83.7%, 4.1%, 2.1%, net profit two-year compound growth rate of 84.4%, 15.7%, 9.9%, -0.8%.
Specifically, Aimeike's operating income and net profit have maintained rapid growth in the past two years, mainly benefiting from the explosive growth of the solution hyaluronic acid large single product "Hi Body"; although Bloomage Bio's operating income has grown rapidly, the compound growth rate of net profit in the past two years has only been 15.7%, far lower than the revenue growth rate. Hao Haishengke is obviously behind, the company's medical aesthetic business part (plastic surgery and wound care) in the first half of 2021 to achieve revenue of 179 million yuan, 2020, the first half of 2019 were 0.76, 154 million yuan, the compound growth rate of the past two years is only 7.81%. The situation of Huadong Pharmaceutical is even worse than that of Haohai Biotech, and the compound growth rate of operating income and net profit of Huadong Pharmaceutical (international medical aesthetic business part) from 2019 to 2021 is only 2.1% and -0.8%, respectively, which is basically in a stagnant state.
Judging from the trend of gross profit margin changes, the differentiation of upstream companies in the medical aesthetic industry is also obvious. The gross profit margins of Aimeike and Bloomage Biotech have remained basically stable in the past two years, while the gross profit margins of Haohai Biotech and Huadong Pharmaceutical (international medical aesthetic business part) have dropped from 76.6% and 72.3% in the first half of 2019 to 74.5% and 67.9% in the first half of 2021, respectively.
For the decline in gross profit margin, Hao Hai biotech said in the semi-annual report that "the main reason is the decline in the sales price of some models of intraocular lens in the area with volume procurement, in addition, the Group appropriately lowered the sales price of "Haiwei" hyaluronic acid products to highlight its "national hyaluronic acid" product positioning, which also led to a decline in gross profit margin during the reporting period.
This explanation reflects the emergence of a price war behind the boom in hyaluronic acid (sodium hyaluronate), the largest subdivision of medical beauty, especially gelatinous hyaluronic acid. Non-surgical medical beauty mainly includes injection diagnosis and treatment and energy diagnosis and treatment, and the injection diagnosis and treatment products are mainly hyaluronic acid and botulinum toxin. According to the IMAX prospectus, as of September 2020, 17 companies have obtained medical device registration certificates for products related to sodium hyaluronate injection in China, and the track is becoming crowded. Bloomage Bio (Runbaiyan, Runzhi), HaoHai biotech (Haiwei, Jiaolan), Huadong Pharmaceutical hyaluronic acid products are mainly gels, and the gross profit margin in the past two years has generally shown a downward trend.
Aimeke gel hyaluronic acid (Avele) sales are also in a stagnant state, sales in the first half of 2021 148 million yuan, compared with the same period in 2019 basically no growth, Aimek performance growth mainly depends on the solution hyaluronic acid (Hi body), 2021 solution product revenue of 476 million yuan increased by 230.38% year-on-year, revenue accounted for 75.2%.
With the maturity of hyaluronic acid technology, the middle and lower reaches of the industrial chain medical aesthetic hospitals also try to use their own brand hyaluronic acid, taking the medical beauty chain Yimeier at the Hong Kong stock hearing in August as an example, in 2020, Yimer began to sell its own label hyaluronic acid filler, and purchased its own label products for 3 million yuan in the first quarter of 2021.
In this context, medical aesthetic upstream companies have devoted themselves to the second largest subdivision of non-surgical medical aesthetic botulinum toxin, opening up new growth space. In March 2021, Hao Hai Biotech announced its intention to invest up to US$31 million to subscribe for Eirion A round of preferred shares, and Eirion authorized Hao Hai Biotech to use its botulinum toxin products for a fee; in August 2021, the Shareholders' Meeting of Aimek approved an investment agreement of 580 million yuan for Huons Bio in South Korea, which is a spin-off company of South Korea's Huons Global Botulinum toxin business; Bloomage Bio has established a joint venture with South Korea's Medybloom in 2020. Related botulinum toxin products are being registered.
<h3>The profitability of medical aesthetic hospitals is under pressure</h3>
In the first half of 2021, the medical aesthetic hospital sector of Langzi Co., Ltd. achieved operating income of 530 million yuan, an increase of 49.52% over the same period of the previous year, but the operating profit was only 21.71 million yuan, down 38.31% year-on-year, and there was a dilemma of "increasing income without increasing profits". Langzi shares analysis said that "mainly affected by the increase in new institutions and the implementation of the new lease standard".
Langzi co., Ltd. entered the medical beauty service business in 2016, through the extension of expansion and connotative growth of two ways of development, currently has 22 medical beauty institutions, including 4 hospitals, outpatient clinics or clinics, divided into "Milan Baiyu", "crystal skin medical beauty" and "high life" three brands. Judging from the semi-annual report data, the gross profit margin of the three brand medical institutions has decreased to varying degrees.
What is more noteworthy is that the net profit margin on sales of all medical institutions of Langzi shares has dropped from 8.57% in the first half of 2020 to 4.46% in the first half of 2021, and the profitability has been further reduced. Langzi shares divide medical institutions into old institutions (operating for more than 3 years), sub-new institutions (1-3 years), new institutions (within 1 year), in the first half of the year, in addition to the profits of old institutions, the net profit margin of sales of sub-new institutions and new institutions is -3.52% and -53.07%, respectively, and the sub-new institutions are from profit to loss for the first time.
One reason for this is the significant increase in depreciation of right-of-use assets. "Right-of-use assets" is a new product after the implementation of the 2019 Accounting Standard for Business Enterprises No. 21 - Lease (Revised Edition), under which the lessee must be included in the "right-of-use assets" account and depreciated under the new standard, regardless of whether it is a financial lease or an operating lease. Medical aesthetic medical institutions generally have small fixed assets, hospitals and office space rely on leasing, and will bear the pressure of depreciation costs for a long time under the new standards.
Taking Langzi shares as an example, the company's right-to-use assets in the first half of 2021 were 413 million yuan, compared with zero in the same period of 2020. The company's right of use assets are mainly leased for housing buildings, with a book value of 400 million yuan at the end of June 2021, and the depreciation of the right of use assets in the first half of the year reached 45.77 million yuan, which greatly eroded the operating profit.
In addition, in August, the Shanghai Stock Exchange and the Shenzhen Stock Exchange notified that the underlying assets of newly listed consumer financial asset securitization products on the exchange were prohibited from entering the pool of "medical beauty installment loans", and the regulatory authorities strictly investigated illegal medical beauty loans, which also had an impact on medical beauty hospitals and even the entire industrial chain.
Taking Immel as an example, in 2019, 2020 and the first quarter of 2021, the total amount of payments received by Imel's continuing operation business from third-party credit companies was 69.5 million yuan, 43.3 million yuan and 11.5 million yuan, respectively, accounting for between 5% and 10% of the operating income in the same period. According to Frost & Sullivan, the terms of Imel's above-mentioned arrangements with credit companies are consistent with industry practice, and the lending business of medical aesthetic institutions may be widespread.