China Times (www.chinatimes.net.cn) reporter Wang Yu Yu Na reported in Beijing
Since the second half of this year, the hot medical beauty track has begun to cool down. First, in June, eight ministries and commissions jointly issued the "Special Rectification Work Plan for Cracking Down on Illegal Medical Beauty Services"; then in July, a consumer in Hangzhou died of a systemic infection caused by liposuction, which aroused social concern about the safety of medical beauty; and then in August, Xinhua News Agency issued an article saying that "medical beauty should be the best effect and prevent adverse consequences".
In this context, recently, Beijing Yimer Medical Technology Group Co., Ltd. (hereinafter referred to as Yimer), the originator of private medical beauty institutions, submitted a prospectus to the Hong Kong Stock Exchange. According to the prospectus, Imer just turned a profit last year, and the cost of inventory and marketing costs are high.
Tian Yahua, vice president of the Medical Beauty Institution Branch of the China Plastic Surgery and Beauty Association, told the "China Times" reporter that the industry is very concerned about the trend of the listing of Yimer, because Yimer is the pioneer of private medical beauty institutions, and the prospectus reveals the common problems of medical beauty institutions. Imel is a leader in management, marketing and other aspects, and the capital market's response to Imel has a reference role for other medical and aesthetic institutions.
In the minds of many investors, medical aesthetics is a profiteering industry, and Imer's prospectus reveals another side of the medical aesthetics industry. In the current context, can listing in Hong Kong bring performance growth to Immel?
Turnaround impact on listing
Thermage, slimming needles, girl needles... With people paying more and more attention to the value of appearance, the development and growth rate of China's medical beauty market is constantly improving. According to Frost & Sullivan data, the total revenue of China's medical beauty service market increased from RMB77.6 billion in 2016 to RMB117.6 billion in 2020, with a compound annual growth rate of 11.0%, and it is expected that from 2021 to 2025, China's medical aesthetic market will continue to grow rapidly at a compound annual growth rate of 19.7%.
Just recently, Immel submitted a prospectus to the Hong Kong Stock Exchange, which is not the first time That imer has impacted the capital market. The company was listed on the New Third Board in October 2016, but due to the limited financing resources of the New Third Board, Imer voluntarily delisted in March 2017.
Imer can be said to be the originator of China's private medical aesthetic institutions. Founder Wang Yong'an founded the Red Cross Jianxiang Plastic Surgery Hospital (later renamed "Yimer Jianxiang Hospital") in Dongsheng Township, Haidian District, Beijing in 1997, and Wang Yong'an became one of the first people to test the waters of private medical aesthetic institutions. At that time, people still lacked awareness of medical beauty, Wang Yongan through the creation of "China's first artificial beauty Hao Lulu" activity, got the Internet flooded with publicity, successfully carried out the first round of medical beauty market education, but also let the market remember the name of Imer.
Through more than 20 years of development, Yimer belongs to the leader of private medical aesthetic institutions in terms of scale and brand. In terms of the revenue of medical beauty services in 2020, Yimer ranks first among private medical beauty institutions in northern China and fourth in the country. Up to now, Yimer has opened a total of 9 medical beauty institutions, including three medical beauty specialist hospitals and two medical beauty specialist outpatient departments in Beijing, and medical beauty institutions have opened or acquired in Tianjin, Qingdao, Jinan and Xi'an.
However, Imer's revenue is not glamorous. Judging from the disclosed data, Imer just achieved a turnaround in 2020.
According to the prospectus, The revenue of Yimer from 2018 to 2020 was 661 million yuan, 739 million yuan and 811 million yuan, and the profit was -100 million yuan, -118 million yuan and 8.29 million yuan, respectively. Imer's revenue for the first quarter of 2021 was 271 million yuan and profit was 10.05 million yuan.
Moreover, in the medical aesthetic industry, the gross profit margin of the midstream institution Yimer is not high. The data shows that from 2018 to 2020, the company's gross profit margin was 53.7%, 51.6% and 53.6%, respectively. This is not the same as the gross profit margin of 80-90% in the upstream and downstream industries.
Lack of core competitiveness
The medical aesthetic industry chain is divided into three parts: upstream, middle and downstream. Upstream for raw material manufacturers, such as hyaluronic acid giant Bloomage Biology, Aimeike, etc., due to high industry barriers, upstream enterprises gross profit margin of up to 90%; downstream for channel providers, advertisers, such as new oxygen and other medical beauty platforms, in 2020 new oxygen gross profit margin is also as high as 84%. A large number of scattered medical aesthetic institutions belong to the midstream, due to the small size and large number, the bargaining power of medical aesthetic institutions for upstream and downstream is relatively weak.
Tian Yahua said that the common problems of private medical aesthetic institutions are low thresholds, large quantities, serious homogenization of medical aesthetic projects, and lack of core competitiveness, so it is difficult to make profits.
Taking Imer as an example, the medical aesthetic services it provides are divided into two main parts: non-surgical services and surgical services. Non-surgical projects mainly refer to injection beauty, energy beauty, etc., which is now often said to be botulinum toxin, hyaluronic acid, thermage and other projects, accounting for a relatively high proportion of revenue. In 2020, non-surgical revenue was $600 million, accounting for 73.9% of total revenue. Tian Yahua said that almost all medical aesthetic institutions are engaged in the above non-surgical projects, and even life beauty institutions without medical aesthetic licenses are doing these projects in violation of the law, so the gross profit margin of these projects is getting lower and lower, and each competition is the ability to obtain marketing customers.
For example, the largest proportion of Imer employees is sales consultants. The data shows that Imel has 736 full-time sales consultants, while Imel has 157 doctors, 209 nurses, 26 pharmacists, six radiographers and 18 laboratory technicians. Moreover, in 2018-2020, sales and marketing expenses were 199 million yuan, 219 million yuan and 188 million yuan respectively, accounting for 30%, 30% and 23% of the total revenue, respectively.
It is worth noting that the inventory cost of Immel is also higher. According to the prospectus, the company's inventory costs (mainly including the purchase of prostheses, injections, skin care products, pharmaceuticals and other medical consumables) are the largest component of the cost of sales, accounting for more than 50%. From 2018 to 2020, the cost of inventory accounted for 52.9%, 50.8% and 52.6% of the cost of sales, respectively.
In this regard, Tian Yahua believes that head institutions like Yimer should find core projects as soon as possible to enhance core competitiveness.
Nowadays, as the originator of private medical beauty institutions, Immel's listing in Hong Kong has become a bellwether in the industry. For these medical and aesthetic institutions struggling in the Red Sea, Tian Yahua believes that finding the core competitiveness of the subdivision field is the fastest way to break out of the siege.
Regarding the high inventory and sales costs of Yimer, the reporter contacted Yimer on August 13, and did not receive a reply as of press time.