Beauty Farm Medical and Health Industry (2373) H1 2023 earnings summary

Executive summary

• H1 2023 revenue rose 41.2% YoY to RMB1,036.9m as customer visits and active membership recovered after pandemic disruption in January.

• Net profit reached RMB121.1m versus RMB19.8m; adjusted net profit was RMB131.2m versus RMB50.6m.

• Direct and franchised networks totaled 196 and 194 stores at June 30; active members at direct stores increased 21.3% YoY.

Financial highlights

• Gross profit rose 52.5% to RMB478.1m; gross margin expanded 3.3 percentage points to 46.1%, partly supported by a higher aesthetic medical revenue mix.

• Operating profit was RMB155.5m versus RMB37.0m; net profit margin rose to 11.7% from 2.7%.

• Adjusted net profit margin was 12.7% versus 6.9%.

• Net cash from operating activities increased 72.8% to RMB222.3m; investing activities used RMB653.4m and financing activities generated RMB337.2m.

Outlook and guidance

• Approximately 30 new direct and franchised stores were expected to open in H2 2023, alongside store upgrades and deeper penetration in existing cities.

• Future acquisition and investment priorities include lifestyle cosmetics and healthcare brands to broaden the service portfolio.

• Planned development includes an energy intervention centre using international technology and equipment.

• Cross-selling into aesthetic medical and subhealth services reached 23.4% of traditional beauty active members, up 2.2 percentage points YoY, with further growth expected.