Beauty Farm Medical and Health Industry (2373) H1 2024 earnings summary

Executive summary

• H1 revenue rose 9.7% YoY to RMB1,137.7m; gross margin improved 0.9 percentage point to 47.0%.

• Net profit increased 4.1% to RMB126.1m; adjusted net profit rose 0.5% to RMB131.8m.

• Direct-store visits grew 11.6% to 684,659 and active members rose 10.3% to 81,531; the dual beauty + dual wellness model expands wellness customer channels.

Financial highlights

• Revenue was RMB1,137.7m versus RMB1,036.9m; gross profit reached RMB534.2m, up 11.7% YoY.

• Operating profit increased to RMB163.1m from RMB155.5m; profit before tax rose to RMB160.5m from RMB153.5m.

• Net profit was RMB126.1m versus RMB121.1m; adjusted net profit, excluding share-based compensation, was RMB131.8m versus RMB131.2m.

• Basic and diluted EPS were both RMB0.50, compared with RMB0.49 in H1 2023.

• Cost of sales and services increased to RMB603.5m; selling expenses rose to RMB189.7m and G&A expenses to RMB181.1m.

Outlook and guidance

• Priorities include improving store-level revenue and operating efficiency, expanding direct-store revenue, growing memberships, refining customer operations and increasing value-added service penetration.

• Plans include selective direct-store openings, upgrading aesthetic and subhealth medical clinics, and expanding franchising into tier-two and tier-three cities.

• M&A remains a strategic growth lever; management expects industry consolidation to continue and views 2024 as the start of a new acquisition and consolidation cycle.

• Long-term outlook remains positive, supported by persistent consumer demand for beauty and health services.