Beauty Farm Medical and Health Industry Inc. (Beauty Farm or Company, HKG: 2373), the largest provider of traditional beauty services in China, today announces the proposed listing of its shares on the Main Board of The Stock Exchange of Hong Kong Limited (SEHK).
Beauty Farm plans to offer an aggregate of 40,536,500 Offer Shares under the Global Offering (subject to the Over-allotment Option), consisting of 36,482,500 International Offer Shares (subject to reallocation and the Over-allotment Option) and 4,054,000 Hong Kong Offer Shares (subject to reallocation), at a price of HK$19.32 per share.
The Company will start its public offering in Hong Kong at 9 a.m. on 30 December, 2022 (Friday) and end at 12 noon on 6 January, 2023 (Friday). Dealings in shares on SEHK are expected to commence on 16 January 2023 (Monday), with the stock code of 2373 in board lots of 500 shares each.
Morgan Stanley Asia Limited, Haitong International Capital Limited and Huatai Financial Holdings (Hong Kong) Limited are the Joint Sponsors; Morgan Stanley Asia Limited, Haitong International Securities Company Limited and Huatai Financial Holdings (Hong Kong) Limited are the Overall Coordinators, Joint Global Coordinators, Joint Bookrunners and Joint Managers.
Beauty and health management service provider with diversified brand portfolio in China
Beauty Farm is a leading player of the chain service brand in China’s beauty and health management service industry, which has large and loyal client base, extensive network with expansion efficiency, diversified services and product offerings as well as strong brand awareness. According to Frost & Sullivan, Beauty Farm is the largest provider of traditional beauty services and the fourth largest non-surgical aesthetic medical service provider in China with a market share of 0.2% and 0.6% respectively, as measured by revenue in 2021. The Company provides overall beauty and health management services through its well-established and widely recognized brand portfolio of BeautyFarm, Palaispa, CellCare and Neology. The service offerings of the Company cover traditional beauty services, aesthetic medical services as well as subhealth assessment and intervention services, across the full client lifecycle. As of June 30, 2022, the overall service network of Beauty Farm comprised 352 stores, including 177 direct stores and 175 franchised stores. Among the direct stores, 84 stores were located in tier-one cities and 73 stores were located in new tier-one cities.
Constant evolution of business model in response to market demand, offering clients overall beauty and health management services
As the leading chain brand in China’s beauty and health management service industry, Beauty Farm has provided traditional beauty services to clients for nearly three decades. With insights into clients’ increasingly diversified demand accumulated through years of services, the Company has extended its offerings by providing more sophisticated services such as aesthetic medical services since 2011. Thereafter, the Company commenced to build its subhealth assessment and intervention service capacity in 2018, in response to the rising demand of subhealth assessment and intervention services as a result of consumption upgrade and China’s rising prevalence rate of subhealth status. Counting the revenue generated in 2021, traditional beauty services, aesthetic medical services, and subhealth assessment and intervention services represented 58.8%, 37.8% and 3.4% of the total revenue for the year. These service offerings of Beauty Farm complement each other and create a synergistic effect for the overall operations of the Company. The Company’s long history in traditional beauty services has positioned the Company uniquely in the industry and fueled the revenue growth without significant increase in customer acquisition costs as the Company has become many members’ lifelong trusted advisor on health and beauty. And 21.7% and 21.2% of members of the Company’s traditional beauty services in 2021 and the six months ended June 30, 2022, respectively, purchased aesthetic medical services or subhealth assessment and intervention services, which is expected to further grow in the future. Likewise, the expansion of aesthetic medical services and subhealth assessment and intervention services can also further boost the growth of traditional beauty services going forward.
Standardized services supported by digitalized platform
Beauty Farm has established an integrated service platform to ensure high-quality services to its clients in a consistent manner across all stores. The digitalized platform of the Company is supported by standardized operating procedures and digital infrastructure covering stringent quality control, training system and supply chain management. The Company achieved one of the few highest service personnel annual retention rates in 2021 within the beauty and health management service industry. Among all the service personnel who have stayed with us for more than one year, they have an average of 6.1 years of retention. The standardization and digitalization of the business platform provides scale advantages across various aspects of the Company’s operations that can be leveraged by its stores and service personnel. The integrated service platform is capable of consolidating and processing operational data accumulated from various systems across the store network. The Company also applies data mining and data analytics to obtain valuable insights to profile its clients’ transaction patterns, consumption habits, and lifetime client value. Such tech-enabled enhancements allow the Company to customize its services according to clients’ needs so as to maintain their stickiness and identify cross-selling opportunities. The platform-based operating model allows Beauty Farm to standardize various aspects of its operations to improve both client experience and the service performance of its service personnel. In addition, as the Company continues to accumulate and analyze digital information from its day-to-day business operations, the Company can further improve its operational efficiency.
A large client base of active members supported by CRM system
The comprehensive service offerings of Beauty Farm have attracted a large base of active clients, which is supported by a comprehensive client service system. In 2021, the direct stores of the Company served 77,356 active members, which was increased by 12.5% in 2020. The active members from direct stores on average made 10.8 visits (2020: 10.2 visits) and spent RMB20,832 in 2021 (2020: RMB20,151). 80.7%, 82.1%, 84.6% and 77.0% of the active members in 2019, 2020, 2021 and the six months ended June 30, 2022 made multiple purchases of the Company’s services in the same period, respectively. In addition to the increasing client volume in direct stores, the franchised stores of the Company served 27,916 active members in 2021 and 22,552 active members in the six months ended June 30, 2022.
Sustainable development supported by organic growth and strategic acquisitions
Beauty Farm has a proven track record of rapidly expanding its geographic footprint across China and has achieved rapid and sustainable business growth through both organic growth and strategic acquisitions. The scalability and replicability of its business is evidenced by its ability to open new stores rapidly. The Company opened 45 new direct stores from 2019 to June 30, 2022. Beauty Farm is able to ramp-up its new stores and achieve profitability efficiently. Contributed by the Company’s long-term business relationship with prime shopping malls and the ability to bring strong footage to the venue, the typical lead time from the completion of site selection to store opening is approximately three months. From 2014 to June 30, 2022, a new traditional beauty service store on average achieved initial breakeven in eleven months after commencement of operation.
Beauty Farm experienced a successful track record of identifying, acquiring and integrating stores into its network. The Company has completed 20 acquisitions in beauty and health management service industry from 2014 to June 30, 2022, most of which have successfully enhanced the Company’s business offerings and management team. Upon the completion of integration, acquired stores typically witness improved business performance and rapid client expansion. For example, the acquisition of Palaispa shows the Company’s acquisition power and capabilities in integration. Revenue generated from Palaispa members and franchisees increased from RMB102.4 million in 2017 to RMB185.7 million in 2021 at a CAGR of 16.0%. Those acquired stores were smoothly integrated into the Company’s network, ensuring further synergies and value creation. Going forward, Beauty Farm will continue to identify and evaluate acquisition opportunities in high-quality stores to capture growth opportunities.
The success of Beauty Farm is also attributable to its visionary and dedicated management with extensive industry experience, as well as strong shareholder support. Since 2013, CITIC PE, who has extensive experience managing and growing companies in the beauty and health management service industry, has been working closely with Beauty Farm to establish a standardized and disciplined chain business with nationwide footprint and has made important contributions to the company’s strategic formulation, merger and expansion, executive recruitment, brand and design, human resources, supply chain, marketing, finance and other aspects of management improvement.
Looking forward, Beauty Farm plans to carry out below key growth strategies to realize its development, including strategically expanding its service network and marketing channels to expand its client base and increase brand awareness; further enhancing its operational efficiency and client experience through standardization and digitalization of its system; improving client loyalty and fulfilling clients’ evolving needs by introducing new technologies, equipment and products, and expanding its service offerings; continuing to cultivate, recruit and retain high-caliber talent and strengthen its human resources management mechanism; and integrating industry resources and promoting the development of industry standards by deepening cooperation with upstream suppliers and sharing its industry and management experience.
Beauty Farm Medical and Health Industry Inc.
Beauty Farm Medical and Health Industry Inc. (“Beauty Farm” or “Company”, stock code: 2373) is a leading player in China’s beauty and health management service industry, which has large and loyal client base, extensive network with expansion efficiency, diversified services and product offerings as well as strong brand awareness. According to Frost & Sullivan, Beauty Farm is the largest provider of traditional beauty services and the fourth largest non-surgical aesthetic medical service provider in China with a market share of 0.2% and 0.6% respectively, as measured by revenue in 2021. Leveraging 29 years of industry experience and adapting to evolving client demand, the Company provides overall beauty and health management services through its well-established and widely recognized brand portfolio of BeautyFarm, Palaispa, CellCare and Neology. The service offerings of the Company cover traditional beauty services, aesthetic medical services as well as subhealth assessment and intervention services, across the full client lifecycle.
This press release is issued by Porda Havas International Finance Communications Group for and on behalf of Beauty Farm Medical and Health Industry Inc. For further information, please contact:
Porda Havas International Finance Communications Group
Telephone: 852 3150 6788
Email: projectgarden.hk@pordahavas.com
