香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概不負責，對其準確性 或完整性亦不發表任何聲明，並明確表示，概不對因本公告全部或任何部份內容而產生或因倚 賴該等內容而引致的任何損失承擔任何責任。 Yonghe Medical Group Co., Ltd. 雍禾醫療集團有限公司 （於開曼群島註冊成立的有限公司） （股份代號：2279） 內幕消息 虧損減少 本公司股東及潛在投資者於買賣本公司股份時務請審慎行事。 ※附註： 銷售及營銷開支率=銷售及營銷開支除以來自客戶合約的收入 一般及行政開支率=一般及行政開支除以來自客戶合約的收入 承董事會命 雍禾醫療集團有限公司 董事長 本公告乃雍禾醫療集團有限公司（「本公司」，連同其子公司合稱「本集團」）遵照香 港聯合交易所有限公司證券上市規則（「上市規則」）第13.09(2)條及香港法例第571 章證券及期貨條例第XIVA部項下的內幕消息條文（定義見上市規則）而作出。 本公司董事會（「董事會」）謹此知會本公司股東及本公司潛在投資者，根據對本集 團截至2024年12月31日止年度（「該年度」）之未經審核合併管理賬目以及董事會 現時可得資料的初步審閱，本集團於該 ...

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概不負責，對其準確性 或完整性亦不發表任何聲明，並明確表示，概不對因本公告全部或任何部份內容而產生或因倚 賴該等內容而引致的任何損失承擔任何責任。 Yonghe Medical Group Co., Ltd. 雍禾醫療集團有限公司（「本公司」）董事會（「董事會」）謹此宣佈，由二零二五年 一月十日起，本公司於香港的主要營業地點的地址將由香港九龍觀塘道348號宏 利廣場5樓遷往香港銅鑼灣希慎道33號利園一期19樓1912室。 本公司的電話號碼、傳真號碼及公司網址將維持不變。 承董事會命 雍禾醫療集團有限公司 董事長 張玉 香港，二零二五年一月九日 於本公告日期，本公司執行董事為張玉先生、張輝先生及韓志梅女士；本公司非 執行董事為耿嘉琦先生；及本公司獨立非執行董事為梁繼紅女士、陳炳鈞先生及 李小培先生。 雍禾醫療集團有限公司 （於開曼群島註冊成立的有限公司） （股份代號：2279） 更改香港主要營業地點的地址 ...

FF305 翌日披露報表 (股份發行人 ── 已發行股份或庫存股份變動、股份購回及/或在場内出售庫存股份) 表格類別： 股票 狀態： 新提交 公司名稱： 雍禾醫療集團有限公司 呈交日期： 2024年12月31日 如上市發行人的已發行股份或庫存股份出現變動而須根據《香港聯合交易所有限公司（「香港聯交所」）證券上市規則》(「《主板上市規則》」)第13.25A條 / 《香港聯合交易所有限公司GEM證券 上市規則》(「《GEM上市規則》」)第17.27A條作出披露，必須填妥第一章節 。 | 第一章節 | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 1. 股份分類 | 普通股 | 股份類別 | 不適用 | | | 於香港聯交所上市 | 是 | | | | 證券代號 (如上市) | 02279 | 說明 | | | | | | | | | A. 已發行股份或庫存股份變動 | | | | | | | | | | | | | | 已發行股份（不包括庫存股份）變動 | | | 庫存股份變動 | | | | | ...

[Company Profile](index=2&type=section&id=Company%20Profile) Yonghe Medical Group is a leading one-stop hair medical service provider in China, expanding its market presence and leveraging technology for industry leadership - The Group is a **leading hair medical service provider** in China, offering **one-stop services** including hair transplantation, medical hair care, routine maintenance, and other related services[2](index=2&type=chunk)[3](index=3&type=chunk) - Through the acquisition of Svenson's mainland China business and Hairmax's Hong Kong business, the Group expanded its operations beyond mainland China[2](index=2&type=chunk)[4](index=4&type=chunk) - Established a joint hair laboratory with Peking University People's Hospital to promote research and application of standardized diagnostic and treatment processes for hair loss diseases[2](index=2&type=chunk)[4](index=4&type=chunk) - Actively promotes the adoption of new technologies such as data application and analysis, artificial intelligence services, and online services to enhance core competitiveness[2](index=2&type=chunk)[5](index=5&type=chunk) [Corporate Information](index=3&type=section&id=Corporate%20Information) This section provides essential corporate details, including board composition, committee members, key contacts, and listing information for Yonghe Medical Group - The Board of Directors comprises **3 executive directors** (including Mr. Zhang Yu, Chairman and CEO), **1 non-executive director**, and **3 independent non-executive directors**[6](index=6&type=chunk) - The Audit Committee is chaired by Mr. Chan Ping Kwan, the Remuneration Committee by Mr. Chan Ping Kwan, and the Nomination Committee by Mr. Zhang Yu[6](index=6&type=chunk) - The Company's stock code is **02279**, listed on the Stock Exchange on **December 13, 2021**[9](index=9&type=chunk) [Financial Highlights](index=6&type=section&id=Financial%20Highlights) Revenue grew 8.7% to RMB 900.2 million, gross profit increased 13.2% to RMB 529.4 million, and net loss significantly narrowed to RMB 138.6 million for the six months ended June 30, 2024 Financial Highlights for the Six Months Ended June 30, 2024 | Metric | June 30, 2024 (RMB '000) | June 30, 2023 (RMB '000) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Revenue from contracts with customers | 900,203 | 827,807 | 8.7% | | Gross Profit | 529,437 | 467,598 | 13.2% | | Loss before income tax | (146,699) | (256,428) | -42.8% | | Loss for the period | (138,648) | (226,191) | -38.7% | | Gross Profit Margin | 58.8% | 56.5% | 2.3pp | | Net Loss Margin | -15.4% | -27.3% | 11.9pp | Financial Position (as at period-end) | Metric | June 30, 2024 (RMB '000) | December 31, 2023 (RMB '000) | Change (%) | | :--- | :--- | :--- | :--- | | Total Assets | 2,086,797 | 2,444,561 | -14.6% | | Total Equity | 801,818 | 942,251 | -14.9% | | Total Liabilities | 1,284,979 | 1,502,310 | -14.4% | | Cash and Cash Equivalents | 533,780 | 603,215 | -11.6% | [Management Discussion and Analysis](index=7&type=section&id=Management%20Discussion%20and%20Analysis) This section analyzes the Group's business performance, strategic adjustments, and financial position, detailing revenue growth, narrowed losses, and future plans for efficiency, service quality, and digital transformation [Business Review](index=7&type=section&id=Business%20Review) The Group, a leading hair medical service provider, expanded its brand matrix and network, serving 74,748 patients with an 8.7% revenue increase and improved gross profit margin - As of June 30, 2024, the Group operates **72 hair transplantation medical institutions** in **68 cities** nationwide, and **9 Svenson hair care institutions** in Beijing, Shanghai, Guangzhou, and Shenzhen[11](index=11&type=chunk)[12](index=12&type=chunk) - During the reporting period, the total number of patients served reached **74,748**[11](index=11&type=chunk)[12](index=12&type=chunk) Overview of Group Revenue, Gross Profit, and Gross Profit Margin | Metric | June 30, 2024 (RMB million) | June 30, 2023 (RMB million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 900.2 | 827.8 | 8.7% | | Gross Profit | 529.4 | 467.6 | 13.2% | | Gross Profit Margin | 58.8% | 56.5% | 2.3pp | [Hair Transplantation Business](index=11&type=section&id=Hair%20Transplantation%20Business) Hair transplantation revenue grew 5.0% to RMB 672.9 million, driven by a 3.4% increase in patients and a 31.1% rise in 'Yongxiang' service patients Hair Transplantation Business Revenue and Proportion | Metric | June 30, 2024 (RMB '000) | June 30, 2023 (RMB '000) | YoY Change (%) | Proportion of Total Revenue (%) | | :--- | :--- | :--- | :--- | :--- | | Hair transplantation medical service revenue | 672,885 | 640,798 | 5.0% | 74.8% | - Deepened the implementation of a **'fixed-price' strategy**, clarifying service costs and committing to precise control throughout the process to ensure high-quality professional services[19](index=19&type=chunk)[21](index=21&type=chunk) - Launched the **'Good Doctors Nearby' national tour** to break geographical barriers and promote equitable distribution of quality medical resources[19](index=19&type=chunk)[21](index=21&type=chunk) Key Operating Data for Hair Transplantation Medical Services | Metric | June 30, 2024 | June 30, 2023 | YoY Change (%) | | :--- | :--- | :--- | :--- | | Number of patients receiving hair transplantation medical services | 29,272 | 28,304 | 3.4% | | Average spending per hair transplantation patient (RMB) | 22,987 | 22,640 | 1.5% | | Number of patients receiving 'Yongxiang' services | 1,700 | 1,297 | 31.1% | [Medical Hair Care Business](index=13&type=section&id=Medical%20Hair%20Care%20Business) Medical hair care revenue surged 25.3% to RMB 215.2 million, driven by a 21.9% increase in patients and a 29.0% package repurchase rate Medical Hair Care Business Revenue and Proportion | Metric | June 30, 2024 (RMB '000) | June 30, 2023 (RMB '000) | YoY Change (%) | Proportion of Total Revenue (%) | | :--- | :--- | :--- | :--- | :--- | | Medical hair care service revenue | 215,176 | 171,684 | 25.3% | 23.9% | - Established **'Svenson Medical Hair Care Centers'** through 'shop-in-shop' and independent store models, offering professional diagnosis and customized treatment services[24](index=24&type=chunk)[25](index=25&type=chunk) Key Operating Data for Medical Hair Care Services | Metric | June 30, 2024 | June 30, 2023 | YoY Change (%) | | :--- | :--- | :--- | :--- | | Number of patients receiving medical hair care services | 49,683 | 40,758 | 21.9% | | Average spending per medical hair care patient (RMB) | 4,331 | 4,212 | 2.8% | | Repurchase Rate | 29.0% | 26.4% | 2.6pp | [Business Progress](index=14&type=section&id=Business%20Progress) The Group strategically adjusted operations, enhancing cost control, optimizing efficiency, and upgrading medical service quality to lead the industry into Hair Transplantation 3.0, while collaborating for innovation Yonghe Hair Transplantation Medical Institutions by Development Stage (as of June 30, 2024) | Development Stage | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Mature Institutions | 52 | 47 | | Developing Institutions | 12 | 12 | | New Institutions | 8 | 16 | | Total | 72 | 75 | Svenson Independent Stores by City (as of June 30, 2024) | City | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Shenzhen | 4 | 6 | | Guangzhou | 2 | 4 | | Shanghai | 2 | 2 | | Beijing | 1 | 1 | | Subtotal | 9 | 13 | | Total (all institutions) | 81 | 88 | [Effective Cost Control Significantly Improves Operational Efficiency](index=14&type=section&id=Effective%20Cost%20Control%20Significantly%20Improves%20Operational%20Efficiency) The Group enhanced operational efficiency through strategic cost control, prudent clinic integration, and innovative service models, including opening 4 new institutions and closing 11 others - Implemented strategic adjustments to strengthen **cost control mechanisms**, optimize operational efficiency, and enhance profitability potential[28](index=28&type=chunk) - Prudently executed the strategy of integrating new and old clinics, and appropriately extended the market observation period for new establishments[28](index=28&type=chunk) - Launched the **'Beijing, Shanghai, Guangzhou Famous Doctors National Tour'** project and promoted value-added services like **'cross-clinic, cross-city surgical support'** to optimize medical resource allocation[28](index=28&type=chunk) - Opened **two new Yonghe Hair Transplantation medical institutions** and **two Svenson clinics**, while closing **five Yonghe Hair Transplantation medical institutions** and **six Svenson clinics** to control costs and enhance operational efficiency[28](index=28&type=chunk) [Deepening Medical Service Quality to Lead Industry Development](index=15&type=section&id=Deepening%20Medical%20Service%20Quality%20to%20Lead%20Industry%20Development) The Group upgraded its 'Good Doctor + Good System' strategy, leading Hair Transplantation 3.0 with a 1,503-strong medical team and collaborations to enhance service quality and R&D - Underwent a **'Good Doctor + Good System' brand strategy upgrade**, leading the industry into the **Hair Transplantation 3.0 era**[30](index=30&type=chunk)[32](index=32&type=chunk) - Provided more comprehensive and personalized medical services through systematic upgrades across five dimensions: diagnosis, transplantation, aesthetics, hair care, and comfort[30](index=30&type=chunk)[32](index=32&type=chunk) Professional Medical Team Composition (as of June 30, 2024) | Category | Number of People | | :--- | :--- | | Total Professional Team | 1,503 | | Doctors | 282 | | Nurses | 1,125 | | Other Medical Professionals | 96 | - Signed strategic cooperation agreements with multiple excellent pharmaceutical companies to deepen collaboration in hair loss prevention and hair transplantation, exploring an innovative **'R&D-Production-Sales-Application' model**[34](index=34&type=chunk)[35](index=35&type=chunk) [Advancing Refined Marketing Strategies to Enhance Brand Value](index=17&type=section&id=Advancing%20Refined%20Marketing%20Strategies%20to%20Enhance%20Brand%20Value) The Group enhanced brand value through refined marketing, clarifying its 'Hair Transplantation 3.0' positioning, utilizing data-driven multi-channel strategies, and improving private domain user operations for increased loyalty - Clarified the new positioning for the **'Hair Transplantation 3.0 era'**, emphasizing medical service quality, innovative hair transplantation systems, and patient experience to enhance consumer trust and loyalty[36](index=36&type=chunk)[37](index=37&type=chunk) - Adopted multi-channel, multi-touchpoint integrated marketing, utilizing data analysis and precise targeting to control marketing costs while improving conversion rates[37](index=37&type=chunk)[38](index=38&type=chunk) - Improved the standardized private domain user operation management system, forming closed-loop marketing through WeChat Work, mini-programs, and official accounts, and strengthening post-operative follow-up services to enhance customer loyalty[37](index=37&type=chunk)[38](index=38&type=chunk) [Adhering to Technological Innovation and Continuously Promoting Intelligent Development](index=18&type=section&id=Adhering%20to%20Technological%20Innovation%20and%20Continuously%20Promoting%20Intelligent%20Development) The Group drives intelligent development through digital innovation, piloting the 'Hefan' system for electronic archives, integrating AI robots for faster online consultations, and automating scalp health assessments - The independently developed operation management system **'Hefan'** has been piloted in various clinics, covering all process links and achieving **'full lifecycle electronic archives'** to enhance business efficiency and customer experience[39](index=39&type=chunk) - Integrated **AI robot tools** into online consultation services, increasing the initial interaction response speed by **85%**[39](index=39&type=chunk) - Leveraged image model algorithms to automate scalp health assessment, including follicle count and hair diameter analysis, generating instant reports, shortening diagnosis time, and supporting personalized treatment[39](index=39&type=chunk) [Future Outlook](index=19&type=section&id=Future%20Outlook) The Group anticipates continued market growth, focusing on cost efficiency, refined operations, enhanced service capabilities, and digital transformation to maintain industry leadership and achieve sustainable growth - Anticipates continuous growth in demand for hair loss treatment and care, and the Group will seize market opportunities to achieve sustainable, virtuous cycle growth[40](index=40&type=chunk) - The Group will adhere to technology-driven innovation, accelerate its digital transformation, and continuously optimize operational efficiency and enhance medical service capabilities[52](index=52&type=chunk)[53](index=53&type=chunk) [Cost Reduction and Efficiency Improvement, Refined Operation of Medical Institutions](index=19&type=section&id=Cost%20Reduction%20and%20Efficiency%20Improvement,%20Refined%20Operation%20of%20Medical%20Institutions) The Group will enhance operational efficiency and reduce costs through a refined, data-driven system, lean management, optimized network distribution, and digital transformation of human resources and supply chain - Continues to advance a refined operation system, guided by data-driven and process optimization, to ensure resource efficient utilization and effective cost control[40](index=40&type=chunk) - Implements a **lean management strategy**, introduces advanced data analysis tools, optimizes the distribution network of hair transplantation and care institutions, and strengthens cross-clinic collaboration[40](index=40&type=chunk) - Focuses on talent development and management, enhancing the digitalization and automation of human resource management, optimizing workflows, and reducing labor and management costs[40](index=40&type=chunk) - Continuously promotes innovative management in various clinics, building **'smart clinics'**, leveraging data analysis and artificial intelligence technology to enhance the precision and responsiveness of medical services, and optimizing the supply chain management system[41](index=41&type=chunk)[43](index=43&type=chunk) [Continuously Enhancing Operational and Medical Service Capabilities](index=20&type=section&id=Continuously%20Enhancing%20Operational%20and%20Medical%20Service%20Capabilities) The Group will enhance operational and medical service capabilities by improving service levels, deepening the 'Good Doctor + Good System' strategy, introducing advanced technologies, building a patient-centric multi-channel system, and strengthening compliance and risk control - Promotes **differentiated services** based on regional market characteristics and establishes rigorous assessment mechanisms to ensure continuous improvement in medical service quality[42](index=42&type=chunk)[44](index=44&type=chunk) - Deepens the **'Good Doctor + Good System' strategy**, introduces advanced technologies and equipment, and plans to promote **3D simulated hair transplantation design** and **intelligent hair transplantation surgery**[42](index=42&type=chunk)[45](index=45&type=chunk) - Advances the construction of a **patient-centric multi-channel medical service system**, integrating online and offline resources to enhance the customer's full lifecycle service experience[42](index=42&type=chunk)[46](index=46&type=chunk) - Strengthens compliance management and risk control, improves emergency plans, and ensures patient safety and Group operational stability[47](index=47&type=chunk)[49](index=49&type=chunk) [Adhering to Technology-Oriented Operations to Promote Digital and Intelligent Services](index=21&type=section&id=Adhering%20to%20Technology-Oriented%20Operations%20to%20Promote%20Digital%20and%20Intelligent%20Services) The Group will accelerate digital transformation by integrating AI models for business processes, piloting 3D simulated hair transplantation, launching an intelligent quality inspection system, and implementing paperless clinics to enhance service and competitiveness - Established a customer-centric full-process service path, introducing **intelligent AI models** in lead follow-up, deal closing, and post-operative service stages, and completed the pilot of **'3D simulated hair transplantation design solutions'**[48](index=48&type=chunk)[50](index=50&type=chunk) - Launched an **'intelligent quality inspection system'** to enhance quality inspection coverage and efficiency, ensure service quality and consistency, and provide data support for operational decisions[48](index=48&type=chunk)[51](index=51&type=chunk) - Fully launched the **'clinic paperless' project**, digitizing customer documents and reports, and improving information security systems to strengthen data privacy protection[48](index=48&type=chunk)[51](index=51&type=chunk) [Financial Review](index=22&type=section&id=Financial%20Review) The Group's financial performance for the six months ended June 30, 2024, showed an 8.7% revenue increase, 13.2% gross profit growth, and a 38.7% reduction in net loss, driven by cost optimization and reduced capital expenditure - The Group's loss for the period significantly narrowed, and net loss margin improved, primarily due to enhanced operational efficiency and optimized cost and expenses[73](index=73&type=chunk)[77](index=77&type=chunk) - Capital expenditure significantly decreased, reflecting the Group's more prudent approach to its expansion strategy[82](index=82&type=chunk)[83](index=83&type=chunk) - Cash and cash equivalents remained robust, sufficient to support daily operations and future development[74](index=74&type=chunk)[78](index=78&type=chunk) [Revenue](index=22&type=section&id=Revenue) Revenue increased 8.7% to RMB 900.2 million, with hair transplantation growing 5.0% to RMB 672.9 million and medical hair care growing 25.3% to RMB 215.2 million Revenue Breakdown by Business Line | Business Line | 2024 (RMB '000) | 2024 (%) | 2023 (RMB '000) | 2023 (%) | YoY Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | Hair transplantation medical services | 672,885 | 74.8 | 640,798 | 77.4 | 5.0% | | Medical hair care services | 215,176 | 23.9 | 171,684 | 20.7 | 25.3% | | Others | 12,142 | 1.3 | 15,325 | 1.9 | -20.8% | | **Total** | **900,203** | **100** | **827,807** | **100** | **8.7%** | - Hair transplantation business revenue growth was primarily due to a **3.4% increase** in patient numbers to **29,272**[55](index=55&type=chunk)[56](index=56&type=chunk) - Medical hair care business revenue growth was primarily due to a **21.9% increase** in patient numbers to **49,683**[57](index=57&type=chunk)[59](index=59&type=chunk) [Costs](index=23&type=section&id=Costs) Costs increased to RMB 370.8 million, driven by higher staff costs due to increased revenue and higher amortization and depreciation from more operating medical institutions Cost of Sales and Services Breakdown | Cost Category | 2024 (RMB '000) | 2024 (%) | 2023 (RMB '000) | 2023 (%) | | :--- | :--- | :--- | :--- | :--- | | Staff costs | 142,032 | 38.3 | 140,983 | 39.1 | | Cost of inventories and consumables | 152,677 | 41.2 | 135,846 | 37.7 | | Amortization and depreciation expenses | 50,549 | 13.6 | 58,081 | 16.1 | | Operating related expenses | 19,596 | 5.3 | 17,518 | 4.9 | | Other expenses | 5,912 | 1.6 | 7,781 | 2.2 | | **Total** | **370,766** | **100** | **360,209** | **100** | - The increase in staff costs was primarily due to the increase in revenue during the reporting period[62](index=62&type=chunk)[65](index=65&type=chunk) - The increase in amortization and depreciation expenses was primarily due to the increased number of medical institutions operating for the six months ended June 30, 2024[62](index=62&type=chunk)[65](index=65&type=chunk) [Gross Profit and Gross Profit Margin](index=24&type=section&id=Gross%20Profit%20and%20Gross%20Profit%20Margin) Gross profit increased 13.2% to RMB 529.4 million, with gross profit margin improving to 58.8% for the six months ended June 30, 2024 Gross Profit and Gross Profit Margin | Metric | June 30, 2024 (RMB million) | June 30, 2023 (RMB million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Gross Profit | 529.4 | 467.6 | 13.2% | | Gross Profit Margin | 58.8% | 56.5% | 2.3pp | [Other Income](index=24&type=section&id=Other%20Income) Other income decreased to RMB 0.8 million, primarily due to lower government grants and additional VAT deductions Other Income | Metric | June 30, 2024 (RMB million) | June 30, 2023 (RMB million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Other Income | 0.8 | 1.2 | -33.3% | [General and Administrative Expenses](index=24&type=section&id=General%20and%20Administrative%20Expenses) General and administrative expenses decreased to RMB 141.0 million, primarily due to reduced staff costs from personnel optimization and organizational restructuring General and Administrative Expenses Breakdown | Expense Category | 2024 (RMB '000) | 2024 (%) | 2023 (RMB '000) | 2023 (%) | | :--- | :--- | :--- | :--- | :--- | | Staff costs | 97,483 | 69.1 | 119,976 | 68.6 | | Operating related expenses | 9,096 | 6.5 | 14,086 | 8.1 | | Professional and consulting service fees | 9,441 | 6.7 | 8,967 | 5.1 | | Travel and entertainment expenses | 6,757 | 4.8 | 7,734 | 4.4 | | Others | 13,241 | 9.4 | 17,748 | 10.2 | | **Total** | **140,970** | **100** | **174,861** | **100** | - The decrease in staff costs was primarily due to personnel optimization and organizational restructuring[68](index=68&type=chunk)[69](index=69&type=chunk) [Selling and Marketing Expenses](index=25&type=section&id=Selling%20and%20Marketing%20Expenses) Selling and marketing expenses decreased to RMB 462.6 million, primarily due to reduced marketing and promotion expenses from refined marketing strategies Selling and Marketing Expenses Breakdown | Expense Category | 2024 (RMB '000) | 2024 (%) | 2023 (RMB '000) | 2023 (%) | | :--- | :--- | :--- | :--- | :--- | | Marketing and promotion expenses | 322,749 | 69.7 | 345,161 | 69.2 | | Staff costs | 119,716 | 25.9 | 127,148 | 25.5 | | Travel expenses | 5,892 | 1.3 | 8,970 | 1.8 | | Operating related expenses | 3,101 | 0.7 | 5,748 | 1.2 | | Amortization and depreciation expenses | 6,457 | 1.4 | 7,307 | 1.5 | | Others | 4,658 | 1.0 | 4,068 | 0.8 | | **Total** | **462,573** | **100** | **498,402** | **100** | - The decrease in marketing and promotion expenses was primarily due to the Group's implementation of refined marketing strategies[71](index=71&type=chunk)[75](index=75&type=chunk) [Income Tax Credit](index=26&type=section&id=Income%20Tax%20Credit) Income tax credit decreased by 73.4% to RMB 8.1 million, primarily due to reduced deferred income tax recognized for temporary losses Income Tax Credit | Metric | June 30, 2024 (RMB million) | June 30, 2023 (RMB million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Income Tax Credit | 8.1 | 30.2 | -73.4% | - The decrease in income tax credit was primarily due to a decrease in deferred income tax recognized for temporary losses in the current period[72](index=72&type=chunk)[76](index=76&type=chunk) [Net Loss and Net Loss Margin](index=26&type=section&id=Net%20Loss%20and%20Net%20Loss%20Margin) Net loss decreased to RMB 138.6 million, with net loss margin improving to 15.4%, driven by enhanced operational efficiency and optimized costs Net Loss and Net Loss Margin | Metric | June 30, 2024 (RMB million) | June 30, 2023 (RMB million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Net Loss | (138.6) | (226.2) | -38.7% | | Net Loss Margin | -15.4% | -27.3% | 11.9pp | - The narrowing of losses was primarily attributable to revenue growth from improved operational efficiency and cost savings from optimized marketing and human resources[73](index=73&type=chunk)[77](index=77&type=chunk) [Cash and Cash Equivalents](index=26&type=section&id=Cash%20and%20Cash%20Equivalents) Cash and cash equivalents decreased to RMB 533.8 million, but the Group maintains robust cash flow to support operations and future expansion plans Cash and Cash Equivalents | Metric | June 30, 2024 (RMB million) | December 31, 2023 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Cash and Cash Equivalents | 533.8 | 603.2 | -11.6% | - The Group maintains robust cash flow, fully capable of meeting daily working capital needs and future medical institution expansion plans[74](index=74&type=chunk)[78](index=78&type=chunk) [Liquidity and Capital Resources](index=27&type=section&id=Liquidity%20and%20Capital%20Resources) The Group maintains ample liquidity with RMB 533.8 million in cash and cash equivalents and RMB 132.6 million in bank borrowings to support operations and future expansion Liquidity Overview | Metric | June 30, 2024 (RMB million) | December 31, 2023 (RMB million) | | :--- | :--- | :--- | | Cash and Cash Equivalents | 533.8 | 603.2 | | Bank Borrowings | 132.6 | 152.8 | [Capital Expenditure](index=27&type=section&id=Capital%20Expenditure) Capital expenditure significantly decreased to RMB 18.4 million, primarily allocated to property, plant and equipment, and intangible assets Capital Expenditure Breakdown | Category | June 30, 2024 (RMB '000) | June 30, 2023 (RMB '000) | | :--- | :--- | :--- | | Payments for property, plant and equipment | 13,966 | 107,083 | | Payments for intangible assets | 4,398 | 540 | | **Total** | **18,364** | **107,623** | [Debt](index=28&type=section&id=Debt) Total debt was RMB 904.1 million, mainly bank borrowings of RMB 132.6 million and lease liabilities of RMB 771.4 million, with lease liabilities decreasing from year-end 2023 Debt Breakdown | Category | June 30, 2024 (RMB '000) | December 31, 2023 (RMB '000) | | :--- | :--- | :--- | | Current bank borrowings | 132,628 | 152,816 | | Current lease liabilities | 147,608 | 170,044 | | Non-current lease liabilities | 623,825 | 772,693 | | **Total** | **904,061** | **1,095,553** | - Bank borrowings bear interest at fixed annual rates ranging from **2.9% to 3.4%**[85](index=85&type=chunk)[88](index=88&type=chunk) - Total lease liabilities were **RMB 771.4 million**, a decrease from **RMB 942.7 million** as of December 31, 2023[86](index=86&type=chunk)[89](index=89&type=chunk) [Significant Acquisitions and Disposals](index=28&type=section&id=Significant%20Acquisitions%20and%20Disposals) The Group had no significant acquisitions or disposals of subsidiaries, associates, or joint ventures, nor any significant investments during the six months ended June 30, 2024 - During the reporting period, the Group did not undertake any significant acquisitions or disposals of any subsidiaries, associates, or joint ventures[90](index=90&type=chunk) - As of June 30, 2024, the Group held no significant investments[90](index=90&type=chunk) [Plans for Future Material Investments or Capital Asset Purchases](index=29&type=section&id=Plans%20for%20Future%20Material%20Investments%20or%20Capital%20Asset%20Purchases) As of June 30, 2024, the Group had no plans for future material investments or capital asset purchases beyond those disclosed in the prospectus - As of June 30, 2024, the Group had no plans for future material investments or purchases of capital assets, other than those disclosed in the prospectus[91](index=91&type=chunk) [Pledge of Assets](index=29&type=section&id=Pledge%20of%20Assets) As of June 30, 2024, the Group had no pledge of assets - As of June 30, 2024, the Group had no pledge of assets[91](index=91&type=chunk) [Gearing Ratio](index=29&type=section&id=Gearing%20Ratio) The Group's gearing ratio slightly increased to 16.5% as of June 30, 2024, from 16.2% at December 31, 2023 Gearing Ratio | Metric | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Gearing Ratio | 16.5% | 16.2% | [Exchange Rates and Any Related Hedges](index=29&type=section&id=Exchange%20Rates%20and%20Any%20Related%20Hedges) The Group has no significant foreign currency risk, with most operations and assets denominated in RMB, and monitors foreign exchange risk for potential hedging - The Group has no significant foreign currency risk, with its operations, assets, and liabilities primarily denominated in **RMB**[91](index=91&type=chunk) Foreign Currency Denominated Cash and Cash Equivalents | Metric | June 30, 2024 (RMB million) | December 31, 2023 (RMB million) | | :--- | :--- | :--- | | Foreign currency denominated cash and cash equivalents | 7.5 | 13.2 | [Contingent Liabilities](index=29&type=section&id=Contingent%20Liabilities) As of June 30, 2024, the Group had no significant contingent liabilities - As of June 30, 2024, the Group had no significant contingent liabilities[91](index=91&type=chunk) [Employees and Remuneration Policy](index=29&type=section&id=Employees%20and%20Remuneration%20Policy) The Group had 3,826 employees, including 1,503 medical professionals, with staff costs decreasing to RMB 371.3 million, and offers competitive remuneration and social security benefits Number of Employees and Staff Costs | Metric | June 30, 2024 | June 30, 2023 | | :--- | :--- | :--- | | Total Employees | 3,826 | N/A | | Professional Medical Team Members | 1,503 | N/A | | Staff Costs (RMB million) | 371.3 | 399.7 | - The Group offers competitive remuneration packages, promotion opportunities, training programs, and a professional working environment, and participates in social security schemes for employees[91](index=91&type=chunk) [Corporate Governance and Other Information](index=29&type=section&id=Corporate%20Governance%20and%20Other%20Information) This section details the Group's corporate governance, including code compliance, audit committee functions, changes in global offering proceeds, regulatory adherence, shareholder interests, contractual arrangements, share schemes, and share repurchases [Compliance with Corporate Governance Code](index=29&type=section&id=Compliance%20with%20Corporate%20Governance%20Code) The Company adheres to high corporate governance standards, with the only deviation being the combined roles of Chairman and CEO, which the Board deems beneficial for management - The Company is committed to high standards of corporate governance and has applied all applicable principles and code provisions of the Corporate Governance Code[92](index=92&type=chunk) - Deviated from Code Provision C.2.1 of the Corporate Governance Code, where the roles of Chairman and Chief Executive Officer are combined in Mr. Zhang Yu, which the Board believes benefits Group management[92](index=92&type=chunk) [Compliance with Model Code for Securities Transactions](index=29&type=section&id=Compliance%20with%20Model%20Code%20for%20Securities%20Transactions) The Company adopted the Model Code for securities transactions, and all directors confirmed compliance for the six months ended June 30, 2024 - The Company has adopted the Model Code set out in Appendix C3 of the Listing Rules, and directors confirmed compliance[92](index=92&type=chunk) [Audit Committee](index=31&type=section&id=Audit%20Committee) The Audit Committee, comprising two independent non-executive directors and one non-executive director, reviews financial information, risk management, internal controls, and external auditor appointments - The Audit Committee comprises **two independent non-executive directors** and **one non-executive director**, with **Mr. Chan Ping Kwan** as Chairman[94](index=94&type=chunk)[96](index=96&type=chunk) - Its primary responsibilities include reviewing financial information, risk management and internal control systems, the effectiveness of the internal audit function, audit scope, and the appointment of external auditors[94](index=94&type=chunk)[96](index=96&type=chunk) [Review of Interim Results and Interim Report](index=31&type=section&id=Review%20of%20Interim%20Results%20and%20Interim%20Report) The Audit Committee, management, and independent auditor reviewed the unaudited condensed consolidated interim financial information for the six months ended June 30, 2024, in accordance with HK SRE 2410 - The Audit Committee, together with management and the independent auditor, reviewed the unaudited condensed consolidated interim financial information for the six months ended June 30, 2024[95](index=95&type=chunk)[97](index=97&type=chunk) - The unaudited condensed consolidated interim financial information was reviewed by the independent auditor in accordance with Hong Kong Standard on Review Engagements 2410[95](index=95&type=chunk)[97](index=97&type=chunk) [Use of Proceeds from Global Offering and Changes in Use of Proceeds](index=31&type=section&id=Use%20of%20Proceeds%20from%20Global%20Offering%20and%20Changes%20in%20Use%20of%20Proceeds) The Board twice resolved to change the use of global offering proceeds, reallocating HK$507.0 million (adjusted to HK$500.1 million) to working capital due to reduced R&D costs, completed smart hospital construction, and slower expansion - The net proceeds from the global offering were approximately **HK$1,526.2 million**[98](index=98&type=chunk) - The Board resolved twice, on **March 30, 2023**, and **August 22, 2024**, to change the use of the unutilized net proceeds[98](index=98&type=chunk)[99](index=99&type=chunk) Overview of Changes in Use of Proceeds (as of June 30, 2024) | Use of Proceeds | Planned Application Amount (HK$ million) | Unutilized as of December 31, 2023 (HK$ million) | Actual Use as of June 30, 2024 (HK$ million) | Unutilized as of June 30, 2024 (HK$ million) | Revised Unutilized as of August 22, 2024 (HK$ million) | Expected Timeline for Full Utilization | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Expansion and upgrade of existing hair transplantation medical institutions in mainland China | 64.7 | 0 | 0 | 0 | 0 | N/A | | Innovation in products and service items | 222.3 | 149.4 | 18.2 | 131.2 | 88.6 | Before December 2025 | | Investment in R&D, and enhancing service system with cutting-edge technology | 136.1 | 105.0 | 11.5 | 93.5 | 38.2 | Before December 2025 | | Integration of industry resources in China to enhance brand awareness | 378.3 | 282.3 | 0 | 282.3 | 122.3 | Before December 2025 | | Settlement of outstanding balance of acquisition consideration for Hairmax | 0 | 0 | 0 | 0 | 0 | N/A | | Working capital and general corporate purposes | 24.2 | 0 | 0 | 0 | 251.0 | Before December 2025 | | **Total** | **825.6** | **536.7** | **29.7** | **507.0** | **500.1** | | - Reasons for changes in the use of proceeds include: reduced R&D costs due to collaboration with pharmaceutical companies, decreased data analysis team building costs and substantial completion of smart hospital construction, and slower institutional expansion and temporary suspension of acquisitions of local non-chain hair transplantation institutions due to economic conditions[100](index=100&type=chunk)[101](index=101&type=chunk)[102](index=102&type=chunk) [Compliance with Relevant Laws and Regulations](index=34&type=section&id=Compliance%20with%20Relevant%20Laws%20and%20Regulations) The Group confirms material compliance with relevant laws and regulations, actively rectifying historical non-compliance, ensuring all medical institutions hold licenses, advertisements are certified, properties are defect-free, and surgeries are performed by qualified doctors - The Group has complied in all material respects with relevant laws and regulations significantly affecting its business and operations, with no material non-compliance during the reporting period[105](index=105&type=chunk) - All operating medical institutions hold practice licenses[105](index=105&type=chunk) - Fire safety control procedures and drainage permit applications for Quanzhou and Lanzhou medical institutions are actively being processed[105](index=105&type=chunk) - All medical institutions have obtained medical advertising review certificates from local health authorities when publishing relevant advertisements[105](index=105&type=chunk) - All surgeries performed in medical institutions are conducted by or under the supervision of doctors holding medical aesthetic principal qualifications[106](index=106&type=chunk)[108](index=108&type=chunk) [Interests and Short Positions of Directors and Chief Executive in Shares, Underlying Shares and Debentures of the Company or its Associated Corporations](index=35&type=section&id=Interests%20and%20Short%20Positions%20of%20Directors%20and%20Chief%20Executive%20in%20Shares,%20Underlying%20Shares%20and%20Debentures%20of%20the%20Company%20or%20its%20Associated%20Corporations) As of June 30, 2024, directors and the chief executive held long positions in the Company's shares, with Mr. Zhang Yu holding 30.74% and 3.

[Financial Summary](index=1&type=section&id=Financial%20Summary) This section provides a high-level overview of the company's financial performance for the six months ended June 30, 2024 Financial Summary for the Six Months Ended June 30, 2024 | Indicator | H1 2024 (RMB million) | H1 2023 (RMB million) | Change | | :--- | :--- | :--- | :--- | | Revenue | 900.2 | 827.8 | Increase | | Gross Profit | 529.4 | 467.6 | Increase | | Gross Margin | 58.8% | 56.5% | Increase | | Net Loss | 138.6 | 226.2 | Narrowed by 38.7% | | Basic Loss Per Share | 0.28 | 0.44 | Narrowed | - The Board has resolved not to declare any interim dividend for the six months ended June 30, 2024[1](index=1&type=chunk) [Interim Condensed Consolidated Financial Statements](index=2&type=section&id=Interim%20Condensed%20Consolidated%20Financial%20Statements) This section presents the interim condensed consolidated financial statements, including the statement of comprehensive income and statement of financial position [Interim Condensed Consolidated Statement of Comprehensive Income](index=2&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) For the six months ended June 30, 2024, the Group's revenue grew to RMB 900.2 million, gross profit to RMB 529.4 million, with net loss narrowing to RMB 138.6 million Key Data from Interim Condensed Consolidated Statement of Comprehensive Income | Indicator | H1 2024 (RMB thousand) | H1 2023 (RMB thousand) | | :--- | :--- | :--- | | Revenue from contracts with customers | 900,203 | 827,807 | | Cost of sales and services | (370,766) | (360,209) | | Gross profit | 529,437 | 467,598 | | Selling and marketing expenses | (462,573) | (498,402) | | General and administrative expenses | (140,970) | (174,861) | | Operating loss | (130,649) | (225,132) | | Loss for the period | (138,648) | (226,191) | | Basic loss per share (RMB) | (0.28) | (0.44) | [Interim Condensed Consolidated Statement of Financial Position](index=2&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2024, total assets were RMB 2,086.8 million, a decrease from RMB 2,444.6 million at the end of 2023, with corresponding reductions in equity and liabilities Key Data from Interim Condensed Consolidated Statement of Financial Position | Indicator | June 30, 2024 (RMB thousand) | December 31, 2023 (RMB thousand) | | :--- | :--- | :--- | | Total non-current assets | 1,367,729 | 1,635,235 | | Total current assets | 719,068 | 809,326 | | Total assets | 2,086,797 | 2,444,561 | | Total equity | 801,818 | 942,251 | | Total non-current liabilities | 628,259 | 779,409 | | Total current liabilities | 656,720 | 722,901 | | Total liabilities | 1,284,979 | 1,502,310 | [Notes to the Interim Condensed Consolidated Financial Information](index=5&type=section&id=Notes%20to%20the%20Interim%20Condensed%20Consolidated%20Financial%20Information) This section provides detailed notes explaining the basis of preparation, accounting policies, and specific financial line items in the interim financial statements [1. General Information](index=5&type=section&id=1.%20General%20Information) Yonghe Medical Group Co., Ltd. was incorporated in the Cayman Islands, listed in Hong Kong in 2021, and primarily provides hair transplant and medical hair care services in mainland China - The Company was incorporated as an exempted company in the Cayman Islands on **September 17, 2020**[4](index=4&type=chunk) - The Group is principally engaged in providing hair transplant medical services and medical hair care services in mainland China[4](index=4&type=chunk) - The Company was listed on the Main Board of The Stock Exchange of Hong Kong Limited on **December 13, 2021**[4](index=4&type=chunk) [2. Basis of Preparation](index=5&type=section&id=2.%20Basis%20of%20Preparation) The interim condensed consolidated financial information is prepared in accordance with HKAS 34 "Interim Financial Reporting" and should be read with the annual financial statements - The interim condensed consolidated financial information has been prepared in accordance with **Hong Kong Accounting Standard 34 "Interim Financial Reporting"**[5](index=5&type=chunk) [3. Accounting Policies](index=5&type=section&id=3.%20Accounting%20Policies) The Group's accounting policies are consistent with 2023, with new standards adopted from January 1, 2024, expected to have no significant impact on operations or financial statements [3.1 New and Revised Standards Adopted by the Group](index=5&type=section&id=3.1%20New%20and%20Revised%20Standards%20Adopted%20by%20the%20Group) - The Group has first applied a number of amendments from **January 1, 2024**, including amendments to **HKAS 1**, **HK(IFRIC)-Int 5**, **HKAS 7** and **HKFRS 7**, and **HKFRS 16**[7](index=7&type=chunk) - The adoption of the amendments to **HKAS 1** did not result in a change in the classification of the Group's borrowings, and no retrospective adjustments were made[7](index=7&type=chunk) [3.2 Impact of Standards Not Yet Adopted by the Group](index=6&type=section&id=3.2%20Impact%20of%20Standards%20Not%20Yet%20Adopted%20by%20the%20Group) - Amendments to **HKAS 21** by the Hong Kong Institute of Certified Public Accountants will be applicable to annual reporting periods beginning on or after **January 1, 2025**, and the Group expects these amendments will not have a significant impact on its operations or financial statements[9](index=9&type=chunk) [4. Revenue from Contracts with Customers](index=6&type=section&id=4.%20Revenue%20from%20Contracts%20with%20Customers) For the six months ended June 30, 2024, total revenue from customer contracts was RMB 900.2 million, primarily from hair transplant and medical hair care services Customer Revenue by Service Category | Service Category | H1 2024 (RMB thousand) | H1 2023 (RMB thousand) | | :--- | :--- | :--- | | Hair transplant medical services | 672,885 | 640,798 | | Medical hair care services | 215,176 | 171,684 | | Others | 12,142 | 15,325 | | Total | 900,203 | 827,807 | Customer Revenue by Timing of Recognition | Timing of Recognition | H1 2024 (RMB thousand) | H1 2023 (RMB thousand) | | :--- | :--- | :--- | | Revenue recognized at a point in time | 708,029 | 679,603 | | Revenue recognized over time | 192,174 | 148,204 | | Total | 900,203 | 827,807 | Customer Revenue by Geographical Region | Region | H1 2024 (RMB thousand) | H1 2023 (RMB thousand) | | :--- | :--- | :--- | | Mainland China | 898,745 | 825,034 | | Hong Kong | 1,458 | 2,773 | | Total | 900,203 | 827,807 | [5. Other Losses, Net](index=7&type=section&id=5.%20Other%20Losses,%20Net) For the six months ended June 30, 2024, net other losses significantly increased to RMB 44.8 million, mainly due to losses on disposal and impairment of property, plant, and equipment Details of Other Losses, Net | Item | H1 2024 (RMB thousand) | H1 2023 (RMB thousand) | | :--- | :--- | :--- | | Loss on disposal of property, plant and equipment | (34,016) | (3,981) | | Impairment loss on property, plant and equipment | (14,064) | – | | Gain on early termination of property leases | 2,682 | 2,337 | | Net fair value loss on financial liabilities at fair value through profit or loss | – | (4,132) | | Others | 582 | (1,612) | | Total | (44,816) | (7,388) | [6. Expenses by Nature](index=7&type=section&id=6.%20Expenses%20by%20Nature) For the six months ended June 30, 2024, total expenses decreased to RMB 986.7 million, primarily due to reduced employee benefits and promotion and marketing expenses Details of Expenses by Nature | Expense Category | H1 2024 (RMB thousand) | H1 2023 (RMB thousand) | | :--- | :--- | :--- | | Employee benefit expenses | 371,270 | 399,747 | | Promotion and marketing related expenses | 322,749 | 345,161 | | Depreciation of property, plant and equipment | 85,862 | 73,143 | | Depreciation of right-of-use assets | 81,302 | 77,652 | | Cost of inventories and consumables | 50,549 | 58,081 | | Total | 986,734 | 1,046,497 | [7. Finance Costs – Net](index=8&type=section&id=7.%20Finance%20Costs%20–%20Net) For the six months ended June 30, 2024, net finance costs significantly decreased to RMB 16.1 million, mainly due to lower interest expenses on lease liabilities and foreign exchange losses Details of Finance Income | Item | H1 2024 (RMB thousand) | H1 2023 (RMB thousand) | | :--- | :--- | :--- | | Interest income from bank deposits | 5,476 | 7,587 | | Foreign exchange gain | 48 | – | | Total | 5,524 | 7,587 | Details of Finance Costs | Item | H1 2024 (RMB thousand) | H1 2023 (RMB thousand) | | :--- | :--- | :--- | | Interest expense on lease liabilities | (18,924) | (27,598) | | Foreign exchange loss | – | (11,285) | | Interest expense on bank borrowings | (2,650) | – | | Total | (21,574) | (38,883) | Finance Costs – Net | Indicator | H1 2024 (RMB thousand) | H1 2023 (RMB thousand) | | :--- | :--- | :--- | | Finance costs – net | (16,050) | (31,296) | [8. Income Tax Credit](index=8&type=section&id=8.%20Income%20Tax%20Credit) For the six months ended June 30, 2024, income tax credit decreased significantly to RMB 8.1 million, mainly due to reduced deferred tax recognized on temporary losses Details of Income Tax Credit | Item | H1 2024 (RMB thousand) | H1 2023 (RMB thousand) | | :--- | :--- | :--- | | Current income tax | (5,726) | (3,884) | | Deferred income tax | 13,777 | 34,121 | | Income tax credit | 8,051 | 30,237 | - Subsidiaries incorporated in the Cayman Islands and British Virgin Islands are **exempt from income tax**[15](index=15&type=chunk)[16](index=16&type=chunk) - Subsidiaries incorporated in Hong Kong are subject to Hong Kong profits tax at a rate of **16.5%**[17](index=17&type=chunk) - Certain subsidiaries in mainland China, such as Yonghe Investment, qualify as high-tech enterprises and enjoy a preferential income tax rate of **15%**, while some qualify as small and micro enterprises, and other entities are taxed at the standard rate of **25%**[18](index=18&type=chunk) [9. Loss Per Share](index=9&type=section&id=9.%20Loss%20Per%20Share) For the six months ended June 30, 2024, basic loss per share narrowed to RMB 0.28, and diluted loss per share was the same due to the Group incurring losses Calculation of Basic Loss Per Share | Indicator | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Loss for the period attributable to equity holders of the Company (RMB thousand) | (138,572) | (226,191) | | Less: Loss attributable to unvested restricted shares during the vesting period (RMB thousand) | 2,170 | 5,088 | | Loss attributable to ordinary equity holders of the Company for basic loss per share calculation (RMB thousand) | (136,402) | (221,103) | | Weighted average number of ordinary shares in issue (thousand shares) | 492,937 | 501,887 | | Basic loss per share (RMB) | (0.28) | (0.44) | - As the Group incurred losses during the reporting period, potential ordinary shares were not included in the calculation of diluted loss per share, thus diluted loss per share is the same as basic loss per share[21](index=21&type=chunk) [10. Dividends](index=10&type=section&id=10.%20Dividends) For the six months ended June 30, 2024, the company neither paid nor declared any interim dividends, consistent with the prior year - For the six months ended June 30, 2024, the Company neither paid nor declared any dividends[23](index=23&type=chunk) [11. Trade Receivables](index=11&type=section&id=11.%20Trade%20Receivables) As of June 30, 2024, net trade receivables slightly increased to RMB 10.4 million, primarily from financial institutions or third-party payment platforms with short credit terms Details of Trade Receivables | Item | June 30, 2024 (RMB thousand) | December 31, 2023 (RMB thousand) | | :--- | :--- | :--- | | Trade receivables from contracts with customers – third parties | 10,428 | 10,283 | | Less: Impairment allowance | (29) | (16) | | Net amount | 10,399 | 10,267 | Ageing Analysis of Trade Receivables | Ageing | June 30, 2024 (RMB thousand) | December 31, 2023 (RMB thousand) | | :--- | :--- | :--- | | Within 3 months | 10,244 | 9,326 | | 3 to 6 months | 175 | 941 | | 6 months to 1 year | 4 | 10 | | 1 to 2 years | 5 | 6 | | Total | 10,428 | 10,283 | - The Group generally collects payments from customers in advance, and trade receivables primarily refer to amounts due from financial institutions or third-party payment platforms, with a general credit period of **within 15 days**, and **6 months** for corporate customers[24](index=24&type=chunk) [12. Prepayments, Deposits and Other Receivables](index=12&type=section&id=12.%20Prepayments,%20Deposits%20and%20Other%20Receivables) As of June 30, 2024, total prepayments, deposits, and other receivables decreased to RMB 113.9 million, mainly due to lower current prepayments and deductible input VAT Details of Prepayments, Deposits and Other Receivables | Item | June 30, 2024 (RMB thousand) | December 31, 2023 (RMB thousand) | | :--- | :--- | :--- | | Current prepayments | 29,618 | 33,360 | | Deductible input VAT | 5,882 | 8,771 | | Other receivables (net) | 75,640 | 77,708 | | Subtotal included in current assets | 111,140 | 119,839 | | Included in non-current assets | 2,745 | 2,106 | | Total | 113,885 | 121,945 | [13. Inventories](index=13&type=section&id=13.%20Inventories) As of June 30, 2024, total inventories decreased to RMB 62.6 million, primarily comprising medical hair care consumables, medicines, and washing and hair care products Details of Inventories | Item | June 30, 2024 (RMB thousand) | December 31, 2023 (RMB thousand) | | :--- | :--- | :--- | | Medical hair care consumables | 33,446 | 38,284 | | Medicines and medical consumables | 15,227 | 18,184 | | Washing and hair care products | 11,098 | 16,041 | | Others | 2,845 | 3,496 | | Total | 62,616 | 76,005 | [Trade and Other Payables](index=13&type=section&id=Trade%20and%20Other%20Payables) As of June 30, 2024, total trade and other payables decreased to RMB 168.2 million, mainly due to reductions in trade payables and accrued employee benefits Details of Trade and Other Payables | Item | June 30, 2024 (RMB thousand) | December 31, 2023 (RMB thousand) | | :--- | :--- | :--- | | Trade payables | 61,509 | 76,166 | | Accrued employee benefits | 56,872 | 68,556 | | Taxes payable | 15,775 | 17,201 | | Refund liabilities | 10,415 | 12,009 | | Accrued expenses | 9,403 | 15,037 | | Deposits | 7,686 | 12,666 | | Bills payable | – | 3,250 | | Others | 6,544 | 5,988 | | Total | 168,204 | 210,873 | Ageing Analysis of Trade Payables | Ageing | June 30, 2024 (RMB thousand) | December 31, 2023 (RMB thousand) | | :--- | :--- | :--- | | Within 3 months | 50,741 | 54,618 | | 3 to 6 months | 5,237 | 15,872 | | 6 months to 1 year | 2,582 | 2,727 | | 1 to 2 years | 1,274 | 1,051 | | Over 2 years | 1,675 | 1,898 | | Total | 61,509 | 76,166 | [15. Contract Liabilities](index=14&type=section&id=15.%20Contract%20Liabilities) As of June 30, 2024, total contract liabilities increased to RMB 199.1 million, primarily from medical hair care services, with RMB 123 million expected to be recognized as revenue within one year Details of Contract Liabilities | Item | June 30, 2024 (RMB thousand) | December 31, 2023 (RMB thousand) | | :--- | :--- | :--- | | Medical hair care | 168,400 | 153,494 | | Hair transplant medical services | 22,150 | 18,354 | | Others | 8,578 | 10,507 | | Total | 199,128 | 182,355 | Revenue Recognized from Contract Liabilities | Service Category | H1 2024 (RMB thousand) | H1 2023 (RMB thousand) | | :--- | :--- | :--- | | Medical hair care | 77,154 | 59,542 | | Hair transplant medical services | 6,560 | 2,958 | | Others | 4,288 | 5,252 | | Total | 88,002 | 67,752 | - Management expects that approximately **RMB 123 million** (December 31, 2023: approximately RMB 99 million) of the unfulfilled contract amount as of June 30, 2024, will be recognized as revenue within the next year[33](index=33&type=chunk) [Management Discussion and Analysis](index=15&type=section&id=Management%20Discussion%20and%20Analysis) This section provides a comprehensive review of the Group's business operations, strategic initiatives, and financial performance for the reporting period [Business Review](index=15&type=section&id=Business%20Review) Yonghe Medical, a leading hair medical service group in China, achieved 8.7% revenue growth to RMB 900.2 million and improved gross margin to 58.8% for the first half of 2024 [Hair Transplant Business](index=17&type=section&id=Hair%20Transplant%20Business) Hair transplant business revenue increased by 5.0% to RMB 672.9 million, driven by a 3.4% increase in patient numbers and enhanced service quality - For the six months ended June 30, 2024, hair transplant business revenue was **RMB 672.9 million**, an increase of **5.0%** year-on-year, accounting for **74.8%** of total revenue[39](index=39&type=chunk) - The Group deepened its "one-price-for-all" pricing strategy and launched the "Good Doctors Around You" national tour to enhance service quality and resource allocation[39](index=39&type=chunk) Key Operating Data for Hair Transplant Medical Services | Indicator | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Number of patients receiving hair transplant medical services | 29,272 | 28,304 | | Average spending per hair transplant patient (RMB) | 22,987 | 22,640 | | Number of patients receiving "Yongxiang" services | 1,700 | 1,297 | - The number of patients undergoing hair transplant surgery increased by **3.4%** to **29,272**, with a significant **31.1%** increase in patients receiving "Yongxiang" services[39](index=39&type=chunk) [Medical Hair Care Business](index=18&type=section&id=Medical%20Hair%20Care%20Business) Medical hair care business revenue grew by 25.3% to RMB 215.2 million, with patient numbers increasing by 21.9% and repurchase rate improving to 29.0% - For the six months ended June 30, 2024, medical hair care business revenue was **RMB 215.2 million**, an increase of **25.3%** year-on-year, accounting for **23.9%** of total revenue[41](index=41&type=chunk) - The Group established "Svenson Medical Hair Care Centers" within each hair transplant medical institution and independent stores to provide professional medical-grade hair health management services[41](index=41&type=chunk) Key Operating Data for Medical Hair Care Services | Indicator | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Number of patients receiving medical hair care services | 49,683 | 40,758 | | Average spending per medical hair care patient (RMB) | 4,331 | 4,212 | | Repurchase rate | 29.0% | 26.4% | - The number of patients receiving medical hair care services increased by **21.9%** to **49,683**, and the repurchase rate improved to **29.0%**[41](index=41&type=chunk)[42](index=42&type=chunk) [Business Progress](index=19&type=section&id=Business%20Progress) The Group implemented strategic adjustments, strengthened cost control, optimized operations, and enhanced medical service quality, while cautiously expanding and leveraging digital technologies [Effective Cost Control Significantly Enhances Operational Efficiency](index=19&type=section&id=Effective%20Cost%20Control%20Significantly%20Enhances%20Operational%20Efficiency) The Group implemented strategic adjustments to strengthen cost control, optimize operational efficiency, and enhance profitability, including integrating clinics and optimizing resource allocation - The Group implemented strategic adjustments to strengthen cost control mechanisms, optimize operational efficiency, and enhance profitability[42](index=42&type=chunk) - The Group prudently executed its strategy of integrating new and existing clinics, appropriately extended the market observation period for new clinics, and launched the "Top Doctors National Tour in Beijing, Shanghai, and Guangzhou" project and promoted "cross-clinic, cross-city surgical support" services[42](index=42&type=chunk)[43](index=43&type=chunk) - During the reporting period, two new Yonghe Hair Transplant medical institutions and two Svenson clinics were established, while five Yonghe Hair Transplant medical institutions and six Svenson clinics were closed to optimize medical resource allocation[43](index=43&type=chunk) Number of Hair Transplant Medical Institutions by Development Stage | Development Stage | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Mature clinics | 52 | 47 | | Developing clinics | 12 | 12 | | New clinics | 8 | 16 | | Total | 72 | 75 | [Deepening Medical Service Quality to Lead Industry Development](index=20&type=section&id=Deepening%20Medical%20Service%20Quality%20to%20Lead%20Industry%20Development) The Group upgraded its "Good Doctor + Good System" brand strategy, leading the industry into the Hair Transplant 3.0 era by emphasizing professional training and comprehensive service enhancements - The Group upgraded its "Good Doctor + Good System" brand strategy, leading the industry into the Hair Transplant 3.0 era, emphasizing professional training and evaluation of doctors, and system upgrades across five dimensions: diagnosis, transplantation, aesthetics, hair care, and comfort[45](index=45&type=chunk) Professional Medical Team Composition | Team Category | Number of People as of June 30, 2024 | | :--- | :--- | | Total professional team | 1,503 | | - Doctors | 282 | | - Nurses | 1,125 | | - Other medical professionals | 96 | - The Group signed strategic cooperation agreements with several excellent pharmaceutical companies to explore a "R&D-production-sales-application" integrated innovation model and continuously strengthened cooperation with renowned medical schools and top-tier hospitals[46](index=46&type=chunk) [Advancing Refined Marketing Strategies to Enhance Brand Value](index=21&type=section&id=Advancing%20Refined%20Marketing%20Strategies%20to%20Enhance%20Brand%20Value) The Group is implementing brand renewal and refined marketing strategies to establish its "Hair Transplant 3.0 era" positioning, enhance brand awareness, and optimize marketing costs - The Group is advancing brand renewal and refined marketing strategies, clearly defining its new positioning for the "Hair Transplant 3.0 era" to enhance brand awareness and market influence[47](index=47&type=chunk) - The Group adopted a multi-channel, multi-touchpoint integrated marketing approach, utilizing data analytics and precise targeting to control marketing costs, and improved its private domain user operation management system to form a closed-loop private domain marketing strategy[47](index=47&type=chunk) [Adhering to Technological Innovation and Continuously Advancing Intelligent Development](index=22&type=section&id=Adhering%20to%20Technological%20Innovation%20and%20Continuously%20Advancing%20Intelligent%20Development) The Group is committed to technological innovation, implementing self-developed operational management systems, integrating AI tools for online consultations, and automating scalp health assessments - The self-developed operational management system "Hefan" has been piloted in various clinics, covering the entire process and achieving "full lifecycle electronic archives"[48](index=48&type=chunk) - AI robot tools have been integrated into online consultation services, increasing the speed of initial interaction feedback by **85%**[48](index=48&type=chunk) - Automated scalp health assessment is achieved through image model algorithms, instantly generating reports on patients' scalp environment and hair health status[48](index=48&type=chunk) [Future Outlook](index=23&type=section&id=Future%20Outlook) The Group anticipates continued high growth in the hair medical services market, focusing on cost reduction, efficiency improvement, refined operations, and technology-driven services to enhance competitiveness [Cost Reduction and Efficiency Enhancement for Refined Operation of Medical Institutions](index=23&type=section&id=Cost%20Reduction%20and%20Efficiency%20Enhancement%20for%20Refined%20Operation%20of%20Medical%20Institutions) The Group will continue to advance its refined operational system through data-driven optimization, efficient resource utilization, and enhanced talent management to build "smart clinics" - The Group will continue to advance its refined operational system, ensuring efficient resource utilization and effective cost control through data-driven approaches and process optimization[50](index=50&type=chunk) - The Group will deepen its lean management strategy, introduce advanced data analysis tools, optimize the distribution network of hair transplant and hair care institutions, and strengthen cross-clinic cooperation[50](index=50&type=chunk) - The Group will focus on talent development and management, enhance the digitalization and automation of human resources, establish a comprehensive performance appraisal system, and promote innovative management and "smart clinic" construction across all clinics[50](index=50&type=chunk) [Continuously Enhancing Operational and Medical Service Capabilities](index=24&type=section&id=Continuously%20Enhancing%20Operational%20and%20Medical%20Service%20Capabilities) The Group aims to enhance operational and medical service capabilities by implementing differentiated services, advanced technologies like 3D simulated hair transplant design, and patient-centric service systems - The Group will promote differentiated services based on regional market characteristics, establish a rigorous assessment mechanism, and upgrade process re-engineering and standardized operations for key clinics[51](index=51&type=chunk) - The Group will deepen its "Good Doctor + Good System" strategy, introduce advanced technological equipment, and plans to pilot **3D simulated hair transplant design** and intelligent hair transplant surgery in more clinics[51](index=51&type=chunk) - The Group will promote the construction of a patient-centric multi-channel medical service system, improve the full lifecycle service experience for customers, and strengthen compliance management and risk control[51](index=51&type=chunk) [Adhering to Technology-Oriented Operations to Promote Digital and Intelligent Services](index=25&type=section&id=Adhering%20to%20Technological%20Innovation%20and%20Continuously%20Advancing%20Intelligent%20Development) The Group is committed to technology-driven operations, leveraging AI models for business empowerment, implementing smart quality inspection systems, and achieving paperless operations across clinics - The Group will empower its business through intelligent AI models, introducing AI models in lead follow-up, deal closing, and post-operative service stages, and completing the pilot work for Yonghe's "**3D simulated hair transplant design solution**"[52](index=52&type=chunk) - The Group will complete the launch of the "**Intelligent Quality Inspection System**" to enhance quality inspection coverage and efficiency, and provide valuable business insights[52](index=52&type=chunk) - The Group will fully launch the "**Paperless Clinic**" project to digitize customer documents and reports, and strengthen information security and data privacy protection[52](index=52&type=chunk) [Financial Review](index=26&type=section&id=Financial%20Review) This section reviews the Group's financial performance for the six months ended June 30, 2024, covering revenue, costs, gross profit, expenses, tax, net loss, cash flow, capital expenditure, and debt [Revenue](index=26&type=section&id=Revenue) For the six months ended June 30, 2024, the Group's revenue increased by 8.7% to RMB 900.2 million, driven by growth in both hair transplant and medical hair care services - For the six months ended June 30, 2024, the Group's revenue was **RMB 900.2 million**, an increase of **8.7%** compared to the same period in 2023[54](index=54&type=chunk) Revenue Breakdown by Business Line | Business Line | H1 2024 (RMB thousand) | Share (%) | H1 2023 (RMB thousand) | Share (%) | | :--- | :--- | :--- | :--- | :--- | | Hair transplant medical services | 672,885 | 74.8 | 640,798 | 77.4 | | Medical hair care services | 215,176 | 23.9 | 171,684 | 20.7 | | Others | 12,142 | 1.3 | 15,325 | 1.9 | | Total | 900,203 | 100 | 827,807 | 100 | - Revenue from hair transplant medical services increased by **5.0%** to **RMB 672.9 million**, primarily due to a **3.4%** increase in patient numbers[54](index=54&type=chunk) - Revenue from medical hair care services increased by **25.3%** to **RMB 215.2 million**, primarily due to a **21.9%** increase in patient numbers[55](index=55&type=chunk) - Revenue from other services decreased by **20.8%** to **RMB 12.1 million**[56](index=56&type=chunk) [Costs](index=27&type=section&id=Costs) For the six months ended June 30, 2024, sales and service costs increased to RMB 370.8 million, primarily due to higher employee costs and amortization and depreciation expenses - For the six months ended June 30, 2024, cost of sales and services was **RMB 370.8 million**, an increase from **RMB 360.2 million** in the same period of 2023[57](index=57&type=chunk) Details of Cost of Sales and Services | Cost Category | H1 2024 (RMB thousand) | Share (%) | H1 2023 (RMB thousand) | Share (%) | | :--- | :--- | :--- | :--- | :--- | | Staff costs | 142,032 | 38.3 | 140,983 | 39.1 | | Amortization and depreciation expenses | 152,677 | 41.2 | 135,846 | 37.7 | | Cost of inventories and consumables | 50,549 | 13.6 | 58,081 | 16.1 | | Operating related expenses | 19,596 | 5.3 | 17,518 | 4.9 | | Other expenses | 5,912 | 1.6 | 7,781 | 2.2 | | Total | 370,766 | 100 | 360,209 | 100 | - The increase in staff costs was mainly due to increased revenue, while the increase in amortization and depreciation expenses was primarily due to the increased number of operating medical institutions[57](index=57&type=chunk) [Gross Profit and Gross Margin](index=27&type=section&id=Gross%20Profit%20and%20Gross%20Margin) For the six months ended June 30, 2024, gross profit increased by 13.2% to RMB 529.4 million, with gross margin improving to 58.8% - For the six months ended June 30, 2024, gross profit was **RMB 529.4 million**, an increase of **13.2%** compared to the same period last year[58](index=58&type=chunk) - Gross margin was **58.8%**, an increase from **56.5%** in the same period of 2023[58](index=58&type=chunk) [Other Income](index=27&type=section&id=Other%20Income) For the six months ended June 30, 2024, other income decreased to RMB 0.8 million, mainly comprising government grants and VAT super deduction - For the six months ended June 30, 2024, other income was **RMB 0.8 million**, a decrease from **RMB 1.2 million** in the same period of 2023, mainly comprising government grants and VAT super deduction[59](index=59&type=chunk) [General and Administrative Expenses](index=28&type=section&id=General%20and%20Administrative%20Expenses) For the six months ended June 30, 2024, general and administrative expenses decreased to RMB 141.0 million, primarily due to reduced employee costs from personnel optimization - For the six months ended June 30, 2024, general and administrative expenses were **RMB 141.0 million**, a decrease from **RMB 174.9 million** in the same period of 2023[60](index=60&type=chunk) Details of General and Administrative Expenses | Expense Category | H1 2024 (RMB thousand) | Share (%) | H1 2023 (RMB thousand) | Share (%) | | :--- | :--- | :--- | :--- | :--- | | Staff costs | 97,483 | 69.1 | 119,976 | 68.6 | | Operating related expenses | 9,096 | 6.5 | 14,086 | 8.1 | | Amortization and depreciation expenses | 9,441 | 6.7 | 8,967 | 5.1 | | Professional and consulting service fees | 6,757 | 4.8 | 7,734 | 4.4 | | Travel and entertainment expenses | 4,952 | 3.5 | 6,350 | 3.6 | | Others | 13,241 | 9.4 | 17,748 | 10.2 | | Total | 140,970 | 100 | 174,861 | 100 | - The decrease in staff costs was mainly due to personnel optimization and organizational structure adjustments[60](index=60&type=chunk) [Selling and Marketing Expenses](index=28&type=section&id=Selling%20and%20Marketing%20Expenses) For the six months ended June 30, 2024, selling and marketing expenses decreased to RMB 462.6 million, mainly due to the implementation of refined marketing strategies - For the six months ended June 30, 2024, selling and marketing expenses were **RMB 462.6 million**, a decrease from **RMB 498.4 million** in the same period of 2023[61](index=61&type=chunk) Details of Selling and Marketing Expenses | Expense Category | H1 2024 (RMB thousand) | Share (%) | H1 2023 (RMB thousand) | Share (%) | | :--- | :--- | :--- | :--- | :--- | | Marketing and promotion expenses | 322,749 | 69.7 | 345,161 | 69.2 | | Staff costs | 119,716 | 25.9 | 127,148 | 25.5 | | Travel expenses | 5,892 | 1.3 | 8,970 | 1.8 | | Operating related expenses | 3,101 | 0.7 | 5,748 | 1.2 | | Amortization and depreciation expenses | 6,457 | 1.4 | 7,307 | 1.5 | | Others | 4,658 | 1.0 | 4,068 | 0.8 | | Total | 462,573 | 100 | 498,402 | 100 | - The decrease in marketing and promotion expenses was mainly due to the Group's implementation of refined marketing strategies[61](index=61&type=chunk) [Income Tax Credit](index=29&type=section&id=Income%20Tax%20Credit) For the six months ended June 30, 2024, income tax credit decreased by 73.4% to RMB 8.1 million, primarily due to reduced deferred tax recognized on temporary losses - For the six months ended June 30, 2024, income tax credit decreased by **73.4%** from **RMB 30.2 million** to **RMB 8.1 million**, mainly due to a decrease in deferred income tax recognized on temporary losses during the period[62](index=62&type=chunk) [Net Loss and Net Loss Margin](index=29&type=section&id=Net%20Loss%20and%20Net%20Loss%20Margin) For the six months ended June 30, 2024, net loss narrowed to RMB 138.6 million, and net loss margin decreased to 15.4%, driven by improved operational efficiency and cost savings - For the six months ended June 30, 2024, net loss decreased from **RMB 226.2 million** to **RMB 138.6 million**, and the net loss margin decreased from **27.3%** to **15.4%**[63](index=63&type=chunk) - The decrease in net loss was primarily attributable to revenue growth driven by improved operational efficiency, and cost savings from optimized marketing and human resources[63](index=63&type=chunk) [Cash and Cash Equivalents](index=29&type=section&id=Cash%20and%20Cash%20Equivalents) As of June 30, 2024, cash and cash equivalents decreased to RMB 533.8 million from RMB 603.2 million at December 31, 2023 - As of June 30, 2024, cash and cash equivalents were **RMB 533.8 million**, a decrease from **RMB 603.2 million** as of December 31, 2023[64](index=64&type=chunk) [Cash Flows](index=29&type=section&id=Cash%20Flows) Net cash from operating activities turned positive for the first half of 2024, indicating improved operational health, despite a decrease in overall cash and cash equivalents Selected Data from Consolidated Cash Flow Statement | Item | H1 2024 (RMB thousand) | H1 2023 (RMB thousand) | | :--- | :--- | :--- | | Net cash from/(used in) operating activities | 73,974 | (24,978) | | Net cash (used in)/from investing activities | (18,282) | 163,055 | | Net cash used in financing activities | (125,169) | (210,537) | | Cash and cash equivalents at end of period | 533,780 | 486,842 | - Net cash from operating activities turned from a net outflow in the first half of 2023 to a net inflow in the first half of 2024, indicating improved operating conditions[65](index=65&type=chunk) [Liquidity and Capital Resources](index=29&type=section&id=Liquidity%20and%20Capital%20Resources) The Group maintains a healthy cash flow and robust liquidity, with RMB 533.8 million in cash and cash equivalents, sufficient to meet operational needs and future expansion plans - As of June 30, 2024, cash and cash equivalents were **RMB 533.8 million**, and bank borrowings were **RMB 132.6 million**[66](index=66&type=chunk) - The Group possesses robust cash flow, which is sufficient to meet its daily working capital requirements and future medical institution expansion plans[64](index=64&type=chunk) [Capital Expenditure](index=30&type=section&id=Capital%20Expenditure) For the six months ended June 30, 2024, capital expenditure significantly decreased to RMB 18.4 million, primarily due to reduced payments for property, plant, and equipment - For the six months ended June 30, 2024, capital expenditure was **RMB 18.4 million**, a significant decrease from **RMB 107.6 million** in the same period of 2023[67](index=67&type=chunk) Details of Capital Expenditure | Item | H1 2024 (RMB thousand) | H1 2023 (RMB thousand) | | :--- | :--- | :--- | | Payments for property, plant and equipment | 13,966 | 107,083 | | Payments for intangible assets | 4,398 | 540 | | Total | 18,364 | 107,623 | [Indebtedness](index=30&type=section&id=Indebtedness) As of June 30, 2024, total indebtedness decreased to RMB 904.1 million, primarily due to reductions in bank borrowings and lease liabilities - As of June 30, 2024, the Group's total indebtedness was **RMB 904.1 million**, a decrease from **RMB 1,095.5 million** as of December 31, 2023[68](index=68&type=chunk) Details of Indebtedness | Debt Category | June 30, 2024 (RMB thousand) | December 31, 2023 (RMB thousand) | | :--- | :--- | :--- | | Current bank borrowings | 132,628 | 152,816 | | Current lease liabilities | 147,608 | 170,044 | | Non-current lease liabilities | 623,825 | 772,693 | | Total | 904,061 | 1,095,553 | [Bank Borrowings](index=30&type=section&id=Bank%20Borrowings) As of June 30, 2024, outstanding interest-bearing bank borrowings were RMB 132.6 million, with interest rates ranging from 2.9% to 3.4% - As of June 30, 2024, outstanding interest-bearing bank borrowings were **RMB 132.6 million**, bearing interest at annual rates ranging from **2.9% to 3.4%**[69](index=69&type=chunk) [Lease Liabilities](index=31&type=section&id=Lease%20Liabilities) As of June 30, 2024, total outstanding lease liabilities decreased to RMB 771.4 million from RMB 942.7 million at December 31, 2023 - As of June 30, 2024, total outstanding lease liabilities were **RMB 771.4 million**, a decrease from **RMB 942.7 million** as of December 31, 2023[70](index=70&type=chunk) [Plans for Material Investments or Capital Asset Purchases in the Future](index=31&type=section&id=Plans%20for%20Material%20Investments%20or%20Capital%20Asset%20Purchases%20in%20the%20Future) As of June 30, 2024, the Group had no plans for material investments or capital asset purchases beyond those disclosed in the prospectus - As of June 30, 2024, the Group had no plans for any material investments or capital asset purchases in the future, other than those disclosed in the prospectus[70](index=70&type=chunk) [Pledge of Assets](index=31&type=section&id=Pledge%20of%20Assets) As of June 30, 2024, the Group had no pledged assets - As of June 30, 2024, the Group had no pledged assets[70](index=70&type=chunk) [Gearing Ratio](index=31&type=section&id=Gearing%20Ratio) As of June 30, 2024, the Group's gearing ratio slightly increased to 16.5% from 16.2% at December 31, 2023 - As of June 30, 2024, the Group's gearing ratio was **16.5%**, a slight increase from **16.2%** as of December 31, 2023[70](index=70&type=chunk) [Exchange Rates and Any Related Hedges](index=31&type=section&id=Exchange%20Rates%20and%20Any%20Related%20Hedges) The Group has no significant foreign currency risk as its operations, assets, and liabilities are primarily denominated in RMB, with a small amount of foreign currency cash - The Group does not have significant foreign currency risk as its operations, assets, and liabilities are primarily denominated in RMB[71](index=71&type=chunk) - As of June 30, 2024, cash and cash equivalents denominated in foreign currencies amounted to **RMB 7.5 million**[71](index=71&type=chunk) [Contingent Liabilities](index=31&type=section&id=Contingent%20Liabilities) As of June 30, 2024, the Group had no significant contingent liabilities - As of June 30, 2024, the Group had no significant contingent liabilities[72](index=72&type=chunk) [Employees and Remuneration Policies](index=31&type=section&id=Employees%20and%20Remuneration%20Policies) As of June 30, 2024, the Group had 3,826 employees, with total employee costs decreasing, and offers competitive remuneration, development, and social security benefits - As of June 30, 2024, the Group had a total of **3,826 employees**, of whom **1,503** were professional medical team members[72](index=72&type=chunk) - Employee costs for the six months ended June 30, 2024, were **RMB 371.3 million**, a decrease from **RMB 399.7 million** in the same period of 2023[72](index=72&type=chunk) - The Group offers competitive remuneration packages, promotion opportunities, diverse training programs, and a professional working environment, and participates in social security schemes for its employees[72](index=72&type=chunk) [Other Information](index=32&type=section&id=Other%20Information) This section covers additional corporate governance, compliance, and financial information, including interim dividends, share repurchases, and the audit committee's review [Interim Dividends](index=32&type=section&id=Interim%20Dividends) The Board has resolved not to declare any interim dividend for the six months ended June 30, 2024 - The Board has resolved not to declare any interim dividend for the six months ended June 30, 2024[73](index=73&type=chunk) [Compliance with the Corporate Governance Code](index=32&type=section&id=Compliance%20with%20the%20Corporate%20Governance%20Code) The company complied with the Corporate Governance Code, except for the chairman and CEO roles being held by the same individual, which the Board believes benefits management - The Company has complied with all applicable principles and code provisions of the Corporate Governance Code, except for the deviation from code provision C.2.1 (the roles of chairman and chief executive officer are performed by the same individual, Mr. Zhang Yu)[73](index=73&type=chunk) - The Board believes that combining the roles of chairman and chief executive officer is beneficial to the Group's management[73](index=73&type=chunk) [Compliance with the Model Code for Securities Transactions](index=32&type=section&id=Compliance%20with%20the%20Model%20Code%20for%20Securities%20Transactions) The company adopted the Model Code for securities transactions by directors and employees, confirming compliance during the reporting period - The Company has adopted the Model Code for Securities Transactions by Directors and Employees who may possess unpublished inside information of the Company[73](index=73&type=chunk) - The Directors have confirmed their compliance with the Model Code throughout the reporting period, and the Company has not identified any instances of non-compliance by relevant employees[73](index=73&type=chunk) [Events After the Reporting Period](index=32&type=section&id=Events%20After%20the%20Reporting%20Period) No significant events occurred after the reporting period that could impact the Group, other than those disclosed in this announcement - Save as disclosed in this announcement, there have been no significant events after the reporting period that could affect the Group[74](index=74&type=chunk) [Use of Proceeds from Global Offering and Change in Use of Proceeds](index=33&type=section&id=Use%20of%20Proceeds%20from%20Global%20Offering%20and%20Change%20in%20Use%20of%20Proceeds) The company received net proceeds of approximately HKD 1,526.2 million from the global offering and resolved to reallocate HKD 251.0 million to working capital to optimize financial resource deployment - The Company received net proceeds of approximately **HKD 1,526.2 million** from the global offering[76](index=76&type=chunk) - On **August 22, 2024**, the Board resolved to change the use of the unutilized net proceeds again, reallocating a total of **HKD 251.0 million** from "product and service innovation projects," "R&D and enhancement of service system," and "integration of industry resources to enhance brand awareness" categories to "working capital and general corporate purposes"[76](index=76&type=chunk)[77](index=77&type=chunk) Use of Proceeds from Global Offering and Changes | Use of Proceeds | Planned Amount (HKD million) | Unutilized Amount as of June 30, 2024 (HKD million) | Revised Amount as of August 22, 2024 (HKD million) | Expected Timeline for Full Utilization | | :--- | :--- | :--- | :--- | :--- | | For expansion and upgrade of existing hair transplant medical institutions in China | 64.7 | 0 | 0 | Not applicable | | For product and service innovation projects | 222.3 | 131.2 | 88.6 | Before December 2025 | | For investment in R&D and enhancement of our service system with cutting-edge technology | 136.1 | 93.5 | 38.2 | Before December 2025 | | For integration of industry resources in China to enhance our brand awareness | 378.3 | 282.3 | 122.3 | Before December 2025 | | For settlement of outstanding balance of acquisition consideration for acquisition of Prominent Hair | 0 | 0 | 0 | Not applicable | | For working capital and general corporate purposes | 24.2 | 0 | 251.0 | Before December 2025 | | Total | 825.6 | 507.0 | 500.1 | | - Reasons for changing the use of proceeds include reduced R&D costs due to cooperation with pharmaceutical companies, lower data analytics team building costs, completion of smart hospital construction, and a slowdown in clinic expansion due to economic conditions[77](index=77&type=chunk) [Repurchase, Sale or Redemption of the Company's Listed Securities](index=35&type=section&id=Repurchase,%20Sale%20or%20Redemption%20of%20the%20Company's%20Listed%20Securities) For the six months ended June 30, 2024, the company repurchased 1,608,000 shares for approximately HKD 1,998,120, demonstrating confidence in its business development - For the six months ended June 30, 2024, the Company repurchased a total of **1,608,000 shares** on the Stock Exchange, representing **0.31%** of the total share capital, for a total consideration of approximately **HKD 1,998,120**[78](index=78&type=chunk) Monthly Share Repurchase Report | Repurchase Month | Number of Shares Repurchased | Highest Price Per Share (HKD) | Lowest Price Per Share (HKD) | Total Consideration (HKD) | | :--- | :--- | :--- | :--- | :--- | | January 2024 | 216,000 | 2.05 | 1.90 | 426,425 | | April 2024 | 702,500 | 1.21 | 0.92 | 772,760 | | May 2024 | 642,500 | 1.27 | 1.05 | 747,145 | | June 2024 | 47,000 | 1.15 | 1.01 | 51,790 | - On **June 14, 2024**, the Company cancelled **1,561,000 repurchased shares**, reducing the number of issued shares to **525,519,416**[79](index=79&type=chunk) [Audit Committee](index=35&type=section&id=Audit%20Committee) The Audit Committee, chaired by Mr. Chen Bingjun, oversees external auditors, internal audit systems, and reviews financial reports and disclosures - The Audit Committee is chaired by Mr. Chen Bingjun, an independent non-executive Director, and comprises Mr. Geng Jiaqi, a non-executive Director, and Mr. Li Xiaopei, an independent non-executive Director[80](index=80&type=chunk) - The primary responsibilities of the Audit Committee include overseeing and evaluating the work of external auditors, supervising the implementation of internal audit systems, and reviewing financial reports and related disclosures[80](index=80&type=chunk) [Review of Interim Results](index=35&type=section&id=Review%20of%20Interim%20Results) The Audit Committee, management, and independent auditors reviewed the unaudited condensed consolidated interim financial information for the six months ended June 30, 2024 - The Audit Committee, together with the Company's management and independent auditors, has reviewed the accounting principles and policies adopted by the Company and the unaudited condensed consolidated interim financial information for the six months ended June 30, 2024[81](index=81&type=chunk) - The unaudited condensed consolidated interim financial information has been reviewed by the Company's independent auditors in accordance with **Hong Kong Standard on Review Engagements 2410**[81](index=81&type=chunk) [Publication of Interim Results Announcement and Interim Report](index=36&type=section&id=Publication%20of%20Interim%20Results%20Announcement%20and%20Interim%20Report) The interim results announcement is available on the HKEX and company websites, with the full 2024 interim report to be published later - This interim results announcement is available on the website of the Stock Exchange and the Company's website[82](index=82&type=chunk) - The 2024 Interim Report, containing all information required by the Listing Rules, will be published on the respective websites of the Stock Exchange and the Company in due course[82](index=82&type=chunk) [Definitions](index=36&type=section&id=Definitions) This section provides definitions for key terms and abbreviations used in this announcement to ensure a clear understanding of the report content - This section provides definitions for terms such as "Audit Committee," "Board," "CAGR," "Corporate Governance Code," "Chairman," "Domestic," "Company," "Directors," "Group," "HKD," "Hong Kong," "Listing," "Listing Rules," "Main Board," "Model Code," "Prospectus," "RMB," "Reporting Period," "Shareholder," "Shares," "Stock Exchange," "US$," and "%"[83](index=83&type=chunk)[84](index=84&type=chunk)

Fund Allocation - The company plans to allocate a total of HKD 825.6 million from the net proceeds of the global offering, with specific allocations for various purposes[4]. - HKD 222.3 million is designated for product and service innovation, with HKD 149.4 million remaining unutilized as of December 31, 2023[4]. - The company has reallocated HKD 160.0 million from brand enhancement initiatives to operational funds due to a slowdown in expansion and closure of some self-operated clinics[3]. - The actual costs for establishing new hospitals in China were lower than expected, leading to a reallocation of HKD 120.0 million for brand enhancement and operational funds[2]. - The company expects to utilize the remaining funds for operational purposes by December 2025[4]. - The board will continue to evaluate the use of unutilized net proceeds and may adjust plans as market conditions change[5]. Operational Developments - The company has completed the construction of smart hospitals, resulting in a reduction of costs associated with data analysis team development[3]. - As of March 30, 2023, the company has opened a new hospital in Shanghai and transformed existing facilities in Guangzhou and Shenzhen[2]. - The company anticipates a delay in acquiring local non-chain hair transplant institutions over the next year[3]. Strategic Outlook - The board believes that the changes in the use of net proceeds will enhance the company's operational efficiency and profitability[5].

| --- | --- | --- | |-----------------------------------------|--------------------------|----------------| | 雍禾医疗（ 增持（维持） | 2279.HK | ）：业绩承压延 | | 所属行业：医疗保健业 / 医疗保健设备和服 | | | | 务 当前价格 ( 港币 ) ： 1.15 元 | 续，关注龙头品牌长期价值 | | 投资要点 证券分析师 -86% -69% -51% -34% -17% 0% 17% 雍禾医疗 恒生指数 | --- | --- | --- | --- | --- | |-------------------------------------|-----------------|-------|-----------------|---------------| | -103% 2023-03 \n恒 生 指 数 对 比 | 2023-07 \n1M | | 2023-11 \n2M | 3M | | 绝对涨幅 (%) 相对涨幅 (%) | -46.70 -44.33 | | ...

Financial Performance - For the fiscal year ended December 31, 2023, the revenue from hair transplant services was RMB 1,354.2 million, an increase of 31.4% compared to the previous year[20]. - Total revenue for the year ended December 31, 2023, was RMB 1,777.3 million, with a gross profit of RMB 997.2 million, resulting in a gross margin of 56.1%[20]. - The group’s revenue for 2023 was RMB 1,777.3 million, a 25.8% increase from RMB 1,412.8 million in 2022[80]. - Gross profit for 2023 was RMB 997.2 million, representing a 14.3% increase from RMB 872.6 million in 2022, with a gross margin of 56.1%[86]. - The company reported a loss attributable to equity holders of RMB 546.394 million for the year ended December 31, 2023, compared to a loss of RMB 85.858 million in the previous year[60]. - The net loss for the group increased from RMB 85.9 million in 2022 to RMB 546.7 million in 2023, with the net loss margin rising from 6.1% to 30.8%[106]. - Operating loss for the year was RMB (531,750), compared to RMB (161,621) in the previous year, reflecting a significant increase in losses[192]. - The total comprehensive loss for the year attributable to equity holders was RMB (546,442), compared to RMB (86,002) in the previous year[191]. Patient Metrics - The number of patients receiving hair transplant surgeries increased by 55.6% year-on-year, reaching 61,071 patients in 2023[21]. - The number of patients receiving medical care services increased by 24.4% year-on-year, reaching 78,687[55]. - The number of patients receiving services exceeded 130,000 in 2023, marking a 27.2% increase year-on-year[93]. - The number of hair transplant patients increased from 39,254 in 2022 to 61,071 in 2023[150]. Pricing and Revenue Breakdown - The average spending per hair transplant patient decreased by 15.5% to RMB 22,174 due to the implementation of a new pricing model[21]. - Revenue from hair transplant medical services accounted for 76.2% of total revenue, amounting to RMB 1,354.2 million, compared to 72.9% and RMB 1,030.5 million in 2022[81]. - The revenue from medical maintenance services rose by 7.1% to RMB 388.2 million in 2023, with the number of patients increasing by 24.4% to 78,687, and average spending per patient decreasing from RMB 5,731 to RMB 4,934[100]. Operational Changes and Strategies - The company introduced a new "one-price" pricing model for hair transplant services in February 2023, aimed at enhancing transparency and standardization[24]. - The company optimized its patient reception process and upgraded its medical service system to improve efficiency and quality[25]. - The company has expanded its service offerings and pricing range to meet changing market demands, enhancing patient loyalty[26]. - The company has upgraded its development strategy in April 2023, emphasizing personalized medical solutions and enhancing service quality through continuous optimization of medical processes[45]. - The introduction of the "He Fan" core business system has optimized key business processes and improved operational efficiency[68]. - The company aims to improve operational efficiency and patient experience through digital transformation and marketing strategies[68]. Financial Position and Investments - As of December 31, 2023, the group had cash and cash equivalents of RMB 603.2 million, up from RMB 565.1 million in 2022, while total bank borrowings amounted to RMB 152.8 million[107]. - The group’s capital expenditure for 2023 was RMB 171.3 million, a decrease from RMB 243.5 million in 2022[109]. - The company recorded bank borrowings of RMB 152.8 million as of December 31, 2023, with interest rates ranging from 2.6% to 3.4%[133]. - The company plans to utilize HKD 642.6 million (42.1%) for the expansion and upgrading of existing hair transplant medical institutions in China[167]. Governance and Compliance - The audit committee has reviewed the consolidated financial statements for the year ending December 31, 2023, confirming compliance with applicable accounting standards and regulations[170]. - The company has adopted standard codes governing securities trading by directors and employees with access to unpublished inside information[165]. - The company is committed to regular reviews of its corporate governance practices to ensure compliance with established codes[164]. Research and Development - A new joint laboratory was established with Peking University People's Hospital in June 2023, focusing on product development and treatment innovation for hair loss diseases[47]. - The company aims to leverage AI technology to optimize surgical planning and enhance user experience, having submitted four patent applications in this area[92]. - The company’s R&D expenses for the year were RMB (374,319), compared to RMB (257,529) in the previous year, showing an increase of approximately 45.3%[192].

Clinic Expansion and Operations - As of June 30, 2023, the total number of hair transplant clinics increased to 72, up from 63 as of December 31, 2022, representing a growth of 14.3%[5] - The number of mature clinics rose to 41 from 37, while start-up clinics increased to 15 from 9, indicating a focus on expanding established operations[5] - The number of hair transplant medical institutions is expected to approach 85 by the end of 2023, indicating continued expansion efforts[41] - The Group operates 72 clinics under the Yonghe Hair Transplant brand in 68 cities nationwide, making it the largest hair-related healthcare clinic chain in China[55] - The Group has established 14 Svenson hair care centers in major cities including Beijing, Shanghai, Guangzhou, and Shenzhen[55] - The Group plans to open nearly 85 hair transplant clinics in China by the end of 2023, focusing on lower-tier cities for broader geographical coverage[103] Financial Performance - Revenue from Mainland China for the first half of 2023 was RMB 825,034,000, up from RMB 743,183,000 in the same period of 2022[30] - For the six months ended June 30, 2023, the company's revenue from contracts with customers was RMB 827.8 million, representing a 10.7% increase from RMB 748.1 million in the same period of 2022[69] - Revenue from hair transplant services for the six months ended June 30, 2023, was RMB 640.8 million, an increase of 15.9% year-on-year, accounting for 77.4% of total revenue[59] - The gross profit for the same period was RMB 467.6 million, with a gross profit margin of 56.5%, down from 64.2% in the previous year[69] - The Group reported a loss before income tax of RMB 256.4 million, compared to a profit of RMB 13.3 million in the prior year[69] - The Group recorded a net loss of RMB 7.4 million, compared to a loss of RMB 1.9 million in the same period of 2022, with losses from the sale of properties amounting to RMB 4.0 million[136] - For the six months ended June 30, 2023, the Group recorded a net loss of RMB226.2 million, a significant decrease from a net profit of RMB17.6 million in the same period of 2022, resulting in a net loss margin of 27.3% compared to a net profit margin of 2.4% in 2022[155] Patient Services and Experience - In February 2023, the company upgraded its pricing strategy to a fixed-price model, enhancing transparency and accommodating diverse patient needs, which is expected to improve conversion efficiency[6][8] - The introduction of the 6S service concept aims to enhance service quality across six areas, improving the overall customer experience[12][13] - The company aims to personalize medical services through the "one-on-one with good doctor" concept, emphasizing tailored care based on individual patient needs[16] - The introduction of 24-hour exclusive butler service and dynamic service process charts at some clinics aims to further enhance user experience[12][15] - The focus on personalized services and medical hair care is expected to drive growth in the customer base, particularly among younger demographics[26] - The Group aims to enhance customer service through a smart quality inspection system for online interactions, expected to significantly improve efficiency[130] Marketing and Brand Strategy - A refined marketing strategy focused on brand value enhancement was implemented, including partnerships with popular variety shows and outdoor advertising campaigns[25] - The "Hair Forest Community Program" was launched in collaboration with Xinhuanet to improve brand communication and user experience[26] - The Group is diversifying its business strategy by enhancing membership value and creating a contextual benefits platform to improve customer loyalty and acquisition channels[113] Research and Development - The establishment of the "Peking University People's Hospital & Yonghe Medical Joint Laboratory for Hair Health" aims to enhance product R&D and treatment solutions for hair loss diseases[24] - The Group collaborates with renowned academic institutions to enhance its diagnostic, therapeutic, and R&D capabilities[48] - The development of the Yonghe Smart Clinic project is ongoing, with plans for pilot validation of 3D model-aided hair transplant solutions[130] Operational Efficiency and Technology - The company has implemented a standardized process for doctor consultations, enhancing operational efficiency and service quality[39] - The company is actively promoting the use of new technologies such as data analytics and intelligent services to improve patient care and operational capabilities[47] - The Group has adopted new technologies, including data analysis and intelligent services, to improve operational efficiency and patient care[48] - The Group plans to launch phase 1 of the "Hefan" business system to enhance clinic reception services and improve operational efficiency[130] Expenses and Liabilities - Employee benefits expenses increased to RMB 399,747, up 33.4% from RMB 299,619 in the same period last year[32] - Promotion and marketing related expenses rose to RMB 345,161, reflecting a 43.1% increase compared to RMB 240,915 in the previous year[32] - The total expenses for the period amounted to RMB 1,046,497, a significant increase from RMB 777,551 in the same period last year[32] - Total liabilities increased to RMB 1,456.9 million from RMB 1,345.1 million in the previous year[69] - The Group's inventories as of June 30, 2023, were RMB 91.2 million, an increase from RMB 88.1 million at the end of 2022[102] Capital Expenditures and Financial Position - Capital expenditures for the six months ended June 30, 2023, were RMB107.6 million, an increase from RMB101.2 million in the same period of 2022, reflecting the Group's business expansion[182] - As of June 30, 2023, the Group had cash and cash equivalents and term deposits totaling RMB632.7 million, down from RMB978.0 million as of December 31, 2022, with no bank borrowings reported[165] - Lease liabilities amounted to RMB1,073.6 million as of June 30, 2023, slightly up from RMB1,035.6 million as of December 31, 2022[186]

Financial Performance - Revenue from customer contracts for the six months ended June 30, 2023, was RMB 827,807 thousand, an increase of 10.6% from RMB 748,137 thousand in the same period of 2022[2] - Gross profit for the six months ended June 30, 2023, was RMB 467,598 thousand, a decrease of 2.5% compared to RMB 480,496 thousand in the prior year[2] - Operating loss for the six months ended June 30, 2023, was RMB 225,132 thousand, significantly higher than the operating loss of RMB 23,421 thousand in the same period of 2022[2] - Net loss for the six months ended June 30, 2023, was RMB 226,191 thousand, compared to a profit of RMB 17,629 thousand in the same period of 2022[2] - Basic loss per share for the six months ended June 30, 2023, was RMB (0.44), a decline from RMB 0.03 in the same period of 2022[2] - Total expenses for the six months ended June 30, 2023, were RMB 1,046.5 million, compared to RMB 777.6 million in the same period of 2022[32] - The company reported a net loss of RMB 226.2 million for the six months ended June 30, 2023, compared to a net profit of RMB 17.6 million in the same period of 2022, resulting in a net loss margin of 27.3%[107] - The board has decided not to declare any interim dividend for the six months ended June 30, 2023[155] Revenue Breakdown - Revenue from hair transplant medical services was RMB 640,798 thousand, up 15.8% from RMB 553,144 thousand in the same period of 2022[9] - Revenue from medical maintenance services was RMB 171,684 thousand, down 8.5% from RMB 187,628 thousand in the same period of 2022[9] - The hair transplant business generated revenue of RMB 640.8 million, representing a 15.9% increase year-over-year, accounting for 77.4% of total revenue[53] - The medical maintenance service segment generated revenue of RMB 171,684 thousand, accounting for 20.7% of total revenue, with a gross profit margin of 45.1%[72] - Revenue from hair transplant medical services was RMB 640.8 million, up 15.9% from RMB 553.1 million in the same period of 2022, driven by a 34.6% increase in patient numbers[119] Operational Metrics - Employee benefits expenses amounted to RMB 399.7 million, while promotional and marketing expenses were RMB 345.2 million for the six months ended June 30, 2023[32] - As of June 30, 2023, the company employed 1,657 professionals, an increase of 38.3% from 1,198 in the same period of 2022, including 372 doctors and 1,167 nurses[62] - The number of patients receiving hair transplant surgeries increased by 34.6% year-on-year, reaching 28,304 patients in the first half of 2023[73] - The average spending per medical maintenance patient decreased to RMB 4,212 in the first half of 2023 from RMB 4,886 in the same period of 2022[75] Assets and Liabilities - Total equity as of June 30, 2023, was RMB 1,268,548 thousand, down from RMB 1,585,310 thousand as of December 31, 2022[3] - Cash and cash equivalents as of June 30, 2023, were RMB 632.7 million, down from RMB 978.0 million as of December 31, 2022, indicating a decrease in liquidity[108] - The group's total inventory as of June 30, 2023, was RMB 912 million, compared to RMB 881 million as of December 31, 2022[128] - The group reported trade and other payables of RMB 210.6 million as of June 30, 2023, compared to RMB 144.1 million as of December 31, 2022[144] Strategic Initiatives - The company introduced a new service model called "6S service concept" to enhance user experience and service quality[59] - The company has initiated a project called "Yonghe Appraisal Officer" to gather user feedback on service quality across various service stages[61] - The company aims to enhance the quality of hair medical services by personalizing and professionalizing medical solutions based on individual patient needs[61] - The company opened 9 new hair transplant clinics in second and third-tier cities, expanding its geographical coverage to regions like Ningxia and Qinghai[76] - The group aims to expand its network of hair transplant medical institutions to nearly 85 locations by the end of 2023, focusing on lower-tier cities and enhancing coverage in first and new first-tier cities[87] - The group plans to enhance its medical and health services by introducing a wider range of products and services under the Shiyunsun brand, aiming for a more customized hair health management service[87] Research and Development - The group has established a joint laboratory with Peking University People's Hospital to advance research and innovation in hair loss treatment[82] - The group is focusing on digital technology innovations to enhance operational efficiency and patient experience, including the development of AI-driven aesthetic assessment tools[85] - The company is advancing its intelligent clinic project, aiming to implement 3D model-assisted hair transplant design and AI-assisted hair loss detection algorithms[116] Market Outlook - The hair medical service market in China is projected to grow from RMB 18.4 billion in 2020 to RMB 138.1 billion by 2030, with a compound annual growth rate of 22.3%[66] - The group is implementing a refined marketing strategy targeting the growing female customer base and increasing awareness of hair health, resulting in enhanced brand influence and business growth[84] Corporate Governance - The company is committed to maintaining high standards of corporate governance to enhance shareholder value and transparency[156] - There were no significant events after the reporting period that could impact the group[159]