Business Overview - Yonghe Medical Group is a leading medical group in China specializing in hair-related healthcare services, offering a one-stop service model that includes hair transplant and medical hair care [16]. - The company has successfully established Svenson Medical Hair Care Centers in mainland China under a "shop-in-shop" model after acquiring Svenson's mainland business [19]. - Yonghe Medical Group expanded its footprint by acquiring the Hong Kong business of Nu/Hart Hair, a renowned hair transplant service provider from the U.S. [19]. - The company collaborates with prestigious universities like Sun Yat-sen University to enhance its research and development capabilities in the hair-related healthcare sector [20]. - Yonghe Medical Group has achieved industry-leading operational capabilities, enabling effective cost control and improved profitability through a standardized and scalable business model [20]. - The company is actively promoting the adoption of new technologies, including data usage and analysis, intelligent services, and online services to enhance patient care and operational efficiency [20]. - The Group's strategic initiatives are expected to reinforce its industry-leading position and sustain growth momentum in the future [20]. - The company has built a comprehensive one-stop medical hair care service system to meet diverse patient needs [17]. - Yonghe Medical Group's commitment to innovation and collaboration is aimed at driving advancements in the hair-related healthcare industry [19]. - The company continues to focus on improving its diagnostic and therapeutic capabilities through partnerships with experts from Class IIIA hospitals [20]. Financial Performance - For the six months ended June 30, 2022, Yonghe Medical Group recorded revenue of RMB 748.1 million, a decrease from RMB 1,053.4 million in the same period of 2021, representing a decline of approximately 29% [32]. - The gross profit for the same period was RMB 480.5 million, with a gross profit margin of 64.2%, down from 73.6% in 2021 [32][41]. - Net profit for the six months ended June 30, 2022, was RMB 17.6 million, compared to RMB 40.4 million in 2021, indicating a decline of approximately 56.5% [32]. - The revenue from hair transplant services amounted to RMB 553.1 million, accounting for 73.9% of total revenue, with 21,021 patients undergoing hair transplant surgery during the period [48][49]. - Medical hair care services generated revenue of RMB 187.6 million, representing 25.1% of total revenue, with a gross profit margin of 25.1% [45]. - Total assets as of June 30, 2022, were RMB 3,132.6 million, a slight decrease from RMB 3,199.3 million as of December 31, 2021 [32]. - Total equity increased to RMB 1,807.6 million from RMB 1,698.3 million in the previous year, reflecting a growth of approximately 6.4% [32]. - Cash and cash equivalents decreased to RMB 1,398.2 million from RMB 1,566.2 million, indicating a decline of about 10.7% [32]. - The Group's total revenue for the six months ended June 30, 2022, was RMB 748.1 million, a decrease of 29.0% compared to RMB 1,053.4 million for the same period in 2021 [97]. - Revenue from hair transplant services was RMB 553.1 million for the six months ended June 30, 2022, down from RMB 789.5 million in the same period of 2021 [103]. - Revenue from medical hair care services was RMB 187.6 million for the six months ended June 30, 2022, compared to RMB 254.2 million in the same period of 2021 [104]. Operational Metrics - As of June 30, 2022, Yonghe Medical Group operated 57 clinics across 56 cities in China, an increase from 52 clinics in the previous year [38][40]. - The number of patients who received hair transplant services decreased to 21,021 in the six months ended June 30, 2022, down from 29,480 in the same period of 2021, representing a decline of approximately 28.5% [51]. - Average spending per hair transplant patient was RMB 26,314 in 2022, slightly down from RMB 26,782 in 2021, indicating a decrease of about 1.7% [51]. - Revenue from medical hair care services amounted to RMB 187.6 million, accounting for 25.1% of total revenue, with a total of 38,440 patients receiving these services, down from 52,633 in 2021, a decline of approximately 27% [52][53]. - The average spending per medical hair care patient increased to RMB 4,886, compared to RMB 4,829 in 2021, reflecting a growth of about 1.2% [55]. - The repurchase rate for medical hair care services improved to 25.5% from 22.2% in the previous year, indicating enhanced customer loyalty [55]. - The company opened three new Yonghe Hair Transplant clinics and two Svenson clinics during the reporting period, contributing to a total of 57 clinics, up from 52 in 2021 [57][61]. - The number of mature-stage clinics increased to 34 in 2022, up from 24 in 2021, while newly-established clinics decreased to 6 from 11 [61]. - The professional medical team expanded to 1,198 members as of June 30, 2022, enhancing the company's service capabilities [66]. - The company implemented a physician consultation system across all clinics, aiming to improve service quality and patient trust [62][64]. - A new hierarchical diagnosis and treatment system for hair transplant physicians was introduced, focusing on evaluating physicians based on academic skills and clinical experience [65]. Market Trends and Future Plans - The hair-related healthcare service market in China was valued at RMB 18.4 billion in 2020 and is projected to grow to RMB 138.1 billion by 2030, with a CAGR of 22.3% [72][76]. - The total number of patients receiving treatments in the first half of 2022 reached 58,988, indicating a growing demand for alopecia treatment and medical hair care services [72][76]. - The company plans to have nearly 70 hair transplant clinics in China by the end of 2022, expanding its geographical coverage and presence in tier-one and new tier-one cities [77][79]. - Nine stand-alone Svenson medical hair care centers were completed in the first half of 2022, with two already in operation and four more under construction, aimed at increasing market share [78][80]. - The company has developed an integrated consultation management system to enhance physician efficiency and digital diagnosis capabilities [70][73]. - The first phase of smart hair loss area measuring software was completed, improving patient consultation experience through photo-based measurements [70][73]. - The patient referral rate has continued to increase, reflecting enhanced brand reputation and customer satisfaction [71]. - The company is focusing on a marketing strategy targeting the rapidly growing female customer base and younger demographics suffering from hair loss [71]. - COVID-19 pandemic measures led to temporary suspensions or limitations in operations for over 30 clinics, impacting revenue during the first half of 2022 [74][75]. - The company aims to leverage its market-leading position and established brand recognition to capture opportunities in the fast-growing hair-related healthcare market [72][76]. Corporate Governance and Compliance - The Audit Committee consists of two independent non-executive Directors and one non-executive Director, with Mr. Chan Peng Kuan as the chairman [159][160]. - The Audit Committee's main duties include reviewing financial information, risk management, internal control systems, and the effectiveness of the internal audit function [160]. - The Company has confirmed compliance with the Model Code for securities transactions during the six months ended June 30, 2022 [156]. - The Company has applied all applicable principles and code provisions of the CG Code except for the deviation from provision C.2.1, where the roles of Chairman and CEO are held by the same individual [157]. - The Board comprises three executive Directors, one non-executive Director, and three independent non-executive Directors, ensuring a strong independent element in its composition [157]. - The Company regularly reviews its corporate governance practices to ensure compliance with the CG Code [157]. - The unaudited consolidated financial statements for the six months ended June 30, 2022, have been reviewed and agreed upon by the independent auditors [161]. - The Company is committed to achieving high standards of corporate governance to safeguard shareholder interests and enhance corporate value [157]. Shareholder Information - As of June 30, 2022, Mr. Zhang Yu holds 161,531,916 shares, representing approximately 30.65% of the issued share capital [179]. - Mr. Zhang Hui has an interest in 24,000,000 shares, accounting for approximately 4.55% of the issued share capital [179]. - Ms. Han Zhimei is deemed to be interested in 12,000,000 shares, which is approximately 2.28% of the issued share capital [179]. - The total number of shares issued as of June 30, 2022, is 527,080,416 [180]. - Ms. Han's shareholding percentage in Shanghai Zhizhen decreased to 28.57% as of September 1, 2022, resulting in her no longer being deemed to have an interest in shares held by Zhirui [181]. - As of June 30, 2022, ZY Investment Capital Ltd holds 161,531,916 shares, representing approximately 30.65% of the issued share capital [184]. - Yonghe Hair Service Holdings Limited owns 91,866,668 shares, accounting for about 17.43% of the issued share capital [184]. - Panmao (Shanghai) Investment Centre holds 183,733,336 shares, which is approximately 34.86% of the issued share capital [184]. - CPEChina Fund II, L.P. and CPEChina Fund IIA, L.P. jointly control CYH Cosmetic Medical Investment Limited, which is approximately 86.3% and 13.7% owned respectively [196]. - CITIC Securities Company Limited owns 35% of CITIC Private Equity Funds Management Co., Ltd., which is the general partner of Panmao Shanghai [195]. - The total number of issued shares as of June 30, 2022, is 527,080,416 [188]. - Frandor Limited is a nominee shareholder for The ZY Trust and The ZH Trust, holding 185,531,916 shares [197]. - The shareholding percentages are calculated based on the total issued shares as of June 30, 2022 [188]. - The interests of substantial shareholders include both beneficial ownership and interests in controlled corporations [190]. - The company has a complex ownership structure involving multiple layers of partnerships and trusts [196]. Capital Expenditure and Utilization - Total proceeds utilization amounts to HK$1,526.2 million, with 101.6 million utilized as of June 30, 2022, and 1,424.6 million remaining unutilized [167]. - HK$642.6 million (42.1%) of the proceeds is allocated to expand and upgrade existing hair transplant clinics in China, expected to be completed by December 2025 [167]. - HK$267.1 million (17.5%) is designated for innovations in product and service offerings, also targeted for completion by December 2025 [167]. - Investment in research and development is set at HK$148.0 million (9.7%), with a completion timeline by December 2025 [167]. - HK$357.1 million (23.4%) is allocated for integrating industry resources to enhance brand awareness in China, with no specific timeline [167]. - The outstanding balance of the acquisition consideration for Nu/Hart Hair has been fully settled, with HK$24.4 million (1.6%) previously allocated for this purpose [168]. - HK$87.0 million (5.7%) is reserved for working capital and general corporate purposes, with HK$50.4 million utilized and HK$36.6 million remaining [167]. - The Group incurred capital expenditures of RMB101.2 million for the six months ended June 30, 2022, an increase from RMB93.5 million for the same period in 2021, driven by business expansion [140]. Compliance with Contractual Arrangements - The Group has adopted measures to ensure effective operation and compliance with the Contractual Arrangements, including annual reviews by the Board [198]. - The Company will disclose the overall performance and compliance with the Contractual Arrangements in its annual and interim reports [198]. - The Group entered into contractual arrangements with Beijing Xunyi and Registered Shareholders to gain effective control over the businesses operated by VIE Entities [198]. - The Board confirmed that there is no unwinding of the Contractual Arrangements or failure to unwind when the restrictions are removed [200].
雍禾医疗(02279) - 2022 - 中期财报