Summary of the Conference Call for Xinyang Industry Overview - The medical aesthetics industry is characterized by a single-store profit margin of approximately 10% for mature institutions. Xinyang focuses on the anti-aging sector, reducing service product units (SPU), and targeting middle-class consumers with an average spending of over 2,000 yuan to meet annual anti-aging needs [2][4]. Key Points and Arguments - **Profitability Enhancement**: Xinyang aims to improve profitability through economies of scale and reduced customer acquisition costs. The user referral rate is increasing, which helps maintain low acquisition costs. Mature stores in first-tier cities have profit margins of about 10% to 15%, while stores in the ramp-up phase achieve around 10% net profit margin [2][6]. - **Supply Chain Strategy**: The company plans to increase its self-supply ratio from the current 15% to 30%-40% within the next three to four years, significantly lowering material costs. This is part of a broader strategy to enhance profit margins by controlling supply chain costs [7][8]. - **Store Expansion Plans**: Xinyang plans to open 50 stores by the end of 2025, primarily in first- and second-tier cities, with a focus on direct management and exploring a fully managed franchise model. By 2026, the company expects to open at least 30 more stores, bringing the total to over 80 [4][19]. - **Cost Structure**: In mature medical aesthetic institutions in first-tier cities, material costs account for about 45% of revenue, while labor costs (including doctors, nurses, and managers) range from 25% to 27%. Marketing costs stabilize around 10% after a year of operation [3][10]. - **Market Positioning**: Xinyang targets middle-class consumers with annual spending on aesthetic treatments between 10,000 to 20,000 yuan. The company aims to encourage 4 to 6 treatments per year to cover annual anti-aging needs [5][24]. - **Customer Retention and Product Strategy**: The company focuses on educating users about domestic products that offer similar quality at lower prices. This strategy is expected to help retain existing customers and attract new ones [12][24]. - **Profit Margin Goals**: Xinyang is confident in achieving a net profit margin of 20% in the long term, especially after increasing the self-supply ratio [24]. Additional Important Insights - **Challenges in Expansion**: The medical aesthetics industry faces challenges such as regional differences and reliance on high-quality store managers. Xinyang is addressing this through digital management to reduce dependence on high-salary managers [16][17]. - **Competitive Landscape**: The company believes its model is difficult to replicate due to its comprehensive system and established brand presence, which creates a flywheel effect for customer acquisition [18]. - **Performance in Second-Tier Cities**: Xinyang is testing its operational model in second-tier cities, with plans to open new stores and validate its approach based on experiences from first-tier cities [15][22]. - **Customer Spending Trends**: There has been a 20% increase in average spending per visit from existing customers in 2025, indicating a positive trend in customer engagement [23]. - **Future Strategic Focus**: The company will continue to prioritize offline chain operations, recognizing that the medical aesthetics sector requires a slower expansion pace compared to other industries like fast food [26]. This summary encapsulates the key insights and strategic directions discussed during the conference call, highlighting Xinyang's focus on profitability, supply chain management, and market positioning within the medical aesthetics industry.