Core Viewpoint - The beauty business, particularly in the medical aesthetics sector, is facing significant challenges, as evidenced by the declining performance of major players like Aimeike, which reported substantial drops in revenue and profit in the first half of 2025 [1][6]. Financial Performance - Aimeike's revenue for the first half of 2025 was 1.299 billion yuan, a year-on-year decrease of 21.59% [1] - The net profit attributable to shareholders was 789 million yuan, down 29.57% year-on-year [1] - The net profit after deducting non-recurring items was 722 million yuan, a decline of 33.7% [1] - Operating cash flow net amount was 655 million yuan, a significant drop of 43.06% [1] - In Q2 alone, revenue fell by 25.11% and net profit dropped by 41.75% year-on-year [1] Inventory and Receivables - Aimeike's accounts receivable reached a historical high of 213 million yuan by the end of June, an increase of 26.79% from the end of the previous year [1][5] - Inventory also hit a record high of 82 million yuan by the end of June [3] - The simultaneous rise in accounts receivable and inventory indicates challenges in product sales and suggests that the company's performance has not yet bottomed out [5] Industry Context - The entire medical aesthetics industry is experiencing a downturn, with competitors like Huaxi Biological also reporting significant declines, including a 58.13% drop in net profit in Q1 [6] Strategic Acquisitions - Aimeike announced the acquisition of 85% of South Korean REGEN for $190 million, aiming to expand its product offerings with "童颜针" (youthful needle) products [7][8] - REGEN is recognized for its AestheFill and PowerFill products, which are expected to complement Aimeike's existing product matrix [8] Legal Challenges - Following the acquisition, REGEN faced legal issues with a previous distributor, 达透医疗, which is seeking 1.6 billion yuan in damages due to alleged breaches of contract [11][13] - If the arbitration favors 达透医疗, Aimeike's cash reserves could drop below 1.5 billion yuan [13] Research and Development - Despite the declining performance, Aimeike increased its R&D investment to 1.566 billion yuan, a year-on-year increase of 24.47%, marking a record high for the period [14] - Ongoing projects include traditional medical aesthetic products as well as new weight loss and hair regeneration products [15] Market Expansion Efforts - In response to the industry's downturn, Aimeike is actively seeking to expand into new markets [16]