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.

Core Viewpoint - The company is optimistic about the growth potential of the Chinese medical beauty market, which currently has a penetration rate of less than 5%, compared to over 20% in mature markets like South Korea [1][2] Group 1: Business Transition - The company has shifted its business model from being a transaction intermediary to directly opening offline medical beauty stores, which may lead to competition with its existing clients [1][2] - The opening of offline stores has resulted in a significant conflict between new and old business lines, leading to a decline in the number of service providers subscribing to the platform [2] Group 2: Financial Performance - In the first half of 2025, the company's revenue was 676 million yuan, a decrease of 6.9% from 726 million yuan in the same period last year, with a net loss of 67.95 million yuan compared to a net loss of 600,000 yuan in the previous year [2] - The company's offline business has now surpassed its online business, becoming the largest source of revenue, with revenue from beauty treatment services reaching 144.4 million yuan, a year-on-year increase of 426.1% [3] Group 3: Future Plans - The company plans to open 50 offline stores nationwide this year, with a goal of achieving a thousand-store scale within 8 to 10 years [3] - Despite the challenges, the company believes that the growth of its chain business will offset the decline in traditional business in the long term [3]

Core Viewpoint - The company is undergoing a strategic transformation from a traditional internet medical beauty platform to a chain model focused on light medical aesthetics, which has become its primary revenue source despite facing challenges in its legacy business [1][7][8]. Financial Performance - In Q2, the company reported total revenue of 379 million RMB, a year-on-year decline of 7.0%, with a net loss of 36 million RMB [1]. - The traditional information and booking services segment generated revenue of 135 million RMB, down 35.6% year-on-year, accounting for 35.7% of total revenue [4][5]. - The light medical aesthetics business saw revenue reach 144 million RMB, a significant year-on-year increase of 426.1%, making it the largest revenue contributor at 38.1% of total revenue [5]. Strategic Transformation - The company is shifting from a "traffic broker" model to an "industry landlord" model, focusing on offline chain operations in the light medical aesthetics sector [7][8]. - This transformation is driven by the need to adapt to rising traffic costs and stricter regulations, allowing the company to tap into a more controllable and growth-oriented business model [7][8]. - The rapid growth of the offline chain business is offsetting the decline in traditional business, indicating a successful transition [8]. Business Model and Competitive Advantage - The company has established a comprehensive business model combining "platform + supply chain + stores," creating a closed-loop system that enhances operational efficiency and customer acquisition [10][11]. - The company has built a large private traffic pool, resulting in customer acquisition costs significantly lower than the industry average [11]. - The supply chain strategy includes exclusive rights to key products and deep collaboration with upstream manufacturers, enhancing product quality and efficiency [12]. Market Potential - The light medical aesthetics market is projected to grow from 176 billion RMB in 2023 to over 258 billion RMB by 2025, with a compound annual growth rate exceeding 20% [24][25]. - As a leading player in the industry, the company is well-positioned to capitalize on this growth, supported by its ongoing expansion of offline stores [24][26]. Future Outlook - The company aims to expand its store count significantly, with plans to reach 50 stores by the end of 2025 and a long-term goal of 1,000 stores within 8 to 10 years [20]. - The transition to a profitable cash flow model is evident, with 25 stores already achieving positive monthly operating cash flow [21]. - The integration of digital capabilities and AI technology is expected to enhance operational efficiency and support further expansion [22].