Core Viewpoint - Dongwu Securities initiates coverage on Meili Tianyuan Healthcare (02373) with a "Buy" rating, highlighting its unique "Double Beauty + Double Health" ecological model, proven acquisition integration capabilities, and excellent operational efficiency, which are expected to drive sustained industry leadership and significant growth [1] Group 1: Company Overview - Established in 1993, the company has developed a comprehensive beauty and health management service system covering traditional beauty, medical beauty, and sub-health assessment and intervention [2] - The company owns four major brands: Meili Tianyuan, Beili Shi, Xiuker, and Yanyuan, and has strengthened its industry position through acquisitions of Nairui'er and Siyuanli, forming a synergistic ecological closed loop [2] Group 2: Financial Performance - The company demonstrates strong growth resilience, with revenue increasing from 1.503 billion in 2020 to 2.572 billion in 2024, representing a compound annual growth rate (CAGR) of 11.3% [3] - In the first half of 2025, revenue accelerated to 1.459 billion, a year-on-year increase of 28.2% [3] - Net profit attributable to shareholders rose from 151 million in 2020 to 228 million in 2024, with a year-on-year growth of 34.9% in the first half of 2025, reaching 156 million [3] - Gross margin improved to 49.33% in the first half of 2025, while net margin optimized to 10.67%, reflecting effective cost control and a higher proportion of high-margin business [3] - The company commits to a dividend payout ratio of no less than 50% of net profit attributable to shareholders over the next three years, indicating strong dividend levels [3] Group 3: Industry Outlook - The traditional beauty, light medical beauty, and sub-health sectors are expected to see long-term growth, with market sizes projected to reach 640.2 billion, 415.7 billion, and 29 billion respectively by 2030 [4] - As young consumers increasingly prioritize standardized services and stable experiences, the competitive landscape is expected to consolidate further, benefiting leading companies [4] Group 4: Business Synergy and Growth Strategy - The company's core business model exhibits significant synergy, utilizing its extensive and trusted beauty services as a front-end traffic source to efficiently convert to higher-priced medical beauty and sub-health services, with cross-business conversion rate reaching 28.7% in 2024 [5] - The company employs a strategy of "directly operated stores as benchmarks, franchising for coverage," leading to rapid expansion of its store network, totaling 554 by the end of 2024 [5] - The company has a mature target selection system and post-acquisition digital integration capabilities, as evidenced by the significant improvement in net profit margin following the acquisition of Nairui'er, validating its strong integration and empowerment capabilities [5]

Investment Rating - The report assigns a "Buy" rating for the company, marking its first coverage [1]. Core Insights - The company is positioned as a leading player in the high-end beauty and health management sector, with a well-established "Double Beauty + Double Health" ecosystem that drives growth through both organic and external expansion [8][13]. - The company has demonstrated strong revenue growth, with total revenue projected to increase from 21.45 billion in 2023 to 45.78 billion by 2027, reflecting a compound annual growth rate (CAGR) of 11.3% from 2020 to 2024 [25]. - The net profit attributable to shareholders is expected to rise from 2.16 billion in 2023 to 5.18 billion by 2027, with significant year-on-year growth rates [1][25]. Summary by Relevant Sections Company Overview - The company, established in 1993, has evolved from a lifestyle beauty business to a comprehensive beauty and health management service provider, encompassing traditional beauty, medical beauty, and sub-health assessment services [8][13]. - It has developed four major brands: Meili Tianyuan, Beili Shi, Xiuker, and Yanyuan, and has strengthened its market position through acquisitions of Nai Rui Er and Si Yan Li [13][20]. Financial Analysis - The company's revenue has shown resilience, increasing from 15.03 billion in 2020 to 25.72 billion in 2024, with a notable 28.2% growth in the first half of 2025 [25][28]. - The gross profit margin has improved from 46.57% in 2020 to 49.33% in the first half of 2025, indicating effective cost control and a higher proportion of high-margin services [28][30]. Industry Insights - The beauty and health management market is expected to grow significantly, with the traditional beauty market projected to reach 640.2 billion by 2030, and the light medical beauty market expected to expand to 415.7 billion [40][44]. - The sub-health medical service market is identified as a high-potential area, with a projected market size of 290 billion by 2030, driven by increasing awareness and demand for preventive health services [48][51]. Competitive Advantages - The company's business model leverages strong synergies between its various service lines, enhancing customer conversion rates and operational efficiency [8][13]. - The management team possesses extensive experience in the beauty and health industry, which supports the company's strategic initiatives and operational execution [22][24].