Core Viewpoint - Saint Bella Group, the first publicly listed company in the global home care sector, has successfully delivered impressive performance despite macroeconomic pressures and declining birth rates, showcasing its resilience and growth potential [1] Group 1: Policy and Market Dynamics - The national childcare subsidy policy, announced in July, is expected to boost retail sales of consumer goods by approximately 0.14-0.2 percentage points, benefiting the maternal and infant industry [2] - The postpartum care and recovery industry in China is projected to grow to RMB 793 billion by 2025, with a compound annual growth rate (CAGR) of 20.4% from 2025 to 2030 [2] Group 2: Company Performance - In the first half of 2025, Saint Bella Group reported total revenue of RMB 5.23 billion, a year-on-year increase of 35.0%, with a net profit of RMB 3.27 billion, marking a significant turnaround [3] - The company expanded its operational scale, with entrusted management center revenues reaching RMB 730 million, a 160% increase year-on-year, and a total of 113 stores globally, adding 36 new stores in the first half of 2025 [3] Group 3: Operational Efficiency and Growth Strategy - Saint Bella operates three main business segments: maternity centers, home care services, and food products, with a focus on enhancing operational efficiency and customer satisfaction through a self-developed SaaS system and AI technology [4] - The customer referral rate increased to 40.2%, contributing to a reduction in marketing costs, with marketing expenses decreasing to 12.0% and management expenses to 22.1% [4] Group 4: Strategic Expansion and Future Outlook - The home care service segment saw a revenue increase of RMB 38.6 million, up 41.7% year-on-year, while the health food brand "Guanghetang" achieved a revenue growth of 10.6% with a gross margin of 72.4% [5] - Saint Bella is transitioning from a maternity center operator to a health management enterprise driven by data intelligence, aiming to meet the health needs of women and families throughout their life cycle [6]

Investment Rating - The report initiates coverage on Saint Bella with a "Buy" rating and a target price of HKD 9.76, corresponding to a 27X PE for 2026E [1][5][7]. Core Insights - Saint Bella is the largest postpartum care and recovery brand group in Asia and China, with 96 centers in 30 cities globally as of June 2025. The company is expected to achieve a revenue and adjusted net profit CAGR of 28% and 94% from 2025 to 2027, respectively [1][19]. - The company is positioned in a growth phase characterized by stable same-store growth and rapid expansion, leveraging its unique high-end service brand and standardized operational capabilities [1][19]. - The report highlights the company's strategy of horizontal global expansion and vertical integration into family care and women's health food sectors, aiming to enhance its full-cycle family care platform [1][3]. Summary by Sections Company Overview - Saint Bella recorded a revenue of RMB 798.67 million in 2024, with a year-on-year growth of 42.64%. The adjusted net profit for the same year is projected at RMB 120.69 million, marking a significant recovery from previous losses [11][19]. Competitive Advantages - The company has established a "brand-scale" positive cycle through a unique high-end service model, innovative supply chain management, and effective customer retention strategies. It holds a 1.2% market share, leading the industry [2][3]. - The operational model includes a light-asset approach with flexible leasing and a proprietary nursing team, enhancing service quality and operational efficiency [2][21]. Growth Strategy - Short to medium-term focus on domestic and international expansion, with a target of 267-316 centers in China. The company plans to utilize its established brand and operational model to penetrate international markets [3][19]. - Long-term vision includes transforming into a comprehensive family health management platform, with new business segments expected to grow at over 30% annually [3][19]. Financial Projections - The report forecasts adjusted net profits of RMB 1.21 billion, RMB 2.05 billion, and RMB 3.06 billion for 2025, 2026, and 2027, respectively, with corresponding adjusted EPS of RMB 0.19, RMB 0.33, and RMB 0.49 [5][11].

Core Viewpoint - Saint Bella is positioning itself as a leader in the postpartum care and recovery industry, aiming to become the "first global family quality care stock" through a differentiated business model and strong financial performance [1][4]. Group 1: Market Position - Saint Bella holds the top position in the postpartum care and recovery sector in Asia and China, with a market share of approximately 1.2% based on projected 2024 revenues [2]. - The company is recognized as the fastest-growing large-scale postpartum care and recovery group in China, leading the industry in revenue growth rates from 2022 to 2024 [2][7]. - Saint Bella is the first operator in the mainland to expand its postpartum care centers beyond China, establishing a global service network [3]. Group 2: Business Model - The company has developed a comprehensive service ecosystem that covers prenatal, postpartum, and family childcare, moving beyond the traditional single-service model [3]. - The business model consists of three stages: 1. Establishing a foundation of professional care with a tiered service design [3]. 2. Extending care services into home settings to meet ongoing needs after hospital discharge [3]. 3. Creating a health consumption ecosystem with high-end health food brands focused on women's nutrition [3]. Group 3: Financial Performance - Saint Bella's revenue has shown strong growth, with figures of 472 million, 560 million, and 799 million yuan from 2022 to 2024, reflecting a compound annual growth rate (CAGR) of 30.15% [7]. - The company has diversified its revenue streams, with nearly 30% of total income in 2024 coming from services outside postpartum care, indicating reduced reliance on a single business line [7]. - The gross profit has also expanded, with gross profits of 141 million, 205 million, and 270 million yuan from 2022 to 2024, achieving a CAGR of 38.42% [8]. - Adjusted net profits have doubled over two years, reaching 42.26 million yuan in 2024, with a year-on-year growth rate of 103.43% [8][12]. Group 4: Strategic Outlook - Saint Bella's strategy of integrating professional care, home settings, and health consumption is redefining industry standards and creating competitive barriers [4]. - The company is expected to accelerate its global expansion, potentially becoming a representative of Chinese family care solutions on the world stage [12].

Financial Data and Key Metrics Changes - The company reported a 16.5% increase in adjusted EBITDA despite headwinds, with the first quarter typically being the lightest volume quarter of the year [16][30] - Average visits per clinic per day reached a record high of 31.4, with a strong finish in March at 33.2 visits per clinic per day [6][31] - The net rate for the first quarter was $105.66, an increase of $2.29 per visit compared to the previous year, despite a 2.9% Medicare rate cut [32][34] Business Line Data and Key Metrics Changes - Physical therapy revenues increased by 16.4% year-over-year to $156.4 million, driven by higher net rates and acquisitions [35] - The injury prevention (IIP) segment saw a revenue increase of 28.8% year-over-year, with gross profit up 13.1% [38] - The physical therapy margin was reported at 16.3%, down from 17.9% in the previous year, but above 20% in March [37] Market Data and Key Metrics Changes - Workers' compensation as a percentage of revenue increased from 10% in the first quarter of last year to 10.9% this year, the highest since 2020 [34] - The company lost approximately 26,000 visits due to weather impacts in the first quarter, with significant losses in January and February [31][48] Company Strategy and Development Direction - The company is focused on increasing reimbursement rates through contract negotiations and expanding its workers' compensation business [33] - There is an emphasis on acquisitions, with the Metro acquisition contributing significantly to revenue growth [35][21] - The company is exploring home care capabilities, which are seen as a growth opportunity due to patient demand and flexibility for clinicians [110][116] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about demand and the potential for recovery following weather-related disruptions [48] - The company is preparing for potential economic downturns, citing past experiences and a strong demand outlook [52][54] - Management is hopeful about updating guidance in the coming months as performance improves [27] Other Important Information - The company has a favorable debt position with $129.4 million in term loan debt at a rate of 4.7% and a $175 million revolving credit facility with only $28 million drawn [40] - The corporate office costs were 8.8% of net revenue, down from 9% in the previous year [38] Q&A Session Summary Question: What was the guiding volume inside the negative mature clinic revenue? - Management indicated that weather had a significant impact on mature clinic revenue, particularly in established markets like Nashville and Texas [47][50] Question: How has the business performed during past economic downturns? - Management noted that during the 2008-2009 recession, the company continued to grow and acquire facilities despite some negative impacts on same-store volume [52][54] Question: What are the drivers of IIP outperformance? - The IIP segment's growth is attributed to effective injury prevention strategies that reduce reported injuries and improve employee satisfaction [62][66] Question: What is the outlook for staffing during a potential recession? - Management stated that staffing availability could improve during a recession, but it is difficult to predict [56][57] Question: Can you provide more details on the commercial rate increases? - Commercial rates increased by over 3%, with workers' compensation rates also showing strong growth [88] Question: What are the expectations for same-store volume growth? - Management expects to see growth in same-store volume for the year, particularly after overcoming weather-related challenges [92] Question: What initiatives are in place to trim excess costs? - The company is actively reviewing its top partnerships to identify areas for improvement and cost control [101]