Core Viewpoint - The acquisition of Siyuanli by Meili Tianyuan is a strategic move that reflects the trend of industry consolidation driven by leading brands in the beauty sector, capitalizing on the growing demand in high-tier cities and the resilience of high-end consumer spending [1][2][3] Group 1: Acquisition Details - Meili Tianyuan announced a strategic acquisition of Siyuanli for 1.25 billion yuan, positioning Siyuanli as the third-largest beauty service brand in China with projected revenues of 850 million yuan in 2024 and a net profit of 81 million yuan [1][2] - Following the acquisition, Meili Tianyuan's store network will exceed 734 locations, increasing its direct membership base by 44% to over 200,000 [1][2] - This acquisition marks Meili Tianyuan's second major move in two years, having previously acquired the second-ranked brand, Nairui'er [1][2] Group 2: Market Context - The beauty service market in China is projected to reach 485 billion yuan in 2024, with first-tier and new first-tier cities contributing nearly 40% of the market share [2][3] - High-income households are concentrated in major cities, driving high consumer spending in the beauty industry, which aligns with Meili Tianyuan's strategic focus on high-value urban areas [2][3] Group 3: Strategic Rationale - The acquisition serves to strengthen Meili Tianyuan's competitive position in the high-end beauty sector while acquiring quality assets during a period of industry restructuring [3][4] - Siyuanli's revenue is primarily generated from first-tier and new first-tier cities, aligning closely with Meili Tianyuan's operational focus [3][4] Group 4: Financial Aspects - The acquisition of Siyuanli at a price corresponding to a price-to-earnings (P/E) ratio of 14.8 and a price-to-sales (P/S) ratio of 1.4 is significantly lower than Meili Tianyuan's P/E of 29.5 and the industry average of 23.3 [5][6] - The transaction structure includes a combination of cash, acquisition loans, and stock, allowing for a low-cost acquisition while ensuring financial stability for both parties [5][6] Group 5: Future Synergies - Meili Tianyuan's extensive experience in acquisitions and integration is expected to enhance Siyuanli's growth, as evidenced by previous successful integrations [9][10] - The acquisition will enable cross-selling opportunities and enhance operational efficiency through shared resources and customer bases [11][12] Group 6: Industry Trends - The beauty industry is undergoing significant consolidation, with a trend of larger companies acquiring smaller brands to enhance market share and operational capabilities [14][15] - The high customer acquisition costs in the beauty sector are being addressed through integrated business models that leverage multiple service offerings to improve customer retention and reduce marketing expenses [16][17]