Investment Rating - Industry rating is "Outperform" [1] Core Insights - The report focuses on the transformation of the medical beauty industry, particularly the evolution of the company "Xinyang" as a pioneering medical beauty e-commerce platform aimed at bridging information gaps in the sector [2][5] - The company faced challenges due to weakened demand and increased competition from internet platforms, leading to a significant decline in GMV (Gross Merchandise Volume) by 55.4% to 1.43 billion yuan in 2022 [2][16] - However, the company is exploring new avenues through supply chain integration and the establishment of "Xinyang Youth Clinics," which have shown promising growth in revenue [2][35] Summary by Sections Xinyang - The First Medical Beauty E-commerce Platform - Xinyang was founded in 2013 to address information asymmetry in the medical beauty market, achieving a monthly active user base of 8.5 million by 2021 [2][5] - The platform has attracted significant investment from top venture capital firms, with the founders and major shareholders holding a combined 58.9% stake as of February 2025 [2][7] Pressure and Adversity: Weak Demand and E-commerce Diversion - The company experienced a decline in performance due to offline consumption fatigue and increased competition from platforms like Meituan and Dazhongdianping, leading to a projected revenue drop to 1.47 billion yuan in 2024 [2][19] - The first quarter of 2025 saw a revenue decrease of 6.6% to 300 million yuan, with a net loss of 33 million yuan [2][22] Reversal and Breakthrough: Supply Chain and Service Exploration - Xinyang is expanding into the upstream medical device sector and has launched the "Xinyang Youth Clinics" brand, with 32 locations established across nine cities by July 2025 [2][35][38] - The revenue from treatment services reached 98.83 million yuan in Q1 2025, marking a year-on-year increase of 551.4% [2][35] Financial Performance - The company reported total cash of 1.02 billion yuan as of Q1 2025, with goodwill impairment risks cleared [2][26] - The revenue and profit trends indicate a challenging environment, with a projected revenue of 1.47 billion yuan in 2024 and a net loss of 590 million yuan [2][19][22] Supply Chain Developments - Xinyang has made strategic acquisitions and partnerships to enhance its supply chain, including a 790 million yuan acquisition of a laser company and exclusive distribution agreements for high-end hyaluronic acid products [2][32][33] Clinic Expansion and Service Offerings - The "Xinyang Youth Clinics" focus on light medical beauty services, with a strong emphasis on standardized service delivery and efficient management [2][41][44] - The clinics have demonstrated strong profitability metrics, with a monthly average revenue of nearly 5 million yuan and a profit margin of 17% [2][44]

Summary of the Conference Call on New Oxygen and the Medical Aesthetic Industry Industry Overview - The medical aesthetic industry experienced rapid growth from 2019 to 2022 but has faced challenges due to upstream price wars and weak downstream consumer demand in recent years. However, in 2025, there are signs of weak recovery with structural opportunities and innovative models emerging [2][4]. Company Insights - New Oxygen, a pioneer in the medical aesthetic e-commerce sector, once held an 86% market share in the medical aesthetic app market. The company was founded in 2013 and went public on NASDAQ in 2019 [2][4]. - The company has faced increased competition from internet platforms, leading to rising customer acquisition costs, which have negatively impacted revenue and profit [2][4]. Strategic Initiatives - New Oxygen is seeking to reverse its fortunes by expanding its supply chain and entering the downstream medical aesthetic institution operation sector. This includes acquiring companies like Qizhi Laser and becoming the exclusive agent for high-end products like Ellastin [1][5]. - As of mid-2025, New Oxygen has opened 32 stores under the New Oxygen Youth Clinic brand, generating total revenue of 170 million yuan [1][5]. Business Model and Performance - The New Oxygen Youth Clinic has a profitable model, with L Mall stores generating monthly revenues of 4 to 5 million yuan. The sales expense ratio is lower than traditional medical aesthetic clinics, resulting in a net profit margin superior to traditional retail [1][7]. - The clinic's customer retention is strong, with a 60% repurchase rate, a 50% referral rate, and 15% of traffic coming from organic sources [1][8]. Future Plans - New Oxygen plans to expand the number of clinics to 50 by the end of 2025, with 18 new stores expected to open in the second half of the year [1][8]. Quality Assurance and Transparency - New Oxygen ensures service quality and price transparency by tracing the qualifications of medical staff and maintaining a transparent pricing system. Prices for similar products in their clinics are at least 30% to 40% lower than market rates [1][10]. Standardization in the Industry - The medical aesthetic industry can achieve standardization, particularly in the light medical aesthetic sector, through a structured approach. New Oxygen employs a tiered management system for doctors and simplifies its product offerings to enhance standardization [11][12]. Challenges for Smaller Clinics - Smaller light medical aesthetic clinics face challenges such as traditional retail models, high customer acquisition costs, and difficulties in negotiating with suppliers. New Oxygen addresses these challenges by focusing on a light asset model and leveraging its established brand to drive traffic [14]. Conclusion - New Oxygen is positioned to capitalize on the recovery of the medical aesthetic industry through strategic expansions, a focus on quality and transparency, and a robust business model that leverages its brand equity and operational efficiencies [1][2][5][8][10].