Core Viewpoint - The company is undergoing a strategic transformation from a traditional internet medical beauty platform to a more controllable and growth-oriented offline light medical beauty chain model, which has become its primary revenue source despite facing challenges in its traditional business [1][4][7]. 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. However, the stock price had increased over fivefold prior to the earnings announcement [1][3]. - The traditional information and reservation services segment generated revenue of 135 million RMB, down 35.6% year-on-year, while the aesthetic treatment services segment saw revenue of 144 million RMB, up 426.1% year-on-year, becoming the largest revenue contributor [4][5]. Strategic Transformation - The company is shifting from a "traffic broker" model to an "industry landlord" model, focusing on offline chain operations, which has led to a significant increase in revenue from light medical beauty services [6][7]. - The rapid growth of the offline chain business has largely offset the decline in traditional business, indicating a successful transition to a new growth engine [7][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 customer acquisition, operational efficiency, and service delivery [10][19]. - The company has built a large private traffic pool, allowing for lower customer acquisition costs compared to industry averages, which supports the expansion of its offline chain business [10][11]. Market Potential - The light medical beauty market in China 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% [26][29]. - As a leading player in the industry, the company is well-positioned to capitalize on this growth, with plans to expand its store count significantly in the coming years [29]. Future Outlook - The company is expected to achieve a positive cash flow from its 25 stores, indicating a clear path to profitability as it continues to scale its operations [24][25]. - The ongoing digital transformation and integration of AI technologies are anticipated to enhance operational efficiency and service quality, further solidifying the company's competitive edge [25][26].

Core Viewpoint - The article discusses the strategic transformation of the company, So-Young, from a traditional internet medical beauty platform to a chain of physical aesthetic clinics, highlighting the challenges and opportunities this shift presents [4][7][33]. Financial Performance - In Q2, So-Young reported total revenue of 379 million RMB, a year-on-year decline of 7.0%, with a net loss of 36 million RMB [2]. - The traditional information and reservation services segment generated revenue of 135 million RMB, down 35.6%, accounting for 35.7% of total revenue [5]. - In contrast, the aesthetic treatment services segment saw revenue of 144 million RMB, a significant increase of 426.1%, making it the largest revenue source at 38.1% of total revenue [5]. Strategic Transformation - The company is transitioning from a "traffic broker" model to an "industry landlord" model, focusing on offline aesthetic clinic chains, which is seen as a response to rising traffic costs and regulatory pressures [7][8]. - This transformation is characterized by a significant shift in revenue sources, with the offline aesthetic business rapidly growing and offsetting declines in traditional services [8]. Business Model and Competitive Advantage - So-Young's business model now integrates "platform + supply chain + stores," creating a comprehensive ecosystem that enhances customer acquisition and operational efficiency [12][23]. - The company has established a large private traffic pool, allowing for lower customer acquisition costs compared to industry averages [13][14]. - By controlling key supply chain elements and standardizing store operations, So-Young aims to achieve rapid and scalable expansion while maintaining service quality [15][16]. Market Potential - The light medical beauty market in China is projected to grow from 176 billion RMB in 2023 to over 250 billion RMB by 2025, with a compound annual growth rate exceeding 20% [30][31]. - As a leading player in the industry, So-Young is well-positioned to capitalize on this growth, supported by its strategic initiatives and market influence [32]. 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 [25][26]. - The successful establishment of a positive cash flow from its clinics indicates a promising path toward profitability as the business matures [27]. - The integration of AI and digital capabilities is expected to enhance operational efficiency and service quality, further solidifying So-Young's competitive edge [28][29].

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].