Investment Rating - The report maintains a "Buy" rating for the company [1] Core Insights - The company achieved a net profit growth of over 35% year-on-year in H1 2025, driven by business structure optimization and scale effects [5] - The company expects H1 2025 revenue to be no less than 1.45 billion RMB, representing a growth of at least 27% year-on-year, with adjusted net profit expected to be no less than 175 million RMB, reflecting a growth of at least 33% [5] - The company's net profit margin for H1 2025 is projected at 11.7%, an increase of 0.6 percentage points compared to the same period last year [5] Summary by Sections Financial Performance - The company reported a significant increase in high-margin business revenue, leading to improved gross margins [5] - The net profit margin for the company is expected to continue rising due to scale effects [5] - The company anticipates a 10% year-on-year increase in internal customer traffic for H1 2025 [5] Business Segments - The beauty and health business is expected to see a net consumption growth of approximately 30% year-on-year, maintaining industry leadership [5] - The medical beauty segment is projected to grow over 10% in net consumption, with internal customer traffic also increasing by over 10% [5] - The sub-health medical services are expected to see a net consumption growth exceeding 100%, with internal net consumption growth over 50% [5] Future Projections - Revenue forecasts for 2025-2027 are set at 3 billion, 3.3 billion, and 3.6 billion RMB, representing year-on-year growth rates of 18%, 8%, and 9% respectively [7] - The projected net profit for the same period is 290 million, 340 million, and 390 million RMB, with growth rates of 28%, 17%, and 14% respectively [7] - The report indicates a price-to-earnings ratio (P/E) of 22X for 2025, 19X for 2026, and 17X for 2027 based on the closing price of 30.3 HKD on July 21, 2025 [5][9]

Summary of the Conference Call for 美丽田园 Company Overview - **Company**: 美丽田园 (Beautiful Pastoral) - **Industry**: Healthcare and Beauty Services Key Points and Arguments 1. Shareholder Structure and Investment - CPE has exited, stabilizing the shareholder structure and paving the way for long-term value release. New investors include long-term foreign healthcare funds and strategic investment funds [2][3][5] - The introduction of diverse investors enhances the capital ecosystem of the company, with a strong belief in the growth potential of the Chinese beauty and health industry [5][8] 2. Financial Performance and Growth - For the first five months of 2025, the company reported significant growth: - Membership revenue increased by over 20% - Sub-health medical services grew by over 50% - Beauty and health services rose by over 20% - Medical beauty services increased by 10% - Customer traffic grew by over 20% [2][12] - The company aims to achieve 3 billion in revenue and 320 million in adjusted net profit for 2025, with a target to improve adjusted net profit margin by at least 0.5 percentage points annually [4][19] 3. Capital Market Strategy - 美丽田园 has a three-year capital market plan: - A dividend mechanism distributing no less than 50% of annual net profit to shareholders, with the first dividend expected in August 2025 - Optimizing the shareholder structure to enhance liquidity and trading activity - Implementing a management equity incentive plan to align long-term interests with shareholders [2][6][19] 4. M&A Strategy - The company has extensive M&A experience, categorizing it into major acquisitions, regional leader acquisitions, and small zero-cost acquisitions. Plans include accelerating the acquisition of major and regional brands [4][15] - 美丽田园 has completed over 30 medium to large-scale acquisitions in the past decade, with ongoing negotiations for more than ten regional brands [15][20] 5. Integration of 奈瑞儿 - The integration of 奈瑞儿 is progressing well, focusing on traditional Chinese medicine-based smart beauty services. The average store revenue has reached 8 million, a 10% increase year-on-year, with a net profit margin exceeding 10% [2][10][11] - Future plans include creating a replicable health store model and expanding into the Yangtze River Delta region in 2026 [11] 6. Market Position and Future Outlook - The company is confident in meeting the criteria for inclusion in the Hong Kong Stock Connect, with a market capitalization expected to reach between 7 billion and 8 billion [13][18] - Management is committed to accelerating the integration of quality brands and exploring opportunities for skincare asset acquisitions or collaborations with international brands [4][13] 7. Challenges and Opportunities - Despite economic concerns, 美丽田园 is positioned to maintain over 10% growth in customer traffic and revenue through both organic growth and acquisitions [17] - The company is focused on optimizing efficiency through supply chain improvements, reducing rental costs, and enhancing employee productivity [17][22] 8. Investor Sentiment - New investors express high confidence in the company's fundamentals and recognize its undervalued market position, indicating a strong commitment to long-term growth [9][14] Additional Important Content - The company is actively working on enhancing its digital and supply chain capabilities, which have shown significant improvements in profitability and operational efficiency [21][22] - Ongoing challenges include optimizing underperforming stores and continuously improving employee capabilities [22]