Investment Rating - The report initiates coverage with an OUTPERFORM rating for the company, with a target price of $10.10, compared to the current price of $5.87 [3][4]. Core Insights - The company is positioned in the burgeoning light medical aesthetics industry in China, benefiting from increasing consumer demand for beauty and anti-aging solutions, a diverse range of upstream products, and improving industry standards and transparency [4][5]. - Despite a significant stock price increase of 487% since mid-June, the company is expected to continue its upward trajectory due to rapid expansion and substantial growth potential [4][6]. Company Overview - The company, So-Young (SY US), is a leading medical aesthetics service group in China and the first online medical aesthetics service platform listed on NASDAQ, established in 2013 [10]. - As of January 2024, the platform has onboarded 57,464 certified institutions and 43,771 physicians, with over 630 million beauty diaries and 210 million downloads [10][11]. Market Overview - The light medical aesthetics market in China is projected to grow at a CAGR of 16.3%, reaching RMB 339 billion by 2030, driven by increased consumer awareness and a diverse product supply [5][32]. - The market remains highly fragmented, with a significant opportunity for chain institutions to increase their penetration due to the standardized nature of light medical aesthetics projects [5][41]. Competitive Advantages - The company aims to address industry pain points such as information asymmetry and high customer acquisition costs through its supply chain advantages and digital marketing capabilities [6][47]. - The rapid expansion of the company's clinics, from 1 in May 2023 to 32 by mid-2025, showcases its strong execution capabilities and ambition to reach 1,000 clinics in the next 7-8 years [6][58]. Financial Analysis and Forecast - Revenue is projected to grow from RMB 1.47 billion in 2024 to RMB 2.68 billion in 2026, with a significant increase in net profit expected in 2026 [3][4]. - The company’s traditional POP business is expected to stabilize, contributing positive cash flow, while the medical aesthetics segment is anticipated to become a new growth driver [7][12]. Valuation and Recommendations - The report employs a segmented valuation approach, assigning different P/E ratios to various business segments, resulting in a target price of $10.10 [7][4]. - The company is expected to maintain a competitive edge through its cost-effective operations and strong digital capabilities, with a projected net profit margin improvement to 20% in the future [7][78].

Summary of the Conference Call for Xinyang Company Overview - Xinyang operates in the medical aesthetics industry, primarily through an online platform that charges information service fees and commissions to medical beauty institutions. The company was founded in 2013 and went public on NASDAQ in 2019. [3][2] Key Business Developments - Xinyang acquired Wuhan Qizhi Laser for 790 million RMB to expand its photonic equipment business and is also the agent for Dongbang's hyaluronic acid products from South Korea, with a quarterly shipment of 28,000 units, a 14% year-on-year increase. [2][3] - The core business, Xinyang Youth Clinics, has opened 31 locations and plans to expand to 50 by 2025, focusing on first-tier cities. [2][5] Financial Performance - Expected revenue for 2025 is between 1.5 billion to 1.6 billion RMB, with contributions from various segments: Top business (500-600 million RMB), chain business (600 million RMB), and upstream business (300 million RMB). [3][12] - The average monthly revenue for mature clinics is 4.5 to 5 million RMB, while growing clinics average around 3 million RMB. [6][7] Customer Insights - Target customers are women aged 25-45, with the highest spending power in the 30-35 age range. The repurchase rate is approximately 60-65%. [9][10] - Average customer spending is 2,000 RMB for new customers and 2,500 RMB for returning customers. [8] Marketing and Customer Acquisition - Xinyang's customer acquisition cost is significantly lower than industry averages, with costs around 700 RMB per customer compared to 2,000-3,000 RMB for competitors. [10][22] - The company utilizes a mix of referral programs, private domain conversions, and social media advertising to attract new customers. [10][11] Operational Efficiency - The cost structure includes marketing expenses (15%), consumable costs (49-50%), personnel costs (12%), and rent/utilities (10-15%). [6][20] - The company has a strong focus on light medical aesthetics, which facilitates replication and expansion. [8] Product Development and Innovation - Xinyang plans to launch proprietary products such as the "童颜针" (youthful needle) and silk protein to enhance cost-effectiveness and competitiveness. [3][13] - New products are designed to improve user experience and reduce costs, with a focus on maintaining a competitive edge in pricing and efficacy. [14][22] Store Expansion Strategy - The company plans to open 50 stores by the end of 2025, with a mix of direct and franchise operations. [17][18] - The payback period for stores is estimated at around six months for positive cash flow and one year for breakeven. [19] Competitive Landscape - Xinyang's business model is unique in the market, with few direct competitors. Similar models exist, but they differ significantly in scale and operations. [28] Conclusion - Xinyang is positioned for growth in the medical aesthetics sector, with a solid expansion plan, innovative product offerings, and a strong customer acquisition strategy. The company aims to leverage its unique business model to maintain a competitive advantage in the industry. [2][3][28]