So Young IPO: the Winner in Such a Rocketed Market
COVID-19 and China
So Young officially lands on Nasdaq. Photo: Credit to So Young.

At 9:30 pm EST on May 2, So Young International Inc (新氧), a Chinese online platform for searching and purchasing aesthetic surgery services, will issue 13 million shares on the Nasdaq under the ticker symbol SY, at a price of USD 13.80 per share. Each 13 ADS is equivalent to 10 shares of Class A common stock. In the case that the underwriters did not exercise the over-allotment option, the total amount of funds raised was approximately USD 179.4 million. According to the issue price, So Young's market value is USD 1.38 billion.

Launched in 2013, So Young has grown to be the most popular online platform for searching and purchasing aesthetic surgery services in China today, and to be the first listed company in this field.

Rapid growth in 9 quarters in such a rocketed market

In the past 9 quarters, So Young’s revenue has maintained a sustained high growth rate. According to the prospectus, its annual revenue increased from CNY 49 million (USD 7.28 million) in 2016 to CNY 259 million (USD 38.46 million) in 2017, with a substantial increase of 428.2% year-on-year. And its annual revenue reached CNY 617 million (USD 91.63 million) in 2018, with a increase of 138% year-on-year.

So Young’s revenue is from information service and reservation service. In 2018, information service contributed CNY 415 million (USD 60.38 million), accounting for 67.26% among the total revenue, while reservation service contributed CNY 202 million (USD 29.40 million).

So Young started to make profit in 2017, when its net profit reached CNY 17 million (USD 2.52 million), while its loss reached CNY 81.04 million (USD 12.04 million) in 2016. In 2018, it achieved a net profit of CNY 55.08 million (USD 8.18 million), with a substantial increase of 223.5% year-on-year.

In 2019 Q1, its revenue reached CNY 206 million (USD 30.59 million), with an increase of 81.8% year-on-year. The net profit of this quarter was CNY 45.9 million (USD 6.82 million), with an increase of 49.9% year-on-year, according to So Young.

So Young is benefited from the large and rapidly growing of medical aesthetic service industry in China. According to Frost & Sullivan, the total revenues of the medical aesthetic services industry reached CNY 121.7 billion (USD 17.7 billion) in 2018, representing a CAGR of 23.6% from 2014. The total revenues of this industry are expected to reach CNY 360.1 billion (USD 52.4 billion) by 2023, with an accelerated CAGR of 24.2% from 2018 to 2023.

With such growth rate, China has become one of the fastest growing medical aesthetic service markets in the world, ranked the second in terms of market size in 2017, and is poised to become the largest market in the world by 2021. In particular, non-surgical medical aesthetic procedures enjoy a higher-than-market expected growth rate, a CAGR of 26.3% from 2018 to 2023, as they can reach a larger group of consumers thanks to the less risky and painful processes and shorter recovery time.

The business development of So Young

When founded in 2013, So Young was just a content online community focused on the topic of plastic surgery at first. Users share their cosmetic experience, evaluation, diaries and cases on this platform, and this content promotes the aesthetic surgery services consumption indeed. In 2014, So Young launched e-commerce business to build connection with offline beauty hospitals, introduce their services and purchase services online.

Today, So Young’s business mainly consists of three parts: original content related to aesthetic surgery, socialized community and service reservation online. In addition, it provides various services to encourage and stimulate users to consume aesthetic surgery services, including medical beauty encyclopedia, live video, drug source traceability, doctor qualification inquiry, e-commerce transaction, financial services, etc.

So Young has built connection with nearly 6,000 consumer medical service providers and covered more than 300 cities in China. The number of monthly active users (MAU) of its App increased from 1.08 million in 2018 Q1 to 1.93 million in 2019 Q1, with an increase of 78.7%. The number of paying users also increased from 68,900 in 2018 Q1 to 127,300 in 2019 Q1, with an increase of 84.9%, according to So Young.

Before IPO, So Young had 6 series funding with total amount of around USD 150 million. The main investors includes Tencent, MatrixPartners China, Apax Partners, CDH Investments, Trustbridge Partners, etc.

Under the O2O business model and e-commerce platform, the medical aesthetic service market in China grows rapidly, in which the platform makes contribution a lot. However, this market is different from others. JIN Xing (金星), the CEO of So Young, said in an interview:

The e-commerce platforms such as Taobao and have massive traffic and millions of users. What they need to do is to continuously expand categories, and to pursue the conversion rate of traffic. But in the medical aesthetic service market, the threshold of consumption decisions is higher, so So Young aims to provide personalized and best service for each of our user.

Before So Young, there is no such a listed company to combine the internet and consumer medical service. MU An (慕安), the group director and general manager of Beaucare Clinics (联合丽格), said that:

With the feature of non-standardized, medical information platforms need to provide richer and more professional content to assist consumers in making decisions, especially in the consumer medical service market.

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