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May 21, 2020 10:24 am · zhitongcaijing

Canaccord Genuity Remains a Buy on So-Young

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May 21, 2020 10:15 am · zhitongcaijing

So-Young Gets a Buy Rating from Needham

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May 18, 2020 11:57 pm ·

So-Young Reports Q1 2020 Results – Monthly Active Users Up 116.8%

► Information services are the most significant income, occupying 69% of the total. ► Marketing campaigns and user acquisition initiatives expenses increased a lot. On May 18, So-Young International (SY:NASDAQ) released its first-quarter financial report for 2020. The data shows that, as of March 31, 2020, its revenue was CNY 182.6 million (USD 25.68 million), exceeding the company’s expectations of CNY 160 million (USD 22.50 million) to CNY 180 million (USD 25.32 million). At the same time, it was higher than Bloomberg’s expectation of CNY 176 million (USD 24.75 million). The first quarter’s net loss increased year-on-year. The number was CNY 35.9 million (USD 5.05 million), compared with a net income of CNY 45.9 million (USD 6.46 million) in the same period for 2019. Users and medical service providers gathered more on this cosmetic surgery platform. Average mobile MAUs (Monthly Active Users) were 4.17 million, an increase of 116.8% from 1.92 million in the same period of 2019. The number of paying medical service providers on So-Young’s platform was 3,295, a year-on-year increase of 22.0%. The number of medical service providers subscribing to information services on So -Young was 1,862, representing a slight increase from 1,853 at the same time in 2019. Mr. Xing Jin, Co-Founder and Chief Executive Officer of So-Young, commented, “Our strategic focus on enhancing engagement expanded our vibrant community of users and medical aesthetic professionals. We are using a series of creative and incentivizing promotion plans, working more closely with medical aesthetic influencers to generate valuable content.” According to the report, information services are it’s most significant revenue resource, occupying 69% of the total, a decrease of 12% year-on-year. Another reservation service obtains 30.94% of the total, the total number of users purchasing reservation services was 77.5 thousand. Sales and marketing expenses increased by 45% year-on-year, consisting of 58.69% of total operating expenses. The increase was primarily due to the rise in costs associated with marketing campaigns and user acquisition initiatives. As for other parts of costs, they all increased due to personal related expenses and the hiring to support product development. According to iiMedia data (in Chinese), since 2015, the market scale of China’s medical cosmetology has been overgrowing. Now China has become the world's third-largest medical and beauty market. It is expected that by 2020, the scale of China’s cosmetology industry will reach 315 billion. Mr. Min Yu, Chief Financial Officer of So-Young said, “We believe that our strategic investments and expenditure in the first quarter will significantly improve the stickiness of our platform. Further, we wish to enhance the quality of our rich content portfolio and better leverage synergies created across our community. We are well-positioned to capitalize on a rebound in macroeconomic conditions, and the drivers of our long-term business growth remain very strong.”

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Mar 24, 2020 09:10 pm ·

So-Young Publishes 2019 Q4 Financial Report – Net Profits Up by 71.4%

On March 23, So-Young (SY:NASDAQ) published financial results for the fourth quarter of 2019. The report shows that, as of December 31, 2019, the company's fourth quarter total revenue was CNY 358.2 million (USD 50.51 million), an increase of 95.7% YoY; net profit was CNY 69.9 million (9.86 million), an increase of 71.4% YoY; non-GAAP net profit was CNY  86.4 million (USD 12.18 million), an increase of 86.5% YoY. So-Young was founded in 2013 and went public on May 2 in 2019, focusing on providing medical cosmetology and beauty related content. The home page displays the most popular medical aesthetic choices, including facial contouring, eyes, nose and mouth alterations. And users can share their experiences on medical aesthetics, most will put photos of  'before' the medical beauty program and 'after' it. Some doctors also introduce their own programs and share beauty information to attract users. Driven by these active medical service providers and beauty seekers on So-Young platform, this Internet platform is showing a strong performance. In the fourth quarter, So-Young's average number of active mobile monthly users was 3.67 million, a YoY increase of 120.1%; the total number of user purchases was 188,300, a YoY increase of 50.7%; subscribers to the information services increased from 1644 to 2138. As a result, the total value of the medical beauty transactions promoted in the fourth quarter was nearly CNY 1 billion (USD 140 million), a YoY increase of 66.6%. Mr. Jin Xing, Chairman and Chief Executive Officer of New Oxygen Technology said (in Chinese), "We have made several strategic adjustments to further strengthen our vibrant and growing community of medical beauty users and professionals. These measures have contributed to a 95.7% year-on-year increase in company revenue, exceeding our forecast limit." According to Deloitte's China medical cosmetology report (in Chinese), the size of the Chinese medical cosmetology market in 2017 reached CNY 192.5 billion (USD 27.14 billion), and it is expected to reach CNY 481 billion(USD 67.82 billion) in 2022. Huge market-driven service providers are stepping into this emerging market while some problems exist. For companies in 2017, channel marketing expenses accounted for more than 50% of the revenue, which squeezed profit margins. For users, safety is their first priority while medical accidents still happen and after-sales services need improving. According to statistics from the National Consumers Association, from 2015 to 2019, China's medical and aesthetic industry-related complaints increased by nearly 13 times, and in 2019, the medical and aesthetic industry complaints increased by 6,138, which is nearly 13 times the number of complaints in 2015. Industry regulations need to be stricter to protect consumers.

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Aug 29, 2019 08:01 pm ·

So-Young Publishes Q2 Results, Shares Plummet Nearly 20%

So-Young (新氧) (SY: NASDAQ) published Q2 results: the company could maintain its high margins after the IPO with 82.5% in Q2. The total number of paying users were 201,500, an increase of 118.8% from 92,100 in the second quarter of 2018, yet the number of paying medical service providers on So-Young’s platform was 3,157, an increase of 39.4% from 2,265 in the second quarter of 2018, that is a slower growth compere to the previous periods.   The company have not faced with a significant regulatory or branding crisis during the period, except one to two insignificant branding cases, and could expand its operational scope. The aggregate value of medical aesthetic treatment transactions facilitated by So-Young’s platform was CNY 892.9 million, an increase of 81.9% from CNY 491.0 million in the second quarter of 2018. The growth in operational capacity and surging paying users should not be regarded as an increasing market share of So-Young; instead, we are estimating that the market has been expanding during the period since parallel operational jumps observed in the company's competitors Gengmei (更美) and Yuemei, as well.  As expected, the company's most significant expenses are marketing-related, So-Young poured CNY 105 million into marketing; however, did not specify the details in the report.​​​​ The market size of China's Medical Aesthetic sector is set to reach CNY 481 billion in 2022, Deloitte estimates. 

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Jul 16, 2019 07:35 pm ·

Post So-Young: Medical Aesthetic Platform GengMei is Said to Seek US or HK IPO

GengMei (更美), China's largest medical aesthetic platform after So-Young (Nasdaq: SY), is going to go public in the US or HK within the Q4 of 2019, Chinese media speculated. As of May 2019, So-Young and GengMei are dominating China's entire medical aesthetic industry with 25 million and 15 million Monthly Active Users (MAU) respectively, according to the analytics from YiGuan (易观), yet another app intelligence platform of China. The company has denied the rumours claiming "GengMei is already a profit-generating company and we're not in a hurry to raise money from an IPO." "GengMei has not yet settled its underwriters, because the company is still a loss-making one, and not ready for being a publicly-traded company, So-Young's IPO is not a good example for the investors, as well." said the people who leaked the information for the Chinese media. "No foreign investment bank would be willing to pick up." the people speculated. Meanwhile, SoYoung stock plunged 9% amid information pollution of GengMei's IPO, proving the fact that the business models of China's medical aesthetic platforms are significantly vulnerable. On July 15, a local media named "Beijing News" (新京报) publicised that So-Young's platform has been promoting unlicensed products and that there are fake and fabricated comments promoted by the platform. The news sent the stock in So-Young more than 9% lower from around USD 16.9 to 15.1 USD per American depositary share, because the incident destroys the most fundamental value of the platform. In fact, the risks associated with the company's brand value was explicitly disclosed in So-Young's "Form F-1".  "We may be subject to consumer claims, regulatory or professional investigations and litigations regarding the medical information and services offered on our platform, which could materially and adversely affect our brand, reputation, and results of operations."  The medical aesthetic market is expected to grow 25% annually and be worth CNY 300 billion by 2020. What's more, China Association of Plastics and Aesthetics has revealed that it believes 70% of the country’s Botox and hyaluronic acid, a type of dermal filler, to be either counterfeit or smuggled into China illegally, The Paper reported. (Check out this article for in-depth analysis of China's medical aesthetic market) China's plastic surgery and the medical aesthetic industry is dominated by small and medium-sized enterprises, and users are bound to use the platforms, such as So-Young and GengMei to reach clear information. If the platform itself promotes false information, it would not be serving for its core values. However, these platforms' main revenue generation source is collecting service fees from the medical aesthetics clinics and exposure them for the public, which creates a massive conflict of interest in the business model of So-Young.

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Jun 2, 2019 05:55 pm ·

So-Young posts a 50% jump in net income, but where is the firm really heading?

On the evening of May 30, So-Young (新氧) announced the financial results for the first quarter of 2019 since the company went public on Nasdaq in May under "SY." Financial reports show a year of rapid expansion for one of China’s largest medial aesthetic players. Its profits jumped more than 50% from USD 4.3 million to USD 6.8 million, and operational expenses almost doubled, totalling USD 19.6 million.  So-Young is one of China's online marketplaces where consumers can discover, review, discuss and book medical aesthetic services. The company’s platform has logged 1.9 million MAU. (Find more about So-Young in this in-depth coverage) MAU and the number of partnership hospitals are the most significant indicators of a medical aesthetic platform's business prospects. So-Young has performed convincingly in this regard. For instance, So-Young has reported an increase of 78.7% in MAUs on mobile devices. With its nearly 2 million MAU, the company has surpassed its competitors in the number of users by a considerable margin. What's more, the Q1 report revealed that the total number of paying customers on So-Young reached 127,300 in the first quarter of this year, a year-on-year increase of 84.9%. Moreover, medical service providers subscribing to information services on So-Young’s platform numbered 1,853 in the first quarter of 2019. So-Young’s overall expansion in its operational capacity is a remarkable success for the company. This is because, as an intermediary between, medical aesthetic providers and consumers, the efficiency of the platform is tied to its overall penetration. Higher penetration creates a unique value proposition for the company. As of the fourth quarter of 2018, three platforms dominated the Chinese medical aesthetic market; they were So-Young, Gengmei (更美) and Yuemei (悦美). Amongst them, So-Young is the only one that has pulled off a US float, thanks to its number of orders, user traffic and penetration rate.  Despite a bright prospect, So-Young needs to be concerned about a few things. First, Gengmei, Yuemei and several others may be catching up, albeit slowly, and this is something that should have put So-Young’s management and investors on alert. Gengmei, Yuemei and several others may slowly be catching up, and it is the first thing to be closely followed by the So-Young investor. Second, one of So-Young's avenues of monetization is for medical service providers to pay “service fees” in return for getting better placements and thus visibility on the platform. This raises the possibility of creating a conflict of interest.  So-Young's business looks secure and stable as of the first quarter of 2019. However, it is important to remember that its business model is still not characterized by a high barrier to entry, and may contain risks from a regulatory and branding perspective. So while So-Young’s strong financial performance might have given its investors a cause for celebration, they’d better not take this temporary success story at its face value. The industry, let alone the company itself, is risky and merits closer scrutiny and due diligence investigation.

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Apr 9, 2019 07:37 am ·

To Be Listed in NASDAQ, So Young Files its Prospectus

April 9, 2019 /EqualOcean/ - So Young (新氧) handed in its prospectus and prepared to launch its IPO in Nasdaq Stock Market. In its prospectus, So Young (filed as So-Young International) applied to be listed under the symbol “SY”. Underwriters for So Young are Deutsche Bank Securities and CICC (China International Capital Corporate). Founded in 2013, So Young, a medical aesthetic service platform and community in China, closed series E financing in amount of USD 70 million in September 2018. It swiftly grew from a startup to current unicorn and started to prepare to be listed in Nasdaq. Founded nearly 6 years, So Young has become the largest medical cosmetology platform and consumption healthcare community. So Young has expanded into 300+ cities in China and collaborated with approximately 6,000 consumption healthcare institutes including dental clinics. Disclosed by its prospectus, So Young’s total revenue increased by 428.2% from CNY 49.1 million (USD 7.6 million) in 2016 to CNY 259.3 million (USD 39.3 million) in 2017, and further by 138.0% to CNY 617.2 million (USD 89.8 million) in 2018. The rapid growth in business and operation brought a significant increase in its gross profit. Its gross profit increased by 797.6% from CNY 23.9 million (USD 3.7 million) in 2016 to CNY 214.5 million (USD 32.5 million) in 2017, and further by 145.1% to CNY 525.7 million (USD 76.5 million) in 2018. Hence, the gross profit margin improved from 48.7% in 2016 to 82.7% in 2017 and further improved to 85.2% in 2018. The historical financial numbers indicate the success of So Young to transform its online customer traffic into real economic consumptions, which is a problem met by numerous online community operators. Medical aesthetic services industry in China is competitive and has numerous participants. The situation caused the customer acquisition costs (CAC) trending up and So Young’s appearance lowered the CAC and its community function helps to lower the entrance bar for consumers – authentic reviews based on real service can eliminate the worries toward the consumption healthcare service due to past information asymmetry. According to Frost and Sullivan, the So Young mobile app accounted for 84.1% of total daily user time spent on online medical aesthetic service mobile apps in 2018. The predominance of So Young in China’s market is unquestionable. Besides, the medical aesthetic service industry in China is yet to grow, compared with other East Asia countries like South Korea. The penetration rate of receiving medical aesthetic services in the female group aged from 18 to 40 in South Korea was 42% in 2018 while China was 7.4%. Comparing to the 2.3% penetration rate in three years ago, the growth is prominent, but the penetration is still far from expectation. Estimated total revenue of China’s consumption healthcare service industry was USD 81.6 billion and is expected to grow at a CAGR of 20.0% from 2018 to 2023. Meanwhile, the online medical aesthetic will expect a faster CAGR in its total revenue at 58.2.% from 2018 to 2023. The market seems to be full of opportunities, but So Young as the first one who enters the IPO process is facing myriad unknowns and risks. Along with the industry development, there might be more services and policies appear for a better consumption healthcare industry, and So Young will also be the first one to experience the changes and challenges.

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Feb 19, 2019 07:43 pm ·

SoYoung Rumored to Seek US IPO

SoYoung (Xinyang 新氧) provides information on cosmetic medicine and procedures and allows users to book with partner clinics. SoYoung is reportedly secretly preparing IPO on US stock exchanges as soon as in the first half of 2019. It is expected to raise around RMB 300 million (USD 4.4 million) in this IPO. The company was valued over RMB 10 billion (USD 1.5 billion) with its last series E round of funding, RMB 70 million (USD 1 million) in September 2018. The last fund was led by Orchid Asia, with participation from BOC International (中银国际), Matrix Partners China, and the Russia-China Investment Fund. It has completed its last 3 rounds of funding in the last 10 months. After its series E round of funding, it becomes a unicorn in the cosmetic and plastic industry. The company was founded in August 2013 in Beijing, China. By the end of 2018, SoYoung has more than 35 million users and more than 30 thousand cosmetic and plastic surgeons registered on its platform. In the beginning, it only has around 1000 seed users and contents were contributed by its founding members. Ending 2018, it partnered with more than 7000 clinics covering 351 cities. More than 40% of its partnered clinics were in the top ten cities in China, and most of them provide a whole range of services. According to the white paper published by SoYoung in 2018, the Chinese cosmetic and plastic surgery market size is expected to reach RMB 224.5 billion (USD 33 billion) and the growth potential in China is 6 times higher than that in the Korean market. Deloitte predicts that the compound annual growth rate will be around 20.1% from 2018 to 2022. Globally speaking, SoYoung’s biggest competitor is RealSelf.com, a US-based online community providing reviews, popularity rankings, and other general cosmetic and plastic surgery information. In 2017, SoYoung has the total number of visitors of 114 million surpassing RealSelf.com.

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Dec 27, 2018 05:42 pm ·

Marching into Japan, the Unsatisfied Need in Emerging Cosmetology Market

On December 24th, SoYoung(新氧) signed the strategic alliance agreement with YCISM(宜采) on building cosmetology channel to Japan for potential cosmetology customers. The former is the largest cosmetology community app and platform in the world, while the later is an experienced cosmetology agent to serve customers to go to Japan for cosmetic or plastic surgery. This is the first time SoYoung invest for oversea business and going-out might be a signal of the market rise. As introduced in another EqualOcean’s article, SoYoung is the first cosmetology unicorn entered series E and valued at USD 5.5 billion within less than five years. SoYoung is founded in 2013, and in 2016, its CEO claimed SoYoung had started to make a profit. In 2017, SoYoung’s app Xinyang and its official website’s total hit exceeded the then-largest cosmetology platform reaself.com, which is based in the U.S. In the latest cosmetology industry white book published by SoYoung, the market penetration boosted over 300% from 2015’s 2.4% to current 7.4% and the customer pool has enlarged to 20 million. Comparing to China’s neighbor, South Korea’s cosmetology market penetration of 42%, China’s market penetration is only 1/6 of its number, which implies the great potential of China’s cosmetology market. Along with the growing customer base, the major force is post-90s, which is 40.41% of the total. Besides, the post-00s cannot be ignored since they take 18.81% of the market. It is worth mention that most post-00s are underage, and those who accept cosmetology services may be considered as those who can legally receive cosmetology services. Hence, post-00s are the next major force in cosmetology customer base. With the growing customer base, the cosmetology institutes and facilities’ distribution is extremely imbalanced. From SoYoung’s investigation of 351 cities in China, the top 10 alpha cities own 53.7% of cosmetology practitioners while the rest 341 cities share less than half of the total cosmetology practitioners, but the customers are scattered in every city. Therefore, the next step is developing the cosmetology market outside those alpha cities like beta cities or abroad. Considering the cosmetology is still a young industry in China, the related talent pool is limited and culturing cosmetology practitioners will take years, but the demand for cosmetology services grows faster than culturing practitioners. Based on the conflict between demand and supply, SoYoung and YCISM’s strategic cooperation targets at the gap, which is also the chance for both. Japan is famed for its artisan spirit and meticulousness in techniques, and hence convey a sense of trustworthy and responsible, which are the most important characteristics to attract cosmetology customers. SoYoung has the oversea business but not the investment, and this is the first time SoYoung invested outside of China. Opening the channel to connect cosmetology markets from China and Japan through the agency is a curve way to march in the overseas market when SoYoung has little experience in oversea practice. YCISM is a company offering “Japan cosmetology service”, a one-stop cosmetology service solution. Cooperating with YCISM can save SoYoung from detouring in providing oversea cosmetology services through its platforms. The cooperation seems to satisfy the cosmetology service demand but going abroad for cosmetology services could only satisfy who can afford the long-distance trip. Going abroad is an option for those who preferred a more reputable and reliable while can afford for. The difference between the two markets might first bring challenges to SoYoung, in which most are from the policy side. But this is a chance for SoYoung to learn from doing cross-border business. For a special industry that is related to healthcare, the globalized market complicates the already-complicated cosmetology market. While expanding the overseas business, enterprises should always remember to protect customers’ benefits when the environment gets more complex.

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