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.