On August 24, 2023, Beauty Farm Medical and Health Industry Inc. ("Beauty Farm" or the "Company") (02373.HK) announced its unaudited financial results for the six months ended June 30, 2023. For the reporting period, the Company’s revenue was approximately RMB 1.037 billion, an increase of 41.2% year-over-year. Net profit was RMB 121 million, an increase of 510.2% year-over-year, exceeding the estimated increase of 400% stated in the Company’s Positive Profit Alert.

Beauty Farm achieved net profit of RMB121 million in the first half of 2023, compared with RMB 105 million in the first half of 2021. Adjusted net profit margin for the first half of 2023 increased by 5.8 percentage points year-over-year to 12.7%, which also represents a rebound close to the first half of 2021 levels. These outstanding results indicate a strong performance recovery. Beauty Farm is leading the industry with its robust growth momentum, further cementing the Company’s leading edge as “the first Chinese beauty salon to go public.”

Active member numbers surge as upscale consumption market rebounds

Owing to the Company’s thoughtful site selection and widespread store presence, Beauty Farm has established itself as the go-to choice for consumers seeking in-store beauty experiences. For the six months ended June 30, 2023, the Company achieved impressive customer acquisition results, expanding the number of active members served at Beauty Farm’s direct stores to 73,919, an increase of 21.3% year-over-year. Of these, new active members acquired during the reporting period increased by 54.3% year-over-year. The number of visits by active members at Beauty Farm’s direct stores exceeded 600,000, with 6.6 visits per active member and average spending per active member of over RMB 12,000 during the reporting period. In the meantime, over 70% of the Company’s active members, with membership dating back to 2019, made multiple purchases at Beauty Farm between 2020 and June 30, 2023, a testament to the high customer loyalty inspired by Beauty Farm’s products and services. These stellar results have been a key catalyst for the Company’s rapid growth.

The Company’s business expansion also rested on multiple policy measures unveiled during the first half of 2023 to boost consumption. At the end of July, the National Development and Reform Commission issued the Measures on Restoring and Expanding Consumption, proposing targeted measures on stabilizing bulk consumption, expanding service consumption, extending new forms of consumption, improving support facilities for consumption, and fostering a better consumption environment. Multiple follow-up consumption upgrade initiatives have been rolled out in stages. The 2022 China Consumer Market Development Report released by the Department of Market Operation and Consumption Promotion of the Ministry of Commerce shows that as Chinese society continues to upgrade consumption overall, the domestic consumer market is exhibiting new trends, including strong demand for upscale consumption and burgeoning demand for consumption related to healthcare and wellness. Driven by a combination of factors, including policy support, income structure optimization, and an increasingly favorable business environment, the Company’s key performance metrics have steadily ascended.

Business landscape expanded to 390 stores through diverse initiatives

Beauty Farm continues to solidify its market standing and broaden its customer roster by actively expanding its store network through mergers and acquisitions as well as strategic investments. As of June 30, 2023, the Company’s vast store network included 196 direct stores and 194 franchised stores. During the reporting period, the Company opened 8 new self-built direct stores, including 6 salons offering traditional beauty services, a medical aesthetics clinic in Hefei, and a Neology healthcare center in Changchun. While building the presence of its direct stores, the Company also expanded its franchisee network by adding 14 new franchised stores over the first half of 2023. With approximately 30 new self-built or franchised stores in the pipeline for the second half of 2023, the Company is on track to accelerate its business penetration across the cities where it operates.

In May 2023, the Company entered into a strategic cooperation agreement with Chengdu Youlan, fortifying its market position in Chengdu to capitalize on growing opportunities for expansion. In June 2023, the Company completed the acquisition of three franchised stores in Changsha to expand its local market reach. These entities have been consolidated into the Company’s financial statements. Going forward, as the Company proactively pursues mergers and acquisitions within the lifestyle and beauty sectors, it also seeks to augment its portfolio with top-notch health and wellness brands.

In addition to bolstering its business footprint through mergers and acquisitions, the Company is diligently driving internal product innovation. During the first half of 2023, the Company launched a nursing care program to address sleep disorders as well as a specialized women’s health initiative. With these ventures, Beauty Farm has enhanced its services to meet evolving market needs, catering to a wider customer demographic with a more diverse and sophisticated suite of offerings. Beauty Farm is committed to propelling sustainable development by fostering integrated growth across all business segments.