Beauty Farm Announces 2023 Annual Results

Revenue and Net Profit Reached Record High Acquisition of Naturade, China’s Second-Largest Market Share Brand


(March 26, 2024, Hong Kong) Beauty Farm Medical and Health Industry Inc. (“Beauty Farm” or the “Company”) (02373.HK), one of the largest beauty and wellness service providers in China, together with its subsidiaries, the “Group,” is pleased to announce the Group’s audited annual results for the year December 31, 2023 (the "Reporting Period").


Performance Highlights:

  • Revenue reached RMB 2,145.1 million, representing a YOY increase of 31.2%;
  • Net profit surged to RMB 230.1 million, reflecting YOY growth of 108.2%. Net profit margin increased to 10.7%, a 4.0 percentage-point increase from 2022;
  • Cash and cash equivalents amounted to RMB 1,574.2 million, increasing by 72.9% YoY. The Board of Directors proposed a dividend distribution of HKD 110.8 million for the year ended December 31, 2023, with a dividend per share of HKD 0.47;
  • Acquired Naturade, the second-largest beauty brand by market share in China.  


2023 marked the first year of Beauty Farm's public listing. The Group delivered an impressive performance this year, achieving record-breaking results in both revenue and profit. As of December 31, 2023, the Company's annual revenue reached RMB 2,145.1 million, representing remarkable growth of 31.2% year-on-year. Net profit amounted to RMB 230.1 million, soaring by 108.2% compared to the previous year. Adjusted net profit increased to RMB 241.0 million, an increase of 53.2% year-on-year. The Group’s store count officially surpassed 400, covering over 100 cities.


Amidst a challenging macroeconomic environment, the Group successfully achieved simultaneous growth in revenue and profit, outperforming industry benchmarks. This exceptional performance can be attributed to the Company's distinctive "Dual-Beauty" business model, which has empowered Beauty Farm to demonstrate remarkable resilience amid economic cycles and fluctuations.


Beauty Farm maintains a growth strategy of "Internal growth + External expansion through acquisitions." On March 26, 2024, the Company announced its acquisition of the core assets of Naturade Health Technology Company Limited (“Naturade”). Naturade is the second-largest beauty brand in China in terms of market share. Upon completion of the acquisition, Beauty Farm’s active member base and its market share in the beauty industry will expand, reinforcing the Group’s solid foundation for future growth across its "Tri-Beauty Model.” This acquisition will serve as another robust engine driving the Company's performance growth.


Beauty Farm has always been committed to creating value for its shareholders. As such, the board of directors has proposed a final dividend of HKD 110.8 million (RMB 100.0 million) for the year ended December 31, 2023, with a dividend per share of HKD 0.47. This dividend distribution reflects the Group's willingness to share the benefits of its business development with shareholders and its gratitude for their continuous support.


The "Dual-Beauty Model" Effect Shines Through as High-Margin Business Revenue Accelerates Rapidly

During the reporting period, the cornerstone businesses of the Company's "Dual-Beauty" model, Beauty and Wellness Services (formerly traditional beauty services), demonstrated steady growth. With the continuous expansion of the Company's brand influence, diversification of services, and improved integrated marketing capabilities, the Company’s active member count continued to grow in 2023. Beauty and Wellness Services’ total revenue increased to RMB 1,193.7 million, representing a year-on-year increase of 26.1%.


On the other hand, as the conversion rate of customers from Beauty and Wellness Services to value-added services continues to improve, there has been accelerated growth in revenue from value-added services. Through continuous innovation and the provision of unique and high-quality aesthetic medical services, the Company has achieved breakthroughs in Aesthetic Medical Services, its second growth curve. Revenue from Aesthetic Medical Services in 2023 amounted to RMB 850.3 million, representing growth of 37.1% year-on-year. Aesthetic Medical Services has become another powerful engine driving the growth of the Group's revenue and profit.


The revenue of the Company's Subhealth Medical Services segment (formerly subhealth assessment and intervention services) in 2023 amounted to RMB 101.0 million, representing remarkable growth of 47.6% year-on-year. This can be attributed to the Company's commitment to deeply understanding customer needs and continuously introducing innovative Subhealth Medical Services, which has effectively driven an increase in member numbers. For example, the Company accurately identified the demand-side gap in the women's gynecological anti-aging market, and, in response, developed the "Women's Special Care Center" business and successfully integrated this business into its national outpatient system. Revenue from the "Women's Special Care Center" business increased by more than 200% year-on-year in 2023. 


Driven by its unique "Dual-Beauty" business model, the Company’s economies of scale have expanded and the proportion of high-margin business revenue continues to increase, leading to a new peak in profitability. In 2023, Beauty Farm's gross profit margin rose to 45.6%, up 1.7 percentage points from the previous year. Net profit margin grew to 10.7%, representing a 4-percentage-point increase compared to 2022.


Rapid Growth in High-Quality Active Members Drives Record-Breaking Performance

High-quality member growth is the primary driver of business expansion, and Beauty Farm has consistently focused on establishing long-term relationships with customers as a fundamental business strategy. In 2023, the Company achieved dual growth in both the "Quantity" and "Quality" of its members.


Beauty Farm welcomed 1.26 million customers in 2023, representing a 33.1% year-on-year increase. Through improved service quality and continuous product innovation, a greater number of customers were converted into active members throughout the year. The number of active members in Direct stores reached 94,000 in 2023, an increase of 19.6% year-on-year. The quality of active members of Direct stores also continued to improve, reflected by their strong purchasing power and brand loyalty. The average annual spending per member in 2023 was RMB 21,000, a net increase of RMB 2,109 compared to 2022. Average annual visits per active member amounted to 10.6 in 2023, representing a 1.1 increase compared to the previous year. Over the last 12 months, the active member repurchase rate reached a remarkable 84.3%.


Under its innovative "Tri-Beauty" business model, the Company continues to transform beauty and wellness members into customers of high-margin value-added services. The proportion of beauty and wellness members purchasing or consuming aesthetic medical services or subhealth medical services increased from 23.7% in 2022 to 25.0% in 2023.


Acquisition of Naturade Bolsters Market Leadership, Industry Consolidation Elevates Company's Leading Position in Market Share

The Company continues to pursue investment and acquisitions as a key strategy for business expansion, driving horizontal consolidation in the beauty and healthcare services industry, expanding its member base, and enhancing member value through value-added services.


In 2023, the Company increased its market share in various regions through investments in and acquisitions of leading regional brands. For instance, in May 2023, Beauty Farm strategically invested in Chengdu Youlan. In August 2023, Beauty Farm completed the acquisition of Hangzhou YanSpa stores, further enhancing the Company’s revenue scale and brand influence across Hangzhou. Furthermore, the Group augmented its direct store presence with the June 2023 acquisition of its own Changsha franchisee, officially adding Changsha to the growing roster of cities covered by the Group’s direct stores.


Excitingly, in March 2024, Beauty Farm announced the acquisition of 88 high-quality stores from Naturade, including 80 beauty and healthcare service stores, six aesthetic medical clinics, and two Chinese medicine outpatient clinics. The revenue scale of these core stores reached an impressive RMB 514 million in 2023. 


The Naturade acquisition will greatly increase the Group’s market share in the beauty and wellness industry. According to a Frost & Sullivan industry report, the Beauty Farm and Naturade brands are the largest and second-largest providers of traditional beauty services in China, respectively, as measured by revenue in 2021. It will also increase the Group’s profitability through membership base expansion and “Tri-Beauty Model” synergies as it will significantly boost the number of the Group’s active members. Going forward, the Group will apply its unique “Tri-Beauty” business model to this enlarged member base, expanding the Group’s revenue and profit scale. Furthermore, integration of Naturade’s stores will extend the Group’s regional coverage. The Group already possesses leading regional influence and competitive barriers in 23 directly operated cities, including Shanghai and Beijing. With Naturade’s deep roots and store presence in Guangzhou and Shenzhen, this acquisition will solidify the Group’s strategic layout of Tri-Beauty businesses in the Greater Bay Area. In addition, Naturade’s unique products and services, grounded in traditional Chinese medicine and Eastern beauty and healthcare concepts, will complement those offered by the Group under the Beauty Farm brand, empowering the Group to more comprehensively meet evolving consumer demands and market trends.


The Group will continue to adhere to the its “customer-centric” philosophy and maximize our its “dual-beauty” model’s advantages, actively embracing industry dynamics and challenges as we diligently pursuing long-term sustainable growth. As always, we remains dedicated to fostering mutual prosperity and creating value for our its customers, shareholders, employees, and the wider society to achieve mutual benefits for all.


About Beauty Farm

Beauty Farm Medical and Health Industry Inc. is a leading beauty and health management platform in China. Beauty Farm developed a unique business model in the past 30 years, the dual-beauty model, covering customer beauty and health needs along their lifetime cycle. We offer a diversified service matrix, including beauty and wellness brands Beauty Farm and Palaispa, aesthetic medical brand CellCare, and subhealth medical services brand Neology. Our nationwide store network reaches over 100 cities with over 400 stores and serves millions of mid-to-high-end customers in top-tier cities in China.


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Beauty Farm Medical and Health Industry Inc.

Vivian Lu

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