Can clearing out real estate and betting on medical beauty support Aoyuan Meigu’s “beauty business”?

Text: Hu Jiaqi Zhu Yun

ID: BMR2004

Aoyuan Meigu is divesting real estate and developing "beautiful business" "On the way.

On June 22, Aoyuan Meigu Technology Co., Ltd. (hereinafter referred to as "Aoyuan Meigu", 000615.SZ) announced that it planned to acquire property rights in Beijing through The company sold 100% equity of Jinghan Real Estate Group Co., Ltd., 100% equity of Beijing Yangjia Health Management Co., Ltd. and 35% equity of Penglai Hualu Jinghan Elderly Care Service Co., Ltd. held by the company through public listing and transfer on the exchange, and the transaction was The other party purchased it in cash. Aoyuan Meigu plans to use 1.02 billion yuan as the listing price for the transfer of the subject matter of this transaction.

Data show that in 2020, Aoyuan Meigu achieved operating income of 1.987 billion yuan, a year-on-year decrease of 37%; a net loss of 130 million yuan, a year-on-year decrease of 1,215%. Among them, real estate and related business income accounted for about 70%, and new chemical fiber materials accounted for about 20%. The medical and aesthetic business did not generate income. It can be seen from the above data that the real estate business still supports Aoyuan Meigu’s income.

Under the strategy of focusing on medical beauty and divesting real estate, Aoyuan Beauty Valley still needs to face performance pressure. After the real estate business is completely liquidated, can Aoyuan Beauty Valley's medical beauty business quickly generate profits? Can it support the normal operation of the company?

According to Wind stock, Aoyuan Meigu is suspected of having two abnormal financial indicators, namely: the company's operating cash flow in 2020 was negative 383 million yuan; the first in 2021 In terms of measuring the Z-score of corporate financial crisis in the quarter, Aoyuan Meigu’s Z-score is 1.717.

The Z-value analysis method is a method of measuring the risk of corporate bankruptcy. This method predicts that a company will go bankrupt when its Z-value is less than 1.20, and the Z-value is between 1.20 and 2.90. It is a "gray area". If Z is greater than 2.90, the company has no risk of bankruptcy.

Picture source: Wind stock

At the time of the comprehensive transformation of Aoyuan Meigu, the original controlling shareholder Tokyo Han Holdings Group Co., Ltd. (referred to as "Jinghan Holdings") is reducing its stake.

Clear out real estate and bet on medical beauty

In recent years, as the development of medical aesthetics in China has entered the "fast lane", many real estate companies have transformed into medical aesthetics, and Aoyuan Beauty Valley is one of them.

On June 22, Aoyuan Meigu announced that it planned to sell the company’s holdings through public listing and transfer on the Beijing Equity Exchange. 100% equity of Jinghan Real Estate Group Co., Ltd., 100% equity of Beijing Yangjia Health Management Co., Ltd. and 35% equity of Penglai Hualu Jinghan Elderly Care Service Co., Ltd.

Regarding Aoyuan’s divestment of real estate, in the opinion of Huang Lichong, co-founder of Xiezong Strategic Management Group, if Aoyuan Meigu can indeed successfully divest real estate, it will Selling shares can reduce liabilities, and at the same time reduce the possibility of the company going bankrupt or defaulting due to liabilities, and solve the problem of financial difficulties, but the subsequent results also need to be seen.

On June 15, Aoyuan Meigu also issued an announcement stating that in order to improve its sustainable development capabilities and effectively solve the problems of horizontal competition with its controlling shareholders, Aoyuan Beauty Valley safeguards the interests of shareholders and achieves strategic transformation focusing on the beauty and health industry. The company plans to sell all or part of its equity in the real estate business sector.

Public information shows that as of now, Aoyuan Beauty Valley’s main businesses are real estate, new chemical fiber materials and medical beauty business.

After the completion of this transaction, Aoyuan Meigu's main business will change from real estate business, medical beauty business and chemical fiber new material business to medical beauty business and chemical fiber new material business, and its main business income structure will undergo major changes.

Chen Sheng, president of the China Real Estate Data Research Institute, believes that Aoyuan Beauty Valley needs to be cautious in completely abandoning the industrial space and transforming into medical beauty industry, or it needs to consider combining the medical beauty industry and real estate space. In combination, it should be noted that it is the development of industrial space rather than the development of the industry itself. Only by helping the industry through industrial space can it be more sound and safer.

On the road to transformation

The "2020 Medical Beauty Industry White Paper" released by the professional medical beauty platform Gengmei APP shows that despite the impact of the epidemic, China's pure medical beauty market has reached 197.5 billion yuan, accounting for 17% of the world, and is expected to become the world's pure medical beauty market. The largest country in medical beauty.

CVSource data shows that in the first five months of 2021, funds invested in the medical beauty track have exceeded 500 million yuan. The annual financing scale of the medical beauty track in 2020 was 800 million yuan.

Although the medical beauty industry has a promising future, Aoyuan Beauty Valley, whose main business was real estate before, has only limited experience in this field and is under great pressure.

Hu Ran, President of Aoyuan Meigu, delivered a keynote speech at the CICC 2021 Second Half Investment Strategy Conference and said that the midstream of medical beauty is the strategic starting point for Aoyuan Meigu to enter medical beauty. It is also the key to layout. The field is highly fragmented and has varying profitability. In this regard, Aoyuan Beauty Valley firmly chooses the "big store model" with strong certainty. By acquiring high-quality regional leading medical aesthetic hospitals, it can achieve economies of scale and reduce the procurement costs of instruments, consumables and drugs; at the same time, it can extend the upstream and downstream industrial chain , forming brand and resource advantages and enhancing market concentration. In the future, Aoyuan Beauty Valley will also explore the "1+N model" of standardized chains of medical beauty institutions and establish a chain store of head equipment consumables + vertical light medical beauty brands.

On June 8, Guangzhou Ogilvy Industrial Investment Co., Ltd. (hereinafter referred to as "Guangzhou Ogilvy"), a subsidiary of Aoyuan Megu, planned to apply for a 418 million yuan merger and acquisition loan from the bank. , and this loan is mainly used for the merger and acquisition of Hangzhou Liantianmei Medical Cosmetology Hospital (hereinafter referred to as "Liantianmei").

According to an announcement issued by Aoyuan Meigu on March 18, the company plans to invest 697 million yuan to acquire 55% of the equity of Zhejiang Liantianmei held by Shengzhuang Medical Beauty. After the transaction is completed , Liantianmei will become a holding subsidiary of the company.

Headquartered in Hangzhou, Liantianmei is one of the earliest medical beauty companies in China and the founder of the first private medical beauty hospital in Zhejiang Province. Its affiliated hospitals have plastic surgery and beauty clinics. Main business departments include micro plastic surgery department, dermatology and cosmetic department, and dental and cosmetic department.

On the upstream side of medical beauty, Guangzhou Ogilvy, a wholly-owned subsidiary of Aoyuan Beauty Valley, and Guangzhou Jinan University Medical Biotechnology Research and Development Center, Guangzhou Jiyuan Biotechnology Co., Ltd. Signed the "Strategic Cooperation Agreement" to enter the collagen market and expand into the upstream product and consumables market.

Subsequently, Guangzhou Ogilvy and Mather signed a strategic cooperation agreement*** with South Korea's KD Medical Company to form a joint venture to exclusively represent Sanosuo laser instruments in China and develop medical-grade Postpartum repair emerging market segments; simultaneously promoting the sales license of injectable medical beauty products owned by KD. Medical in China.

Minsheng Securities report shows that KD.Medical was established in April 2016. It is a biotechnology company focusing on research and product sales in medical beauty-related fields, including In total, all categories in the four major categories of medical beauty technology (lipolysis products, radiofrequency medical beauty equipment, water light needles, single/bi-phase cross-linked sodium hyaluronate fillers for injection), 7 subdivisions Variety, the main products are AIR FEELING (injectable lipolysis products), AIR UP (facial lipolysis), AIR V UP S (lipolysis needles for other parts of the body except the face), AIR SONIC (radio frequency medical beauty equipment), AIR CELLING (kinetic water light injection), RHEA LUCLANE (salmon cell extract for injection, PDRN baby injection), SHINNEUS (single-phase cross-linked sodium hyaluronate filler for injection containing lidocaine), etc. Many of these products have been Obtain KFDA export formalities.

At the downstream end of medical aesthetics, Aoyuan Beauty Valley has achieved downstream positioning through cooperation with leading MCN institutions, which not only attracts traffic to medical aesthetics hospitals, but also stimulates more consumers. Demand for upstream products.

Regarding the progress of cooperation, Aoyuan Meigu said that whether it is the in-depth strategic integration and mergers and acquisitions of upstream Jiyuan Biotech, Musiyuan Medicine, KDM, and Guangna Hospital, Whether it is the acquisition of midstream medical beauty service institutions, or the theatrical situational layout of MCN, the leader in the downstream medical beauty segment, Aoyuan Beauty Valley is gradually advancing its implementation in accordance with the strategic layout.

Regarding the external environment, Aoyuan Beauty Valley needs to face mature competitors that have been developing for many years in the medical aesthetics industry, as well as challenges from new entrants.

Since May 2021, Suning Global, whose main business is real estate, Medi Technology, whose main business is in the medical IT field, as well as Zhendong Pharmaceutical, Teyi Pharmaceutical and other companies have expressed their desire to Entering the field of medical beauty.

In the view of independent economist Wang Chikun, medical beauty is a segmented emerging industry spurred by market demand. This track is in the ascendant and belongs to the growth stage. Industry consumption is growing rapidly. The industry market is in an incremental market, the industry threshold has been initially established, the industry competition is not very fierce, the market is in a seller's market, it has pricing power, and the industry's gross profit is also very high. While the competition landscape is not yet fierce, the medical beauty industry is generally in a blue ocean market and has repeatedly become the darling of capital.

The stock price rose 472.17%

The original controlling shareholder reduced its holdings

Wind stock data shows that as of June 23, 2021, the share price of Aoyuan Meigu has increased by 472.17% in the past 250 days. As the stock price rises, the company's original controlling stock, Tokyo Han Holdings, has reduced its holdings and cashed out.

Wang Chikun believes that under the flattery and support of capital, the medical beauty industry has been overheated and its valuation has been overvalued. According to past experience, all those who are hotly pursued by capital Sectors all have a callback process, and this callback process is the process of squeezing bubbles.

On May 19, Jianshui Tairong Enterprise, a person acting in concert with the original controlling shareholder of Aoyuan Meigu, Jinghan Holdings Group Co., Ltd. (referred to as "Jinghan Holdings") Management Co., Ltd., Beijing Heli Wantong Information Consulting Center (Limited Partnership), and Duan Yajuan plan to reduce their holdings by a centralized bidding method from June 10, 2021 to November 13, 2021, by a total of no more than approximately 15.62 million shares (accounting for the company’s total 2% of the share capital).

Regarding the reasons and impact of the transfer of shares by the original controlling shareholder, Liang Nan, an analyst at Zhugezhaofang Data Research Center, believes that on the one hand, Aoyuan Meigu has gradually begun to move towards medical beauty. layout, but the real estate business has always supported its development. In the process of adjusting the layout, the company will face certain transition risks. At the same time, the competitive pressure of the medical and aesthetic industry cannot be ignored, and future development will face certain challenges; on the other hand, shareholders will also reduce their holdings. It may be related to its own operating needs, and it needs to obtain a certain amount of cash flow by reducing its holdings of Aoyuan Meigu shares. Since Aoyuan Meigu is facing certain debt pressure, it needs to use financing to reduce operating pressure. At this time, shareholders' reduction in holdings will further increase the pressure on Aoyuan Meigu.

In fact, before October 2020, Aoyuan Meigu could not be regarded as a medical beauty company. According to the announcement, on October 26, 2020, Jinghan Co., Ltd. The announcement stated that the company name is planned to be changed to Aoyuan Meigu Technology Co., Ltd., and the securities abbreviation is changed to Aoyuan Meigu.

The controlling shareholder behind Aoyuan Meigu is China Aoyuan Group Co., Ltd. (hereinafter referred to as "Aoyuan Group").

In May 2020, the original controlling shareholder Jinghan Shares and Aoyuan Kexing signed an equity transfer agreement. Jinghan Shares transferred the 229 million shares it held to Shenzhen Aoyuan Kexing Investment Co., Ltd. (hereinafter referred to as "Aoyuan Kexing"), accounting for 29.3% of the total share capital of Jinghan Co., Ltd. After the above-mentioned equity transfer, Aoyuan Kexing became the largest shareholder of Jinghan Co., Ltd., and the actual controller changed from Tian Han, chairman of Jinghan Co., Ltd. to Guo Ziwen, chairman of Aoyuan Group.

Founded in 1996, Jinghan Co., Ltd. is a company listed on the main board of the Shenzhen Stock Exchange. Its main businesses are chemical fiber and real estate, and it focuses on the development of new materials, green fiber and other related industries. R&D and manufacturing.

In terms of new chemical fiber materials, Jinghan Co., Ltd. currently has an annual production capacity of 16,000 tons of viscose filament, 7,000 tons of cellophane, and 35,000 tons of chemical fiber pulp.

Based on Jinghan Chemical Fiber Technology, in April 2021, Aoyuan Meigu officially put into production a green fiber project with an annual output of 40,000 tons. It is understood that green fiber is the main raw material for facial mask paper in the upstream medical beauty industry chain.

Opportunities and risks coexist

In the trillion-dollar "appearance economy", medical beauty, as a new hot industry, has both opportunities and risks.

Although Aoyuan Beauty Valley is determined to transform, facing the innate real estate genes and the competition between pioneers and latecomers on the medical beauty track, there are still huge opportunities in front of it. challenges. Can Aoyuan Beauty Valley's transformation into medical beauty be successful? What are the opportunities and risks?

According to Lou Jun, a partner at Musheng Enterprise Management Consulting Firm and a visiting scholar at New York University's Stern School of Business, if you get a good investment target, you may succeed. Of course, this depends on luck and the general trend of the industry.

What is a good target? Lou Jun believes that a good team, good industrial resources, and good strategic ideas belong to the category of good targets.

Lou Jun suggested that success in an industry must rely on core competitiveness. Core competitiveness comes from deep cultivation of the industry. This rule will never go out of style. As for whether real estate companies can support their performance after transformation, Lou Jun believes that if there are good investment targets, it is possible to quickly form performance, but this kind of performance is not the fundamentals of the company, and investors who value long-term value do not need to care too much.

The transformation of real estate companies into medical aesthetics also means that the company's overall organizational structure has changed. As for how real estate companies should organize and manage after transforming into medical aesthetics, in the face of industry trends, How will Aoyuan Meigu seize opportunities and develop?

In this regard, Lou Jun believes that this is a big problem. First understand the industry, then set a strategy, then build an organizational structure, and then look for high-quality talents in the industry, but Every step here is a filter, which will filter out speculators who are not sincere in developing the industry.

It is understood that the upstream of the medical aesthetics industry chain is mainly medical device manufacturers and consumables dealers; the midstream is mainly plastic surgery clinics, plastic surgery hospitals, and beauty salons; the downstream is mainly medical aesthetics. Guest guide platform. The terminal is mainly a consumer.

iiMedia Consulting data shows that in China, medical beauty institutions are mainly divided into two categories: public hospitals and private institutions. Private institutions include large chain hospitals and small and medium-sized private plastic surgery institutions. There are three subcategories: hospitals and small private clinics. Data shows that in 2019, the number of medical beauty shops in China exceeded 1.4 million, and there were about 13,000 institutions with medical beauty qualifications. The problem of "black institutions" in the medical beauty industry is still serious, and it is estimated that more than 80,000 medical beauty shops operate illegally.

It can be seen that the track that Aoyuan Meigu enters from the midstream of medical beauty is also the most competitive area. Aoyuan Meigu should also pay attention to improving itself while making mergers and acquisitions. core competitiveness.

She suggested that Aoyuan Meigu can explore a complete set of paradigms, standardize the previously scattered business formats, and determine pricing and publicity. down, and then drive other stores in surrounding areas and even across the country to improve comprehensively. In addition, a unified outpatient operation and management system can also be adopted. For this point, you can refer to oral care. From the perspective of development speed, medical aesthetics is faster than dental care, but with the standardization and standardization of development, oral care is better than medical care.

Bai Wenxi, Vice Chairman of the China Enterprise Capital Alliance, suggested that the profitability of the medical aesthetics business lies in the medical aesthetics services themselves on the one hand, and in the medical aesthetics rehabilitation and aesthetics services on the other. Serving the financial business of medical beauty, etc. The company's transformation needs to fully study the development status, competitive landscape and future trends of the industry it intends to enter, select the right focus and entry strategy, and combine its own resources and capabilities to quickly form business scale and industry competitiveness, and build an industrial moat for development out of its own core competitiveness.