Hair transplant players are on the road to IPO.

文｜Don YutingCover Source |Visual China
It is the wish of most beauty lovers to have thick hair. In recent years, the problem of hair loss has attracted much attention, and related topics have frequently rushed to the Internet. At present, more than 250 million people in China are suffering from the problem of hair loss, and the proportion of hair loss before the age of 30 is as high as 84%. The demand potential for fixed hair and hair care has also been gradually stimulated, and the related downstream service companies have also grown. On June 29, Barley hair transplant Medical (Shenzhen) Group Co., Ltd. (hereinafter referred to as "Barley hair transplant" or company) formally submitted an A1 prospectus to the Hong Kong Stock Exchange to seek listing in Hong Kong, with CITIC Construction Investment International as the exclusive sponsor. According to the prospectus, the funds will be used mainly in four areas: continue to expand the company's operating network, continue to promote innovation in products and services, continue to invest in research and development, and promote the digital transformation of medical services. With regard to barley hair transplant, 36Kr Holdings has reported in detail that it is located in the middle and high-end hair diagnosis and treatment group, involving consultation and diagnosis, microneedle hair implantation, hair fixation and hair maintenance full-cycle hair diagnosis and treatment services, which is characterized by "microneedle hair implantation" technical services. According to the cautionary report, the company is the hair diagnosis and treatment service group with the highest market share in China's first-tier cities by revenue (5.2% in 2021). According to the prospectus, the company's total revenue in 2019, 2020 and 2021 was 747.2 million yuan, 764.4 million yuan and 1.021 billion yuan respectively, while the gross profit in the same period was 596.3 million yuan, 580.3 million yuan and 724 million yuan respectively, and the gross profit margin continued to exceed 70%. Hair diagnosis and treatment has grown rapidly in the past few years, and its market size has increased from 8.3 billion yuan in 2016 to 23.8 billion yuan in 2021, with a compound annual growth rate of 23.5%. It is expected to grow at a compound annual growth rate of 24.5%. It will reach 71.2 billion yuan by 2026. At present, China's hair transplant market is mainly hair follicle unit extraction ("FUE") hair transplant technology, which usually involves three steps, including the extraction of hair follicle units, the use of a 1.0mm to 1.5mm gem knife to make an incision on the scalp, and the use of tweezers to stretch the incision to implant plants. In 2006, microneedle hair transplant technology was introduced into China by Group founder Li Xingdong and has been continuously developed and upgraded. now, by using 0.6 to 1.0 mm implant pens, microneedle hair transplant can protect hair follicles, reduce wounds and speed up postoperative recovery. According to Li Xingdong's previous interview with 36Kr Holdings, at present, other institutions generally have less application in microneedle hair transplant technology, and barley microneedles have been popularized. Up to now, barley hair transplant has built a national network of hair transplant medical institutions, covering 33 medical institutions, and another 4 service institutions are under construction; in addition, the company has obtained the service license of Internet hospital for hair diagnosis and treatment in January 2022 to prepare for the follow-up realization of telemedicine service.Behind the barley hair transplant IPO is the rapid growth of China's hair transplant market.The high price of hair transplant, considerable gross profit margin and huge potential demand for hair transplant are the architects of this prosperous track. According to the cautionary report, it has increased from 6.2 billion yuan in 2016 to 17.3 billion yuan in 2021, with a compound annual growth rate of 22.8 percent. It is expected to grow at a compound annual growth rate of 22.1 percent, reaching 47 billion yuan by 2026. In addition, the market penetration rate of hair transplant services has increased from 0.14 percent in 2016 to 0.25 percent in 2021, and is expected to further reach 0.47 percent in 2026. In many ways, under the "stimulation", in recent years, various hair transplant players have stepped towards the road of IPO. In 2021, Yonghe Medical successfully landed on the Hong Kong Stock Exchange and listed on the Hong Kong Stock Exchange. now barley hair transplant has taken over the IPO baton, and the hair business is really fragrant. However, it is worth noting that behind the popularity of the industry, the actual net profit is not high. Some institutions have estimated that the average unit price of a hair transplant is 30,000 to 70,000-the price of a hair transplant starts at 10 yuan per unit, and the number of hair follicle units that need to be extracted for general hair transplant surgery is mostly in the thousands. The costs behind it include marketing expenses (15% mura 40%), personnel costs (20% muri 40%), rent, electricity and electricity (10%), and the final actual net profit is less than 10%. Why is the marketing cost so high? The reason is:First, hair transplant is similar to breast augmentation surgery.It is almost a "one-shot sale", users have no demand for repurchase, and have a lower desire to share, it is more difficult to build brand awareness, institutions need to constantly develop new sources of customers.Second, the lack of technological change in the industry, resulting in a low degree of differentiation, which leads to high delivery costs in terms of the source of customers and the effect of treatment.Third, the industry is a labor-intensive industry.Income can only be increased by increasing the number of doctors and nurses. In short, although the hair transplant business is "beautiful", it is still suffering and needs to be changed urgently. The chaos in the industry has also brought uncertainty to the healthy development of the track. It can not be ignored that there is also relatively fierce market competition in the industry at present. At present, there are mainly four types of players in the industry: first, the hair transplant departments of public hospitals such as Shanghai Changzheng Hospital and Southwest Hospital; second, the hair transplant departments of private medical and cosmetic institutions represented by Imel and Xido; third, local private non-chain hair transplant institutions represented by Hengbo; fourth, national private chain hair transplant institutions represented by Yonghe hair transplant, barley hair transplant, Biliansheng hair transplant and new life hair transplant. If it can be successfully listed, barley hair transplant may be able to expand faster with the help of capital to gain a greater competitive advantage.