Introduction to this report:
On July 20, 2022, Medical and Aesthetic International announced that it plans to continue to transfer+issue additional shares to companies owned by the Lafon family. If the Lafang family's shareholding ratio is expected to exceed 50%, it will take control of Medical America International, which is expected to broaden the business boundaries.
Key points of investment:
Investment advice: Maintain the 2022-24 EPS forecast of 0.33/0.38/0.43 yuan, the target price of 17.41 yuan, and maintain the increase in holdings rating.
It invests and plans to continue to increase its holdings of AIH.US (AIH.US) shares, and is expected to take the lead in holding. In July 2022, Lafangjia Chemical's wholly-owned subsidiary completed the subscription for 23.25% of the shares of AIH (AIH). On July 20, Medical and Aesthetic International announced again that it plans to continue to transfer 21.32 million shares to companies under the Lafang family and issue an additional 36.4 million shares. It is estimated that if both subscriptions are implemented, Lafang will hold more than 50% of the shares of Medical and Aesthetic International, with a total investment of about 3.7 yuan, which is expected to become the main holding.
Affected by the pandemic, Medical and Aesthetic International's performance bottomed out in 2021 and financial difficulties. With financial support from Lavon, it is expected to overcome difficulties. As the epidemic improves, profits are expected to recover as passenger flow recovers. In 2021, Medical and Aesthetic International took the initiative to restructure or shut down 7 institutions. At the same time, due to factors such as the continued disturbance of the epidemic and cost increases, revenue was -28.39% year on year to 646 million yuan, and profit side losses were 587 million yuan (of which 314 million yuan was impairment loss of non-current assets). As of the end of 21, current assets on account were only 96 million yuan. The profitability of medical and aesthetic institutions is greatly influenced by the flow of customers and the proportion of regular customers. Normally, mature medical and aesthetic institutions have a stable profit model, and the net profit margin can reach 10-15%. After undergoing strategic adjustments in 2021, Medical & Aesthetic International currently has a total of 15 organizations. Of these, 11 have been in operation for more than 3 years. It is expected that profitability will recover as the customer base recovers after the disturbances of the epidemic decrease.
The main business developed steadily, gradually expanding the brand matrix and optimizing the channel structure. The company's revenue in 2021 was 1.1 billion yuan, +12% year on year, mainly due to the increase in new brands and strong e-commerce channels. On the brand side, the original main brands Lafang and Yujie developed steadily, while the agency brand Riboxi and its own up-and-coming brand VNK increased by 84% and 316% respectively. On the channel side, the company actively expanded e-commerce channels. In 2021, e-commerce surged 51%, and its share increased to 30% +.
Risk warning: unsuccessful acquisition and delivery, repeated epidemics, high customer acquisition costs for medical and aesthetic institutions.