The cost of childbearing is getting higher.

“Investors Network” Wu Wei

Recently, SAINT BELLA Inc. (hereinafter referred to as “Santa Bella”), the largest comprehensive home care brand in China, submitted a prospectus to be listed on the Hong Kong Stock Exchange.

Santa Bella started as a confinement center. Currently, it has multiple business lines such as confinement centers, home care, and functional food for women's health. Unlike traditional confinement centers, Santa Bella mainly follows the asset-light route. The company's confinement centers are mainly distributed in high-end hotels and single-family villas built by some companies. A media interview revealed that the price of some high-end services in central Santa Bella was as high as 0.7688 million yuan. In addition to the Santa Bella Center, Santa Bella has also launched the friendly brand Little Bella. The nightly service price of Little Bella is only half that of the Santa Bella Center.

Although Santa Bella has diversified its layout, by the end of 2023, the company's revenue scale was only 0.56 billion yuan, and between 2021 and 2023, the company had accumulated losses of more than 0.7 billion yuan. It should be pointed out that since its establishment, Santa Bella has been favored by many capitals such as Tencent and China Life Insurance. From 2018 to 2023, the company carried out 7 rounds of financing, and the cumulative financing amount exceeded 0.3 billion yuan, but from 2021 to 2023, the company's liquidity index still showed a clear decline.

Favored by institutions, can the Hong Kong stock listing improve Santa Bella's business conditions?

Growth is slowing

Santa Bella was founded by Xiang Hua in 2017, and the company's first confinement center was established in Hangzhou. In 2018, after receiving a round of seed financing, Santa Bella began to expand into North China, Central China, Yangtze River Delta and Pearl River Delta regions, and launched home care services in the same year; in 2019, the friendly brand Little Bella Confinement Center was established; in 2021, the company also acquired Guanghetang Foods to lay out the functional food business for women. After 2023, Santa Bella began expanding overseas.

Although Santa Bella has begun to diversify its layout since its establishment, as of the end of 2023, 83.5% of the company's revenue was still provided by confinement centers. Currently, home care services and the women's health functional food business only provided 8.1% and 8.4% of the revenue for Santa Bella, respectively.

It should be noted that in recent years, Santa Bella has raised the company's revenue scale by increasing service prices in an attempt to enhance the company's profitability. The average price of its Santa Bella Center rose from 6,736 yuan/night in 2021 to 6,887 yuan/night in 2023; the average price of Little Bella Center rose from 2,975 yuan/night in 2021 to 3,478 yuan/night in 2023.

Although Santa Bella continues to raise the company's service unit prices, the revenue growth rate of confinement centers between 2021 and 2023 still showed a marked slowdown. In 2022, the revenue of the Santa Bella confinement center increased by 74.59% compared to 2021, while in 2023, the revenue of the confinement center increased by only 14.48% compared to 2022. Affected by this, Santa Bella's revenue growth rate in 2023 fell from 82.22% in 2022 to 18.75%, and the growth rate fell by nearly 64 percentage points.

Of course, in order to cope with the slowdown in the company's revenue growth, Santa Bella began expanding overseas in 2021; back then, Santa Bella opened confinement centers in Hong Kong through its Hong Kong subsidiary. In October 2023 and May 2024, Santa Bella also successively opened confinement centers in regions with many Chinese people, such as Singapore and Los Angeles in the US.

Can Santa Bella make money by setting up overseas markets?

Losses continue

As Santa Bella continues to raise the company's service unit price, the company's gross margin also showed a clear upward trend. Its gross margin rose from 30.6% in 2021 to 36.5% in 2023, an increase of nearly 6 percentage points over three years. However, in the face of increased gross margin in Santa Bella, the company still failed to turn a loss into a profit. From 2021 to 2023, the company experienced losses of 0.122 billion yuan, 0.421 billion yuan, and 0.239 billion yuan respectively, with a cumulative loss of more than 0.7 billion yuan over three years.

Specifically, although Santa Bella maintains a team of babysitters through labor outsourcing or other forms to improve home care services for customers to control the company's labor costs, under the asset-light model, administrative expenses have become an important cost for Santa Bella. In 2022 and 2023, Santa Bella's total administrative expenses all exceeded 0.1 billion yuan, accounting for more than 20% of the company's revenue in the current period. During the same period, Santa Bella's sales and distribution expenses were at their highest of only 81.5 million yuan.

According to Tianyancha information, Xiang Hua, the founder of Santa Bella, graduated from Oxford University in bioengineering and obtained a bachelor's and master's degree from Oxford University. He worked as a director in the investment banking department of the Bank of Switzerland, and was responsible for healthcare projects in the Asian region. In 2016, Bacon International was established with medical consultants from famous international universities such as MIT in the US and the University of Oxford in the UK.

With the support of the actual controller, Santa Bella was favored by investment institutions such as Gao Rong Capital and Kunshan Tanglu in the second year of its establishment; since then, the company has successively received investments from investment institutions such as Tencent, China Life Insurance Investment, and Future Assets. In seven rounds of financing from 2018 to 2023, Santa Bella has accumulated more than 0.3 billion yuan in financing. However, according to the prospectus, Santa Bella Finance is mainly funded through preferred shares; the first condition for redemption is that the company failed to complete the listing or sale before December 31, 2025.

Since its establishment, Santa Bella has been favored by many well-known institutions such as Tencent, China Life Insurance Investment, and Future Asset, but under continuous losses, Santa Bella's liquidity ratio dropped from 1.3 times in 2021 to 1 times in 2023, and the company's moving ratio dropped from 1.2 times in 2021 to 1 times in 2023. The company's liquidity is not optimistic.

It should be pointed out that on the official website of the Santa Bella Center, the company claims that the Santa Bella Center “insists on one-on-one care by 24-hour nurses”. On the official website of the Little Bella Center, the company also claims that the company can provide “intimate and warm care at a distance of 24 hours.” However, according to the prospectus, as of the end of 2023, Santa Bella had only 621 nursing specialists; of the company's 1,200 full-time employees, there were 674 nursing staff.

According to the Santa Bella prospectus, at the Santa Bella Center, the company's nursing specialists work different shifts; at the Little Bella Center, most of the company's nursing professionals work 12 hours, and the remaining 12 hours provide intensive care in the nursery. According to statistics from the National Bureau of Statistics, the average weekly working hours of employees in enterprises nationwide in 2023 are 49 hours. How can Santa Bella provide customers with 24-hour service while protecting the normal rights and interests of employees? (Produced by Thinking Finance) ■