Aesthetic Medical International Holdings Group Ltd (AIH) 2022 Q3 法說會逐字稿

Good morning, ladies and gentlemen. Thank you for standing by, and welcome to Aesthetic Medical International third-quarter 2022 earnings conference call. (Operator Instructions) As a reminder, today's conference call is being recorded.

早上好，女士們，先生們。感謝您的支持，歡迎來到 Aesthetic Medical International 2022 年第三季度收益電話會議。 （操作員說明）提醒一下，今天的電話會議正在錄製中。

On the call today from Aesthetic Medical International are Dr. Pengwu Zhou, Chairman and Chief Executive Officer; Mr. Toby Wu, Chief Financial Officer; and Mr. Derrick Shi, Investor Relations Associate Director. Dr. Zhou will review the business operations and the company highlights, followed by Mr. Toby Wu, who will introduce the company's financial performance. They will all be available to answer your questions during the Q&A session that follows.

今天，Aesthetic Medical International 的電話會議主席兼首席執行官周鵬武博士； Toby Wu 先生，首席財務官；投資者關係副總監 Derrick Shi 先生。周博士將回顧業務運營和公司亮點，隨後 Toby Wu 先生將介紹公司的財務業績。在接下來的問答環節中，他們都可以回答您的問題。

Before we get started, I'd like to remind you that some of the information discussed will include forward-looking statements regarding future events and our future financial performance. These include statements about our future expectations, financial projections and our plans and prospects. Actual results may differ materially from those set forth in such statements. For a discussion of these risks and uncertainties, you should review the company's filings with the SEC, which includes today's press release. You should not rely on our forward-looking statements as predictions of future events. All forward-looking statements that we make on this call are based on assumptions and beliefs as of today, and we undertake no obligation to update them, except as required by applicable law.

在我們開始之前，我想提醒您，所討論的一些信息將包括有關未來事件和我們未來財務業績的前瞻性陳述。其中包括關於我們未來預期、財務預測以及我們的計劃和前景的陳述。實際結果可能與此類聲明中的結果存在重大差異。要討論這些風險和不確定性，您應該查看公司向美國證券交易委員會提交的文件，其中包括今天的新聞稿。您不應依賴我們的前瞻性陳述作為對未來事件的預測。我們在本次電話會議上所做的所有前瞻性陳述均基於截至今日的假設和信念，除適用法律要求外，我們不承擔更新這些陳述的義務。

Our discussion today will include non-IFRS financial measures, including EBITDA, adjusted loss and adjusted EBITDA. You should not consider EBITDA, adjusted EBITDA or adjusted loss as a substitute for or superior to net income prepared in accordance with IFRS.

我們今天的討論將包括非 IFRS 財務指標，包括 EBITDA、調整後的虧損和調整後的 EBITDA。您不應將 EBITDA、調整後的 EBITDA 或調整後的虧損視為替代或優於根據 IFRS 編制的淨收入。

Furthermore, because of non-IFRS measures are not prepared in accordance with IFRS, they are susceptible to varying calculations and may not be comparable to other similarly titled measures presented by other companies. You are encouraged to review the company's financial information in its entirety and not rely on a single financial measure.

此外，由於非 IFRS 措施不是根據 IFRS 編制的，因此它們容易受到不同計算的影響，並且可能無法與其他公司提出的其他類似名稱的措施相比較。我們鼓勵您全面審查公司的財務信息，而不是依賴單一的財務指標。

At this time, I would like to turn the call over to Dr. Pengwu Zhou, Chairman and CEO of Aesthetic Medical International. His opening remarks will be delivered in English by Investor Relations Associate Director, Mr. Derrick Shi. Dr. Zhou, please go ahead.

這時，我想把電話轉給美醫國際董事長兼首席執行官周鵬武博士。他的開場白將由投資者關係副總監 Derrick Shi 先生以英文發表。週醫生，請繼續。

(interpreted) Thank you, everyone, for joining the call today. The third quarter of 2022 was still clouded by the uncertainties arising from the resurgence of COVID-19 pandemic. To migrate the impact on people's daily living and business operations, the country has adjusted its strategy of prevention and control measures from a broad coverage of a region to a more precise implementation of specific areas with shortened lockdown period. Yet Shenzhen was placed under lockdown, and three of the group's treatment centers were forced to close temporary in September, which affected our customer traffic. As a result, revenue of this quarter slightly decreased by 0.3% year over year.

（口譯）謝謝大家今天加入電話會議。 2022 年第三季度仍籠罩在 COVID-19 大流行捲土重來的不確定性之中。為了轉移對人們日常生活和企業經營的影響，國家將防控措施的策略從一個區域的廣泛覆蓋調整為更精確地實施特定區域並縮短鎖定時間。然而，深圳被封鎖，集團的三個治療中心在 9 月被迫臨時關閉，這影響了我們的客戶流量。因此，本季度收入同比小幅下降 0.3%。

During the period, the company has strived to enhance its operating efficiency by adjusting marketing strategies and streamlining business operations. In terms of marketing, we have started collaborating with key opinion leaders and heading to live streaming e-commerce. This was successful and effective in expanding target audience to younger generation who had strong demand in self-care and aesthetic-related consumption. This is reflected by a 27.8% year-on-year decrease in selling expenses during the third quarter.

期內，公司致力透過調整營銷策略及精簡業務運作，提升營運效率。在營銷方面，我們開始與關鍵意見領袖合作，並向直播電商進發。這成功有效地將目標受眾擴大到對自我保健和審美相關消費有強烈需求的年輕一代。這反映在第三季度銷售費用同比下降 27.8%。

In terms of operations, we have further strengthened our training program, which was launched in the second quarter. Besides offering them with the latest standardized operating procedure, we have further equipped them with the latest aesthetic medical market trends and product offerings, ensuring the best-in-class services are provided to our customers. We have also engaged mystery shoppers in this quarter to better evaluate the service quality, of which they will discretely visit each treatment centers and provide assessment on user experience for management's review. As at the date, 25 mystery shoppers' assessments and feedback have been received.

在運營方面，我們進一步加強了第二季度推出的培訓計劃。除了為他們提供最新的標準化操作程序外，我們還為他們提供最新的美容醫療市場趨勢和產品供應，確保為我們的客戶提供一流的服務。本季度我們還聘請了神秘顧客以更好地評估服務質量，他們將離散訪問每個治療中心並提供用戶體驗評估以供管理層審查。截至目前，已收到25位神秘顧客的評價和反饋。

During the time being, we have also begun the renovation of the first floor of one of our flagship hospitals, Shenzhen Peng'ai Aesthetic Medical Hospital, which is expected to be completed by the end of this year. We believe that these measures will provide customers with a better service experience, laying a strong foundation to support our business, scalability and sustainable growth in the long run.

與此同時，我們亦已開始對其中一家旗艦醫院深圳鵬愛美容醫院的一樓進行裝修，預計將於今年年底完工。我們相信，這些措施將為客戶提供更好的服務體驗，為長期支持我們的業務、可擴展性和可持續增長奠定堅實的基礎。

The company is committed to becoming a professional and reliable non-surgical aesthetic medical service provider. We remain prudent to conduct regular assessment on treatment centers and divest non-performing centers. During this quarter, we divested the Changsha Peng'ai Aesthetic Medical Hospital and Nanchang Peng'ai Xiuqi Aesthetic Medical Hospital, and expect to receive cash inflows of RMB4.6 million and RMB3.0 million from Changsha Peng'ai and Nanchang Peng'ai, respectively.

公司致力於成為專業可靠的非手術美容醫療服務商。我們仍然謹慎地對治療中心進行定期評估並剝離不良中心。本季度，我們剝離了長沙鵬愛醫療美容醫院和南昌鵬愛秀琪美容醫療醫院，預計長沙鵬愛醫療和南昌鵬愛醫療將分別獲得人民幣 460 萬元和人民幣 300 萬元的現金流入， 分別。

We believe we see aforementioned strategies, we can further enhance our core competencies, improve brand equity and eventually drive profitability. Thank you again for all your support and attention. And I would like now to turn the call to our CFO, Toby Wu, to introduce the financials and operations for the third quarter of 2022. Toby, please go ahead.

我們相信我們看到上述戰略，我們可以進一步增強我們的核心競爭力，提高品牌資產並最終推動盈利能力。再次感謝大家的支持和關注。現在我想請我們的首席財務官 Toby Wu 介紹 2022 年第三季度的財務和運營情況。Toby，請繼續。

Okay. Thank you, Dr. Zhou, and thank you, Derrick.

好的。謝謝你，周博士，也謝謝你，Derrick。

Hi, everyone. I will summarize some of our key unaudited financial results and operation results for the third quarter ended September 30, 2022. In the third quarter of 2022, total revenue decreased 0.3% year on year to RMB167 million, primarily attributable to the divestment of underperforming assets in the 2021 and the first three quarters of 2022 and the temporary closure of several treatment centers due to the pandemic preventative requirements in the third quarter of 2022.

大家好。我將總結我們截至 2022 年 9 月 30 日的第三季度的一些主要未經審計的財務業績和經營業績。2022 年第三季度，總收入同比下降 0.3% 至人民幣 1.67 億元，這主要歸因於剝離表現不佳的資產2021年和2022年前三季度，以及2022年第三季度因防疫需要，部分治療中心暫時關閉。

Gross profit was RMB86.6 million, representing an increase of 22.5% year on year. Gross profit margin was increase 9.6 percentage points to 51.8%. The increase was attributable to the implementation of stringent cost control of our aesthetic medical consumables, as well as the value-added service provided by the group's professional doctors to enhance the service quality of non-surgical aesthetic medical business.

毛利為人民幣86.6百萬元，同比增長22.5%。毛利率上升9.6個百分點至51.8%。增加乃由於我們對醫美耗材實施嚴格成本控制，以及集團專業醫生提供增值服務以提升非手術醫美業務的服務質素所致。

Selling expenses was RMB61.5 million, representing 36.8% of the company's total revenue in the third quarter of 2022. Selling expenses as of revenue decreased by 14 percentage points year on year. The reduction in the selling expenses and its contribute was mainly as a result the company's strategic shift of marketing focus on lower-cost online marketing channels, such as the private domain customer reach and social media live streaming as to raising customer acquisition costs under the impact of COVID-19 pandemic. General and admin expenses were RMB45.5 million, representing a decrease of 12.6%, primarily due to the divestment of underperforming assets in the 2021 and the first three quarters of 2022. As a result of the foregoing, the company recorded a loss of RMB52.4 million for the third quarter of 2022 compared with a loss of RMB30.3 million in the third quarter of 2021.

銷售費用為人民幣6,150萬元，占公司2022年第三季度總收入的36.8%。銷售費用佔收入比同比下降14個百分點。銷售費用的減少及其貢獻主要是由於公司將營銷重點戰略轉移到低成本的在線營銷渠道，如私域觸達和社交媒體直播，以提高獲客成本的影響COVID-19 大流行病。一般和管理費用為人民幣 4550 萬元，下降 12.6%，主要是由於 2021 年和 2022 年前三個季度剝離了表現不佳的資產。因此，公司錄得虧損人民幣 52 元2022 年第三季度虧損 40 萬元，而 2021 年第三季度虧損人民幣 3030 萬元。

Basic and diluted loss per share was both loss of RMB0.6 in the third quarter of 2022, compared with a basic and diluted loss per share of RMB0.22 in the third quarter of 2021. EBITDA for the third quarter of 2022 was a loss of RMB38.1 million compared with a loss of RMB43.1 million in the third quarter of 2021. Adjusted EBITDA for the third quarter of 2022 was RMB10.6 million, rebound from a loss of RMB30 million in the third quarter of 2021. Adjusted loss after tax for the third quarter of 2022 narrowed to RMB3.7 million, compared with a loss of RMB17.2 million in the third quarter of 2021. In terms of our operating performance, as a result of a temporary business suspension of several treatment centers in the third quarter of 2022, the company recorded a decrease of 13.5% year on year in the total active customers.

2022 年第三季度每股基本和稀釋虧損均為虧損 0.6 元人民幣，而 2021 年第三季度每股基本和稀釋虧損為 0.22 元人民幣。2022 年第三季度 EBITDA 為虧損3810 萬元人民幣，而 2021 年第三季度為虧損 4310 萬元人民幣。2022 年第三季度調整後的 EBITDA 為 1060 萬元人民幣，從 2021 年第三季度的 3000 萬元人民幣虧損中反彈。調整後2022 年第三季度稅後虧損收窄至人民幣 370 萬元，而 2021 年第三季度虧損人民幣 1720 萬元。就我們的經營業績而言，由於多項治療業務暫時停止2022年第三季度，公司活躍客戶總數同比下降13.5%。

The company recorded an increase in the number of treatment cases of 4.7% year on year. And the number of treatment cases in the retained treatment centers increased by 37% year on year. The increase was primarily drive by the increasing demand of non-surgical aesthetic medical treatments around the young generation as well as the effectiveness of our company's newly introduced package promotion. Total number of non-surgical aesthetic medical treatments as a percentage of a total number of aesthetic treatments increased by 5.8 percentage points. Average spending per customer increased by 15.2% from RMB2,529 in third quarter of 2021 to RMB2,915 in the third quarter of 2022, primarily drive by the sales of high-end bio-stimulating fillers. As of September 30, 2022, cash and cash equivalent was RMB20.4 million.

公司錄得的治療例數同比增長4.7%。保留診療中心診治例數同比增長37%。該增長主要是由於年輕一代對非手術美容醫療的需求不斷增加以及我們公司新推出的套餐促銷的有效性。非手術美容醫學治療總數占美容治療總數的百分比增加了5.8個百分點。每位客戶的平均支出從 2021 年第三季度的人民幣 2,529 元增長 15.2% 至 2022 年第三季度的人民幣 2,915 元，這主要是受高端生物刺激填充劑銷售的推動。截至2022年9月30日，現金及現金等價物為人民幣2,040萬元。

Looking ahead, we will continue to implement aforementioned strategy. We will dedicate to provide better and quality service to our customers and delivering sustainable long-term growth.

展望未來，我們將繼續實施上述策略。我們將致力於為客戶提供更優質的服務，實現可持續的長期增長。

This concludes our prepared remarks. Thank you for joining us today's call. We will now open the call to the question. Operator, please go ahead.

我們準備好的發言到此結束。感謝您加入我們今天的電話會議。我們現在將打開問題的電話。接線員，請繼續。

(Operator Instructions) [Jasper Huang], Saga Tree Capital.

（操作員說明）[Jasper Huang]，Saga Tree Capital。

Hi, I am Jasper's colleague. I just wanted to thank you, management, for their sharing. I actually have two questions. My first question is about customers. So we noticed that the number of customers have decreased. What were the reasons for the decrease? And is there any strategy to acquire new customers and to retain existing customers? Thank you.

大家好，我是 Jasper 的同事。我只是想感謝你，管理層，感謝他們的分享。我其實有兩個問題。我的第一個問題是關於客戶的。所以我們注意到客戶數量減少了。減少的原因是什麼？有沒有什麼策略來獲得新客戶和留住現有客戶？謝謝。

Hi, [Jasper]. This is Derrick. And thank you for your question. Yes, we have seen that the number of customers have been decreasing in comparison with the third quarter in 2021. The main reason of the decreasing is that we have divested some agencies in 2021, and also in the first three quarters in 2022. And the other reason is that we plan to allocate more resources in our treatment center in Greater Bay area. So we have allocated more cash in training the employees instead of spending in advertising.

嗨，[賈斯珀]。這是德里克。謝謝你的問題。是的，我們看到客戶數量和2021年第三季度相比一直在減少，減少的主要原因是我們在2021年剝離了一些代理，2022年前三個季度也剝離了一些代理。而且另一個原因是我們計劃在大灣區的治療中心分配更多資源。因此，我們分配了更多資金用於培訓員工，而不是花在廣告上。

And the strategies that we are trying to retain our customers is that we will introduce SOP training to our employees, and then inculcate core values to them. And the last is to do the renovation for one of our flagship hospital so that we could provide better customer experience to retain those customers. Thank you.

而我們試圖留住客戶的策略是，我們將向員工介紹SOP培訓，然後向他們灌輸核心價值觀。最後是對我們的一家旗艦醫院進行翻新，以便我們可以提供更好的客戶體驗來留住這些客戶。謝謝。

(Operator Instructions) I see no further questions. Let me turn the call over to Mr. Derrick Shi for closing remarks.

（操作員說明）我看不到其他問題。讓我把電話轉給 Derrick Shi 先生作結束語。

Thank you, operator. On behalf of our entire management team, I would like to thank everyone again for joining us today. If you have any questions, please contact us through e-mail at ir@pengai.com.cn or reach our IR Counsel, DLK Advisory, at ir@dlkadvisory.com. We appreciate your interest and support in Aesthetic Medical International and look forward to speaking with you again next time.

謝謝你，運營商。我謹代表我們整個管理團隊，再次感謝大家今天加入我們。如有任何疑問，請發送電子郵件至 ir@pengai.com.cn 或發送電子郵件至 ir@dlkadvisory.com 聯繫我們的投資者關係顧問 DLK Advisory。感謝您對國際醫美的關注與支持，期待下次與您的再次交流。

And I have one more advertisement for our company that we provide one-stop aesthetic medical treatment with [genu] equipment and consumables. So welcome all the investors and analysts to visit our hospital all over China, and hope you have a great experience here. And thank you. Operator, please go ahead.

還有我公司的廣告，我們提供一站式美容醫療，[genu]設備和耗材。歡迎廣大投資者和分析人士來我院參觀，希望您在這裡有一個愉快的體驗。謝謝你。接線員，請繼續。

Pardon me. I was just advised. We do have a follow-up question from Jasper Huang.

對不起。我只是被告知。我們確實有來自 Jasper Huang 的後續問題。

Perfect. Thank you. Sorry about that. I actually have one more follow-up question. So we all noticed that the COVID situation remains uncertain and there's lockdowns and that could potentially affect the company's business. So we just want to know, is there any measures in place to alleviate the risks? Thank you.

完美的。謝謝。對於那個很抱歉。我實際上還有一個後續問題。因此，我們都注意到 COVID 情況仍然不確定，並且存在封鎖，這可能會影響公司的業務。那麼我們就想知道，有什麼措施可以緩解風險嗎？謝謝。

Okay. Thank you, Jasper. Yes, we noticed that the activity of government is to limit the spread of COVID-19. So firstly, we will actively coordinate with government pandemic prevention measures. For example, we will set a front desk to guide the customers scan the site code and measure their body temperature to prevent the customer affected by COVID, and then we will take advantage of our online marketing while our face-to-face consultation is impacted. For example, we will use a video call between our doctors and customers. And lastly, we will providing prudent expansion during this period. So we won't have many loss-making agencies in comparison to the previous time. Thank you.

好的。謝謝你，賈斯珀。是的，我們注意到政府的活動是為了限制 COVID-19 的傳播。因此，首先，我們將積極配合政府的防疫措施。比如我們會設置一個前台，引導客戶掃碼測體溫，防止客戶被COVID影響，然後我們利用線上營銷的優勢，面對面的諮詢受到影響.例如，我們將在醫生和客戶之間使用視頻通話。最後，我們將在此期間提供審慎的擴張。所以跟以前相比，我們不會有很多虧損的機構。謝謝。

Thank you. Am I still with you guys?

謝謝。我還和你們在一起嗎？

Yes, we can hear you.

是的，我們能聽到你的聲音。

Yes, thank you. Actually, one last question, please. And we saw the Chinese government actually has introduced quite a lot of policies on how aesthetic medical industry should operate and advertise. So what's the company's view on these regulations? And how will they affect our business operations?

是的，謝謝。實際上，請問最後一個問題。而且我們看到中國政府實際上已經出台了很多關於醫療美容行業應該如何運作和宣傳的政策。那麼公司對這些規定有何看法？它們將如何影響我們的業務運營？

Thank you, Jasper. Yes, the good thing is that we know the bottom line of the government, how they will regulate our industry. And we know the execute. And we will have the target to conduct our business in a healthy and long-term way. And as you know, the AIH was founded by Dr. Zhou. And so we have been at the forefront of industry in terms of compliance. So we are confident that we will be impacted much -- we will have much smaller impact than our competitors. And that's it. Thank you.

謝謝你，賈斯珀。是的，好消息是我們知道政府的底線，他們將如何監管我們的行業。我們知道執行。我們將有一個目標，以健康和長期的方式開展我們的業務。眾所周知，AIH 是由周博士創立的。因此，我們在合規性方面一直處於行業前沿。所以我們相信我們會受到很大的影響——我們的影響會比我們的競爭對手小得多。就是這樣。謝謝。

^ Thank you, management. That will be my last question too.

^ 謝謝你，管理。這也是我的最後一個問題。

(Operator Instructions) Eva, Lumiere Capital.

（操作員說明）Eva，Lumiere Capital。

Hello. Hi, management. Thanks for the presentation. We just learned from that you guys have a plan to further dispose in the centers in Shenzhen. But I mean, Shenzhen is our core area, and why should we make this such a decision to -- for the two potential centers to be divested? We want to know apart from these, do we have other target to further dispose other assets? Thanks.

你好。你好，管理層。感謝您的介紹。我們剛剛了解到，你們有進一步在深圳中心佈局的計劃。但我的意思是，深圳是我們的核心區域，我們為什麼要做出這樣的決定——剝離兩個潛在的中心？我們想知道除了這些之外，我們還有其他目標進一步處置其他資產嗎？謝謝。

Hello, Eva. Thank you for your question. Yes, we have disclosed that we are planning to divest one of our clinics in Shenzhen. And we think the main reason is that that clinic is located in Futian District, where it is frequently affected by COVID-19 lockdown. And we are unable to waive the rental from our private landlord. So in consideration of the cash flow and the healthy development of our financial aspects, we decide to divest it in the next few months. And we do not have further disposal plan. And that's it. Thank you.

你好，伊娃。謝謝你的問題。是的，我們已經透露我們正計劃剝離我們在深圳的一家診所。我們認為主要原因是該診所位於福田區，那裡經常受到 COVID-19 封鎖的影響。而且我們無法免除私人房東的租金。所以考慮到現金流和我們財務方面的健康發展，我們決定在未來幾個月內剝離它。我們沒有進一步的處置計劃。就是這樣。謝謝。

Okay, thank you. Just one question. So how many clinics and hospitals do we have in total as of today? Thanks.

好的謝謝。只有一個問題。那麼，截至目前，我們總共有多少家診所和醫院？謝謝。

Thank you. We have 10 clinics and hospital in total as of today.

謝謝。截至今天，我們共有 10 家診所和醫院。

All right. Thank you so much. Thanks.

好的。太感謝了。謝謝。

(Operator Instructions) All right. Seeing there are no further questions, let me turn the call back once again to Mr. Derrick Shi to repeat his closing remarks.

（操作員說明）好的。看到沒有其他問題，讓我再次將電話轉回 Derrick Shi 先生，重複他的結束語。

Okay. Thank you, operator. Thank you, everyone, for joining the call today. And thank you, Jasper and Eva, for your helpful questions and I think that's it for today's call. And operator, please go ahead.

好的。謝謝你，運營商。謝謝大家今天加入電話會議。感謝 Jasper 和 Eva 提出的有用問題，我想今天的電話就到此為止。接線員，請繼續。

Thank you, everyone, for attending Aesthetic Medical International's third-quarter of 2022 earnings conference call. This concludes our call today. We thank you for -- thank you all for listening. Goodbye.

感謝大家參加 Aesthetic Medical International 2022 年第三季度財報電話會議。我們今天的電話會議到此結束。我們感謝您——感謝大家的聆聽。再見。