So-Young International Inc (SY) 2023 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by for So-Young's Third Quarter 2023 Earnings Conference Call. (Operator Instructions)

女士們、先生們，感謝你們出席新氧 2023 年第三季財報電話會議。 （操作員說明）

As a reminder, today's conference call is being recorded. I would now like to turn the meeting over to your host for today's call, Miss Vivian Xu. Please proceed Miss Xu.

提醒一下，今天的電話會議正在錄音。現在我想將會議轉交給今天電話會議的主持人 Vivian Xu 女士。請徐小姐繼續。

Thank you, operator and thank you, everyone, for joining So-Young third-quarter 2023 earnings conference call. Joining me today on the call is Mr. Xing Jin, our Co-Founder, Chairman, and CEO, and Mr. Nick Zhao, CFO.

謝謝業者，也謝謝大家參加新氧2023年第三季財報電話會議。今天與我一起參加電話會議的是我們的共同創辦人、董事長兼執行長金星先生和財務長趙尼克先生。

Please note that the discussion today will contain forward-looking statements made under the Safe Harbor provisions of the US Private Securities and Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include, but are not limited to those outlined in our public filings with the SEC, including our annual report on Form 20-F. So-Young does not undertake any obligation to update any forward-looking statement except as required under applicable law.

請注意，今天的討論將包含根據1995 年美國私人證券和訴訟改革法案的安全港條款做出的前瞻性陳述。前瞻性陳述受到風險和不確定性的影響，可能導致實際結果與我們的結果存在重大差異。當前的期望。潛在風險和不確定性包括但不限於我們向 SEC 公開提交的文件中概述的風險和不確定性，包括我們的 20-F 表格年度報告。除適用法律要求外，新氧不承擔任何更新任何前瞻性聲明的義務。

At this time, I would like to turn the call over to Mr. Xing Jin. Yes, please?

這時我想把電話轉給金星先生。是的，請？

(spoken in Mandarin)

（以國語發言）

Hello, everyone. Thank you for joining So-Young third quarter 2023 earnings call. Our business remained resilient, and it delivered a solid financial and operational results during the quarter despite the microeconomic headwinds.

大家好。感謝您參加新氧 2023 年第三季財報電話會議。儘管存在微觀經濟不利因素，我們的業務仍然保持彈性，並在本季度實現了穩健的財務和營運績效。

Total revenues were RMB390 million, an increase of 19% year-over-year and in line with our previous guidance.

總收入為人民幣 3.9 億元，年增 19%，與我們先前的指引一致。

Profitability also continued to improve, thanks to our careful management of costs. Net income attributable to So-Young International Inc. was RMB18.3 million compared with RMB2.3 million in the same period last year.

由於我們對成本的精心管理，獲利能力也持續改善。新氧國際應佔淨利為人民幣1,830萬元，去年同期為人民幣230萬元。

(spoken in Mandarin)

（以國語發言）

I would like to start by sharing my thoughts on where the sector is. We firmly believe that medical aesthetics market going forward, we are ahead in two directions.

我想先分享我對該行業現狀的看法。我們堅信醫美市場的未來，我們在兩個方向上領先。

The first is a gradual and stock popularization of high tier users who are less impacted by a weak macro environment, and we'll continue to seek high quality services. In this scenario, low- to mid-tier users would increasingly gravitate towards products with the best quality-to-cost ratio. The second is a continuation of high speed growth of light medical aesthetics as the market continued to expand in size. We are adapting each of our business to be able to cater to both of the two scenarios.

首先是高端用戶的逐步普及和存量普及，受宏觀環境影響較小，我們將繼續尋求高品質的服務。在這種情況下，中低端用戶將越來越傾向於選擇性價比最高的產品。二是光醫美容延續快速成長，市場規模不斷擴大。我們正在調整我們的每項業務，以便能夠同時滿足這兩種情況。

(spoken in Mandarin)

（以國語發言）

Taking this into account, we are adjusting our community POP business with a focus towards high-end service end users. During the quarter, we strengthened cooperation with select number of well-respected doctors and institutions, further integrate internal resources and optimized the processes, all in effort to provide the highest quality service and experience through our one-stop solution. Offering premium content and enhancing the use of medical aesthetics service experience has helped where respected doctors and institutions avoid costly price wars while still generating reasonable premiums.

考慮到這一點，我們正在調整社區POP業務，並專注於高端服務終端用戶。本季度，我們加強了與部分知名醫生和機構的合作，進一步整合內部資源，優化流程，致力於透過一站式解決方案提供最優質的服務和體驗。提供優質內容並增強醫療美容服務體驗的使用有助於受人尊敬的醫生和機構避免代價高昂的價格戰，同時仍產生合理的保費。

During the quarter, we worked with well-respected doctor to promote their face contouring category. Online GMV for the face contouring category grew by 40% year-over-year during the quarter, while GMV for all surgical categories grew by 11% quarter-over-quarter. Average transaction value for non-surgical products grew by 60% year-over-year, and GMV grew by 72% year-over-year.

在本季度，我們與備受尊敬的醫生合作推廣他們的臉部輪廓類別。本季臉部輪廓類別的線上 GMV 年增 40%，而所有手術類別的 GMV 則是環比增長 11%。非手術類產品平均交易額較去年同期成長60%，GMV較去年同期成長72%。

In addition, by cooperating clinics with simple care and investing in medical aesthetics and MCNs, we have obtained a deep understanding of the mechanics, which is helping us transform So-Young app into a high-end platform that offers users a large selection of premium doctors to choose from and reducing the decision making cost.

此外，透過與簡單護理診所的合作以及對醫美和MCN的投資，我們對機制有了深入的了解，這有助於我們將新氧應用程式轉型為高端平台，為用戶提供大量優質服務選擇醫生可供選擇，降低決策成本。

(spoken in Mandarin)

（以國語發言）

So-Young Prime is being adjusted to serve should looking at the back (technical difficulty) cost-to-ratio product. So-Young Prime is a unique innovation for the light medical aesthetics industry and a critical step to standardize offline service. Since its launch in August last year, the business has rapidly expanded and scaled with fulfilled orders increasing by 23% sequentially during the quarter. Within fulfilled orders, high-intensity focused ultrasound under the ultrasonic age category in particular increased by 44% sequentially.

新氧Prime正在調整服務應該看後面（技術難度）產品性價比。新氧Prime是光醫美容產業的獨特創新，也是規範線下服務的關鍵一步。自去年 8 月推出以來，該業務迅速擴張和規模化，本季履行的訂單量較上季成長 23%。在已完成的訂單中，特別是超音波年齡類別下的高強度聚焦超音波訂單較上月增加了44%。

As I mentioned in our last earnings call, as So-Young Prime scales our focus is on ensuring the best possible online to offline user experience, improving operational efficiency for our institutional network, and refine operations. During the quarter, orders of So-Young Prime from the more than 100 institutions we walked with contributed over 13% of fulfilled orders in house.

正如我在上次財報電話會議中提到的，隨著新氧Prime 規模的擴大，我們的重點是確保盡可能最佳的線上到線下用戶體驗、提高我們機構網絡的運營效率並完善運營。本季度，新氧Prime來自我們走過的100多家機構的訂單貢獻了超過13%的內部履行訂單。

(spoken in Mandarin)

（以國語發言）

To further standardize the management system for light medical aesthetics institutions, we built a flagship clinic on the second floor of our head office to test our systems in real time. The team operating in the clinics fully integrate with So-Young Prime and has already seen monthly visits increased by more than six fold over the past three months. Equally as important, the clinic has already achieved profitability.

為了進一步規範輕型醫美機構的管理體系，我們在總部二樓建立了旗艦診所，對我們的系統進行即時測試。診所的營運團隊與新氧 Prime 完全整合，過去三個月的月就診量增加了六倍以上。同樣重要的是，該診所已經實現盈利。

(spoken in Mandarin)

（以國語發言）

Lastly, our supply chain business is being positioned to capture opportunities if the light medical aesthetics market continue expanding rapidly. This is the best encapsulated with the standout performance it had during the quarter and the remarkable growth it has generated. The supply chain business is a result of our initiative to import opportunities and acquire deep industry insights that would allow us to expand upstream along the medical aesthetic supply chain.

最後，如果光醫美市場持續快速擴張，我們的供應鏈業務將抓住機會。這是本季出色業績和所產生的顯著成長的最佳概括。供應鏈業務是我們主動引入機會並獲得深入的行業洞察的結果，這將使我們能夠沿著醫美供應鏈向上游擴張。

Looking at the upstream medical lasers product category, following the acquisition of Wuhan Miracle, we built a new generation of ultrasonic anti-aging equipment called a micro-focused ultrasound device, which we are using to build out our direct-to-consumer business model.

從上游醫療雷射產品類別來看，收購武漢奇蹟後，我們打造了新一代超音波抗衰老設備，稱為微聚焦超音波設備，我們正在利用它來建構直接面向消費者的商業模式。

On the medical injection part, we established a team through [Elastic] and achieved a rapid growth in performance. Full year shipments are expected to be seven times that of last year.

在醫用注射部分，我們透過【Elastic】組建了團隊，實現了業績的快速成長。預計全年出貨量將是去年的七倍。

In July, we also signed a strategic cooperation agreement with [Hehong Biopharma] for the exclusive distribution rights of two filler products. Cooperation agreement such as these fill gaps and greatly enhance our light medical aesthetics product portfolio.

7月，我們也與【和紅生物製藥】簽署策略合作協議，取得兩款填充劑產品的獨家經銷權。這類合作協議填補了空白，極大豐富了我們的光醫美產品組合。

(spoken in Mandarin)

（以國語發言）

This thing differ from the traditional upstream R&D production supply chain model used by manufacturers.

這個東西和傳統廠商採用的上游研發生產供應鏈模式不同。

We are able to add further value by developing synergies with our existing business and to fully leverage our institutional network and expansive consumer reach. This allow us to quickly bring new products to market and rapidly make them competitive.

我們能夠透過與現有業務發展協同效應並充分利用我們的機構網絡和廣泛的消費者影響力來增加更多價值。這使我們能夠快速將新產品推向市場並迅速使其具有競爭力。

(spoken in Mandarin)

（以國語發言）

In the third quarter, revenue from our supply chain business, which includes Wuhan Miracle, reached RMB75 million, an increase of 19% year-over-year and accounting for 20% of total revenue.

第三季度，包括武漢奇蹟在內的供應鏈業務收入達到人民幣7,500萬元，較去年同期成長19%，佔總營收的20%。

We entered as an injectable filler market adjuster last year with a product designed for the highly competitive hyaluronic acid serum. Revenue for this serum keeps hitting new heights and has already become profitable on a single-month basis in August and September. This success directly reflects the enormous synergies we are able to create between the So-Young platform and high quality upstream product.

去年，我們作為注射填充劑市場調整者進入市場，推出了一款專為競爭激烈的透明質酸精華液設計的產品。此精華液的收入不斷創新高，並已在8月和9月實現單月獲利。這項成功直接反映了我們能夠在新氧平台和優質上游產品之間創造巨大的綜效。

(spoken in Mandarin)

（以國語發言）

Over the long term, the medical aesthetics industry in China still has plenty of room to grow with user penetration rate that are still very low.

長期來看，中國醫美產業仍有很大的發展空間，用戶滲透率仍然很低。

Markets beyond the first tier cities remain largely untapped as standardization spread across the industry. Our fully integrated capabilities and other competitive advantage will become more pronounced. Our focus will remain our three core business segments where we will work to further integrate institution, doctors, and products in order to create sustainable diversified revenue streams and create long-term value for our shareholders.

隨著標準化在整個產業的普及，一線城市以外的市場基本上尚未開發。我們的全面整合能力和其他競爭優勢將變得更加明顯。我們的重點仍然是我們的三大核心業務板塊，我們將進一步整合機構、醫生和產品，以創造可持續的多元化收入來源，為股東創造長期價值。

(spoken in Mandarin)

（以國語發言）

I will now turn the call over to our CFO Nick to review the financial results for the third quarter before taking your questions.

現在我將把電話轉給我們的財務長尼克，在回答你們的問題之前先回顧一下第三季的財務表現。

Okay, hello, this is Nick. I will now go through our financial performance in this quarter. Please be reminded that all amounts quoted here will be in RMB. Please also refer to our earnings release for detailed information of our comparative financial performances year-over-year basis.

好的，你好，我是尼克。現在我將介紹我們本季的財務表現。請注意，此處報價的所有金額均以人民幣為單位。另請參閱我們的收益發布，以了解我們的同比財務業績比較的詳細資訊。

Total revenues during the quarter were RMB385.3 million, up 19.2% year-over-year, and in line with our guidance. The increase was primarily due to an increase in revenues generated by So-Young Prime and sales of medical products. Information services and other revenues were RMB285.9 million, up 24.1% year-over-year, primarily due to an increase in revenues generated by So-Young Prime. Reservation services revenues decreased by 18.8% year-over-year to RMB24.1 million, primarily due to our operating strategy, which gives higher subsidies to end users. Revenue from sales of medical products and maintenance services were RMB75.2 million, up 19.2% year-over-year, primarily due to an increase in sales of cosmetic injectables.

該季度總營收為 3.853 億元，年增 19.2%，符合我們的指引。這一增長主要是由於新氧Prime和醫療產品銷售收入的增加。資訊服務及其他收入為人民幣2.859億元，年增24.1%，主要是新氧Prime收入增加所致。預訂服務收入較去年同期下降18.8%至人民幣2,410萬元，主要是由於我們的經營策略對終端用戶給予更高的補貼。醫療產品及維修服務銷售收入為人民幣7,520萬元，較去年同期成長19.2%，主要是美容注射銷售增加所致。

Cost of revenues were RMB142.6 million, up 51.7% year-over-year. The increase was primarily due to an increase in costs associated with So-Young Prime. Within cost of revenues, cost of services and others were RMB103.5 million, up 74.2% year-over-year, primarily due to an increase in costs associated with the So-Young Prime. Cost of medical products sold, and maintenance services were RMB39.1 million, up 13% year-over-year, primarily due to an increase in costs associated with the sales of cosmetic injectables.

收入成本為人民幣1.426億元，較去年成長51.7%。這一增長主要是由於新氧 Prime 相關成本的增加。在收入成本中，服務成本及其他成本為人民幣1.035億元，較去年同期成長74.2%，主要是由於新氧Prime相關成本增加。醫療產品銷售及維護服務成本為3,910萬元，較去年同期成長13%，主要是因為美容注射物銷售相關成本增加。

Total operating expenses were RMB244.7 million, up 3.4% year-over-year. Sales and marketing expenses were RMB143.8 million, up 15.3% year-over-year, primarily due to an increase in expenses associated with branding and user acquisition activities. G&A expenses were RMB50.2 million, down 16% year-over-year, the change was primarily due to the reversal of share-based compensation expenses, partially offset by increase in payroll costs associated with the expansion of administrative employees to support our business upgrade and new strategic businesses. R&D expenses were RMB50.6 million, down 2.7% year-over-year, primarily due to improvements in staff efficiency.

總營業費用為人民幣2.447億元，年增3.4%。銷售及行銷費用為人民幣1.438億元，年增15.3%，主要是因為與品牌和用戶獲取活動相關的費用增加。一般及行政費用為人民幣 5,020 萬元，年減 16%，這項變更主要是由於股權激勵費用的轉回，部分被與支持我們業務的行政人員擴張相關的工資成本增加所抵消升級和新的戰略業務。研發費用為人民幣5,060萬元，較去年同期下降2.7%，主要是因為員工效率的提升。

Income tax benefits were RMB2.2 million compared with income tax benefits of RMB16.5 million in the third quarter of 2022.

所得稅優惠為人民幣220萬元，而2022年第三季所得稅優惠為人民幣1,650萬元。

Net income attributable to So-Young was RMB18.3 million compared with a net income of RMB2.3 million during the same period last year. Non-GAAP net income attributable to So-Young was RMB9.5 million compared with RMB9.9 million non-GAAP net income attributable to So-Young in the same period of 2022.

新氧歸屬淨利為人民幣1830萬元，去年同期淨利為人民幣230萬元。非美國通用會計準則歸屬於新氧的淨利為人民幣950萬元，而2022年同期非美國通用會計準則歸屬於新氧的淨利為人民幣990萬元。

Basic and diluted earnings per ADS attributable to ordinary shareholders were RMB0.18 and RMB0.18, respectively, compared with basic and diluted earnings per ADS attributable to ordinary shareholders of RMB0.02 and RMB0.02, respectively, during the same period of 2022.

歸屬於普通股股東的每股美國存託股票基本和稀釋收益分別為人民幣0.18元和人民幣0.18元，而2022年同期歸屬於普通股股東的每股美國存託股票基本和稀釋收益分別為人民幣0.02元和人民幣0.02元。

We have ample cash on hand with total cash and cash equivalents, restricted cash term deposits, and short-term investments of RMB1.4 billion as of September 30, 2023, compared with RMB1.6 billion as of December 31, 2022. The decrease was primarily due to investments in building our supply chain product pipelines of RMB38 million and share repurchases of approximately RMB121 million.

截至2023年9月30日，我們手頭現金充裕，現金及現金等價物總額、受限現金定期存款及短期投資為人民幣14億元，而截至2022年12月31日為人民幣16億元。主要是由於投資建設供應鏈產品管線約人民幣3,800萬元及股份回購約人民幣1.21億元。

For the fourth quarter of 2023, we expect total revenues to be between RMB380 million and RMB400 million.

2023年第四季，我們預期總收入在人民幣3.8億元至人民幣4億元之間。

The above outlook is based on our current market conditions that reflects the company's preliminary estimates of market and operating conditions and the consumer demand. This concludes our key remarks. I will now turn the call to the operator and open the call for Q&A. Thank you.

上述展望是基於我們當前的市場狀況，反映了公司對市場和經營狀況以及消費者需求的初步估計。我們的重要演講到此結束。我現在將把電話轉給接線員並打開電話進行問答。謝謝。

(Operator Instructions) Thomas Chong, Jefferies.

（操作員說明）Thomas Chong，Jefferies。

Hi, good evening. Thanks, management, for taking my question. Can you say about the progress of So-Young Prime at May and the expectation for Q4 and 2024? And my next question is about our estimate for marketing expenses in Q4 and next year. Thank you.

嗨，晚上好。謝謝管理層回答我的問題。您能否介紹一下新氧Prime 5月份的進展以及對Q4和2024年的預期？我的下一個問題是關於我們對第四季和明年行銷費用的估計。謝謝。

(spoken in Mandarin)

（以國語發言）

Thank you for your questions, I will take the first one. We launched So-Young Prime just over a year ago since then fulfilled orders have grown by tenfold during a quarter when compared in last year as our user base expands rapidly, which I believe demonstrates in the transactions so this is gaining among consumers.

謝謝大家的提問，我先回答第一個問題。一年多前，我們推出了So-Young Prime，從那時起，隨著我們的用戶群迅速擴大，一個季度內完成的訂單量比去年增長了十倍，我相信這在交易中得到了證明，因此這在消費者中越來越受歡迎。

Within fulfilled orders, high intensified focused ultrasound under the ultrasonic anti-aging category in particular increased by 44% sequentially -- generating strong word of mouth.

在已完成的訂單中，特別是超音波抗衰老類別下的高強度聚焦超音波環比增長了44%，產生了良好的口碑。

(spoken in Mandarin)

（以國語發言）

As I mentioned during my prepared remarks that we build a model clinic for high -- we call it is a flagship store for light medical aesthetics procedures on the second floor of our office. The team operating in the clinic are fully integrated with So-Young Prime and driving the development of a standardized measurement system for light medical aesthetics institutions and further improving the overall business model.

正如我在準備好的演講中提到的，我們在辦公室二樓建立了一個高端示範診所，我們稱之為輕型醫療美容手術的旗艦店。診所營運團隊與新氧Prime全面融合，推動光醫美容機構標準化測量體系的發展，進一步完善整體商業模式。

(spoken in Mandarin)

（以國語發言）

We will continue the So-Young Prime user base so this experience capture emerging in the light medical assets industries and to create products and service with high quality-to-cost ratios. We will also expand the number of categories with cooperation with institutions and an impairment of a standardized measurement system to strengthen our position as an all-around primer for small and mid-sized light medical aesthetic institutions.

我們將延續新氧Prime用戶群，讓這種體驗抓住輕醫療資產產業的新興趨勢，並創造出高性價比的產品和服務。我們也將透過與機構合作擴大品類，完善標準化衡量體系，強化中小型輕醫美機構全方位引流的地位。

(spoken in Mandarin)

（以國語發言）

We plan on integrating So-Young Prime with our supply chain business in the future. Products from the supply chain business can directly source So-Young Prime's micro focused ultrasound device -- the new generation of ultrasonic anti-aging equipment -- we launched in the fourth quarter has performed well in clinical applications. Going forward, So-Young Prime will gradually introduce new products for the improved margins and create synergies with our supply chain business.

我們計劃未來將新氧Prime與我們的供應鏈業務整合。供應鏈業務的產品可以直接採購新氧Prime的微聚焦超音波設備—新一代超音波抗衰老設備—我們在第四季推出的臨床應用表現良好。展望未來，新氧將逐步推出新產品以提高利潤率，並與我們的供應鏈業務產生協同效應。

(spoken in Mandarin)

（以國語發言）

Okay. I will respond to the question regarding the marketing expense. We have placed an accent on improving advertising efficiency this year. Conversion rate for users placing an order online improved in the third quarter, mainly due to our community content, strong brand image, and new user acquisition matters such as a private domain operation. Looking ahead to Q4 and 2024, we will continue to leverage our community content, strong brand, and other competitive advantages to further improve the user experience to increase user conversion rates.

好的。我將回答有關行銷費用的問題。今年我們非常注重提升廣告效率。第三季線上訂單的用戶轉換率有所提高，主要得益於我們的社群內容、強大的品牌形像以及私域營運等新用戶獲取事宜。展望第四季和2024年，我們將持續利用社群內容、強大品牌等競爭優勢，進一步改善用戶體驗，提高用戶轉換率。

Lastly, we will also continue deploying a highly efficient marketing strategy, expanding user acquisition channels, improve marketing ROI, and carefully manage marketing costs to maintain our margin and improve the profitability of the company.

最後，我們也將繼續部署高效的行銷策略，擴大用戶獲取管道，提高行銷投資報酬率，並謹慎管理行銷成本，以維持利潤率並提高公司的獲利能力。

Nelson Cheung, Citi.

張納爾遜，花旗銀行。

(spoken in Mandarin) So I would translate myself in English. So, thanks, management for taking my questions. So how would management expect the vertical effective market to develop in fourth quarter, especially during the Double 11 period? And also, into the next year 2024? Thank you.

（用國語發言）所以我會把自己翻譯成英文。所以，謝謝管理層回答我的問題。那麼管理階層預計第四季度，特別是雙11期間垂直有效市場將如何發展？還有，到明年 2024 年嗎？謝謝。

(spoken in Mandarin)

（以國語發言）

Thank you for asking me. First, as I mentioned in prepared remarks, I believe the medical aesthetics market going forward, we are heading in two directions.

謝謝你問我。首先，正如我在準備好的發言中提到的，我相信醫療美容市場的未來，我們正朝著兩個方向發展。

The first is gradual and stacker popularization of high tier users who are less impacted by the weak macro environment, and we'll continue to seek high quality service. In the scenario of low to mid users, it will increasingly gravitate towards products with the best quality-to-cost ratio.

首先是受宏觀環境影響較小的高端用戶的逐步普及，我們將繼續尋求高品質的服務。在中低階使用者場景下，會越來越傾向於性價比最好的產品。

The second is a continuation of high speed growth of light medical aesthetics in the medical and the market continues to expand in size. We are adapting each of our business to be able to cater to both of these scenarios.

二是光醫美在醫療領域延續快速成長，市場規模不斷擴大。我們正在調整我們的每一項業務，以便能夠滿足這兩種情況。

(spoken in Mandarin)

（以國語發言）

Based on the outlook potential, we will focus on our three business segments to create consolidated professional medical aesthetics platform for all consumers. First, we are adjusting our community e-commerce business with a focus towards high end services and users seeking high-quality online medical aesthetic services. Secondly, So-Young Prime is being adjusted to serve user growth, look for the best quality cost ratio products as we continue to explore standardized measurement system for light medical aesthetics. Third, our supply chain business is being positioned to incrementally capture a larger share of the light medical aesthetics market as they continue to expand rapidly and to create synergies with other business segments.

基於前景潛力，我們將聚焦三大業務板塊，為廣大消費者打造一體化的專業醫美平台。首先，我們正在調整社群電商業務，聚焦高端服務和尋求高品質線上醫美服務的使用者。其次，新氧Prime正在調整，服務用戶成長，尋找性價比最高的產品，不斷探索光醫美標準化測量體系。第三，我們的供應鏈業務正在不斷快速擴張，並與其他業務部門產生協同效應，逐步佔領光醫美市場的更大份額。

(spoken in Mandarin)

（以國語發言）

In addition, according to consumption data published by the National Bureau of Statistics, total retail sales of consumer groups during the first 10 months increased by 69% year-over-year and 76% year-over-year in October, indicating that the economy is gradually gaining recovery momentum.

此外，國家統計局公佈的消費數據顯示，前10個月消費群體零售總額年增69%，10月年增76%，顯示經濟正逐步獲得復甦動能。

In summary, we remain confident with the growth perspective in medical aesthetics market for 2024 and further into the future. Even though our business is occasionally impacted by volatile markets, it remained resilient. We will continue investing in acquiring high-quality users and institutions to create value for the industry and are confident in our long-term growth perspective. Thank you.

綜上所述，我們對 2024 年及未來醫療美容市場的成長前景仍充滿信心。儘管我們的業務偶爾會受到市場波動的影響，但仍保持彈性。我們將繼續投資以獲取優質用戶和機​​構，為產業創造價值，並對我們的長期成長前景充滿信心。謝謝。

Chloe Wei, CICC. I'm sorry, we're not able to hear your audio at this time. So, we'll move to the next question, which is from [Gigi Ryan] with CITIC. Please go ahead.

魏女士，中金公司。抱歉，我們目前無法聽到您的音訊。那麼，我們將轉向下一個問題，該問題由中信銀行的 [Gigi Ryan] 提出。請繼續。

(spoken in Mandarin) Let me translate my questions. As profitability has improved for two consecutive quarters, how do you expect margins to trend next quarter and going forward? Thank you.

（以國語發言）我來翻譯我的問題。由於獲利能力連續兩季有所改善，您預期下季及未來的利潤率趨勢如何？謝謝。

Thank you for your question. With a soft consumer sentiment, we are focused on driving revenue growth with a gradual diversification of revenue streams. Our supply chain business and So-Young Prime is showing a solid performance each quarter and reflects this focus. The improvement in our profitability for the past two consecutive quarters reflects the improvements we have made in operating efficiency. We will continue to execute this strategy and remain confident that we will be able to maintain profitability next quarter. 2023 is a critical year for our business transformation. We have made steady progress in laying a solid foundation for future growth and creating long-term sustainable value for our shareholders.

謝謝你的問題。由於消費者情緒疲軟，我們專注於透過收入來源逐步多元化來推動收入成長。我們的供應鏈業務和新氧Prime每季都表現出穩健的業績，反映了這一重點。我們的獲利能力連續兩個季度的改善反映了我們在營運效率方面的進步。我們將繼續執行這項策略，並對下個季度能夠保持獲利能力保持信心。 2023年是我們業務轉型的關鍵一年。我們穩步前進，為未來發展奠定堅實基礎，為股東創造長期永續價值。

Looking forward to 2024, we will continue to grow revenue, improve operating efficiency, and carefully manage costs. We will be well positioned to increase our competitiveness and maintain healthy cash flows as we leverage opportunities to generate returns for our shareholders. Thank you.

展望2024年，我們將持續成長收入、提高營運效率、謹慎管理成本。當我們利用機會為股東創造回報時，我們將處於有利地位，以提高我們的競爭力並保持健康的現金流。謝謝。

Thank you.

謝謝。

Chloe Wei, CICC.

魏女士，中金公司。

(spoken in Mandarin) So I will translate myself, Mr. Xing Jin, what do you think of the future competitive landscape? And given the thoughts, how do we position ourselves in the long run? Thank you.

（國語）那麼我自己翻譯一下，邢金先生，您對未來的競爭格局有何看法？考慮到這些想法，從長遠來看我們如何定位自己？謝謝。

(spoken in Mandarin)

（以國語發言）

Thank you for your question. We have been exploring new business models across different verticals within the industry that are outside the traditional Internet business models. We are trying to find new ways to think about industry development and exploring value creation.

謝謝你的問題。我們一直在業界不同垂直領域探索傳統網路商業模式以外的新商業模式。我們正在努力尋找新的想法來思考產業發展、探索價值創造。

(spoken in Mandarin)

（以國語發言）

First, looking midway upstream, we are seeing that a major short video platform tapped into medical aesthetics in the third quarter. We believe these platforms as well as the major e-commerce platform are mainly applying a low-priced purchase model, which fits their operation models. Based on our expectation of industry popularization in the future, we are adopting a different operating strategy with our POP business to focus on the demand of high-end users by providing them a better consumption experience, which will also improve our margin.

首先，往上游看，我們看到第三季有一個主要的短視訊平台進軍醫美領域。我們認為這些平台以及各大電商平台主要採用低價進貨模式，符合其營運模式。基於我們對未來產業普及的預期，我們對POP業務採取不同的營運策略，專注於高端用戶的需求，為他們提供更好的消費體驗，這也將提高我們的利潤率。

(spoken in Mandarin)

（以國語發言）

Downstream adds to the institutional end of the spectrum, users are increasingly seeking products with a high quality-to-cost ratio, which our operations will be able to cater to add this space growth. We believe the chain stores of light medical aesthetics will have a huge market growth space in the future. Domestic competitors in the vertical are few and far between with only two brands growing over 20 chain stores with limited standardized products and low margins.

下游增加了機構端的範圍，使用者越來越多地尋求具有高品質成本比的產品，我們的營運將能夠滿足這些需求，以增加這一空間成長。我們相信輕醫美連鎖店未來將有龐大的市場成長空間。國內垂直產業競爭對手少之又少，只有兩個品牌擁有超過20家連鎖店，標準化產品有限，利潤率低。

There are successful models already deployed outside China, which provides a premier consumption experience for low- to mid-tier users. We are working on deploying a standardized management system for light medical aesthetics institutions through So-Young Prime with high quality-to-cost product ratios for our users. This positions us as an all-around partner for a large number of small and midsized light medical aesthetics institutions.

中國境外已經有一些成功的模式，為中低階用戶提供一流的消費體驗。我們致力於透過新氧Prime為光醫美機構部署標準化的管理體系，為使用者提供高性價比的產品。這使我們成為眾多中小型輕醫美機構的全方位合作夥伴。

(spoken in Mandarin)

（以國語發言）

Upstream competition is getting fierce in the injections category, but in numerous key market, potential remain intact for medical lasers, particularly in the ultrasonic anti-aging category. Based on our observations, we customized and launched the ultrasonic anti-aging product called as micro-focused ultrasound device during the first quarter. For injections, we see enormous growth potential in the regenerative market, driven by new materials and have expanded our offering in the category.

注射劑領域的上游競爭日益激烈，但在許多關鍵市場，醫用雷射的潛力仍然完好無損，特別是在超音波抗衰老領域。根據我們的觀察，我們在第一季客製化並推出了名為微聚焦超音波儀的超音波抗衰老產品。對於注射劑，我們看到了在新材料的推動下再生市場的巨大成長潛力，並擴大了我們在該類別中的產品範圍。

(spoken in Mandarin)

（以國語發言）

In summary, in addition to developing the Internet business model, we're also exploring growth potential along industry supply chain with a focus on the long term. We are confident that our superior positioning in the market and our product advantage to going forward, driven by our integration and innovation along the industry value chain. Thank you. Thank you for asking.

綜上所述，除了發展網路商業模式外，我們也著眼於長期，探索產業供應鏈的成長潛力。我們有信心在產業價值鏈的整合和創新的推動下，我們在市場中的優越定位和產品優勢能夠繼續向前發展。謝謝。謝謝你的慰問。

Thank you. And ladies and gentlemen, we're approaching the end of today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.

謝謝。女士們、先生們，今天的電話會議即將結束。我們感謝大家參加今天的演講。您現在可以斷開線路並度過美好的一天。

Statements in English on this transcript were spoken by an interpreter present on the live call. The interpreter was provided by the company sponsoring this event.

本筆錄中的英語陳述是由現場通話中的口譯員說出的。口譯員由贊助本次活動的公司提供。