So-Young International Inc (SY) 2023 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by for So-Young fourth-quarter and full year 2023 earnings conference call. (Operator Instructions) As a reminder, today's conference call is being recorded. I will now like to turn the meeting over to your host for today's call, Ms. Vivian Xu. Please proceed, Ms. Xu.

女士們、先生們，感謝你們出席新氧第四季和 2023 年全年財報電話會議。（操作員說明）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。請徐女士繼續。

Thank you, operator, and thank you, everyone, for joining So-Young's fourth-quarter and full year 2023 earnings conference call. Joining 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第四季和2023年全年獲利電話會議。我們的共同創辦人、董事長兼執行長金星先生參加了今天的電話會議；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。前瞻性陳述存在風險和不確定性，可能導致實際結果與我們目前的預期有重大差異。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.

這時我想把電話轉給金星先生。

(interpreted) Hello, everyone. Thank you for joining the call today. Despite the challenging market conditions, our business remained resilient as the new ventures we are developing continue to demonstrate significant growth potential. Total revenues increased by 21, 20% -- sorry, 20.1% year-over-year to RMB390.6 million during the quarter. Our legacy business reflected in revenues from information services and others increased by 15.8%. While new businesses reflect in revenues from sales of medical products and maintenance services increased by 50.6% during the quarter.

（譯）大家好。感謝您今天加入通話。儘管市場條件充滿挑戰，我們的業務仍然保持彈性，因為我們正在開發的新企業繼續展現出巨大的成長潛力。本季總營收年增 21，即 20%（抱歉，成長 20.1%）至 3.906 億元。我們的傳統業務反映在資訊服務和其他收入上，成長了 15.8%。而新業務反映的醫療產品銷售和維護服務收入在本季成長了 50.6%。

By carefully managing costs, we regained profitability with a net income attributable to So-Young International Inc of RMB21.3 million in 2023, a significant turnaround from a net loss attributed to So-Young International Inc of RMB65.6 million last year. In many ways, last year presented a even more challenging situation than the COVID-19 pandemic did. In this context, our financial results for the year are even more impressive and a testament to our students and its adaptability in the face of evolving consumer behaviors and market practice.

透過精心管理成本，我們重新實現獲利，2023年新氧淨利為人民幣2,130萬元，較去年淨利虧損人民幣6,560萬元大幅扭轉。從許多方面來說，去年的情況比 COVID-19 大流行更具挑戰性。在這種背景下，我們今年的財務表現更加令人印象深刻，這證明了我們的學生及其面對不斷變化的消費者行為和市場實踐的適應性。

Looking back at 2023, it's evident that our differentiated strategy was key to maintaining stable growth. While e-commerce platforms and short-form video platforms prioritized the pricing of products to attach budget costs low to mid-tier users, we prioritize premium service to attract high tier users seeking quality services. This segment representing only 13% of frequent users, drive 51% of market volume. We've consistently maintained a strong competitive advantage with the segment, given our premium products and services.

回顧2023年，我們的差異化策略顯然是維持穩定成長的關鍵。電商平台和短視頻平台優先考慮產品定價，以吸引中端用戶的低預算成本，而我們優先考慮優質服務，以吸引尋求優質服務的高端用戶。該細分市場僅佔頻繁用戶的 13%，卻佔了 51% 的市場容量。鑑於我們的優質產品和服務，我們在該領域始終保持著強大的競爭優勢。

Throughout the year, we further strengthen this advantage by offering high tier users their personalized services they require for high quality procedures, which also drives supports the profitability of the prominent institutions we cooperate with. Moving forward, we remain committed to this strategy as we build stronger relationships with more high-caliber doctors and institutions.

全年，我們透過向高端用戶提供高品質手術所需的個人化服務，進一步強化了這一優勢，這也推動了與我們合作的知名機構的獲利能力。展望未來，我們將繼續致力於這項策略，與更多高素質醫師和機構建立更牢固的關係。

So-Young Prime made significant progress throughout the year with over 200,000 clinics visit facilitated, generating over RMB100 million in revenues for payment institutions. This translates to a significant user acquisition cost savings of roughly RMB140 million to further optimize our model, we piloted operations for a chain of clinics by establishing a model clinic for like medical aesthetics procedures. On the second floor of our headquarters last summer.

新氧Prime全年取得長足進展，累計就診量超過20萬人次，為支付機構帶來收入超億元。這意味著可節省約1.4億元的用戶獲取成本。去年夏天在我們總部的二樓。

The results have been impressive. This clinic having exceptional growth. We're steadily expanding margins and monthly revenue increasing 13.8 times during the second half of this year, a kegger of 71% equally as important get it breakeven after only three months of formal operations.

結果令人印象深刻。該診所發展迅速。今年下半年，我們的利潤率穩步擴大，每月收入成長了 13.8 倍，達到 71%，同樣重要的是，在正式營運僅三個月後就實現了盈虧平衡。

Building on this success, we are now actively expanding our network by turning partner institutions into a chain of clinics. Several are already under construction with the first one's already operational. We plan to open clinics in six to seven cities throughout 2024 and will explore franchise opportunities in the latter half of this year.

在此成功的基礎上，我們現在正在積極擴展我們的網絡，將合作夥伴機構轉變為連鎖診所。其中幾個已經在建設中，第一個已經投入運作。我們計劃2024年在六到七個城市開設診所，並將在今年下半年探索特許經營機會。

Our supply chain business also continues to create opportunities for us by leveraging synergies with our other business to expand and upstream and allow the medical aesthetics supply chain, distinct from the traditional upstream R&D production supply chain model used by manufacturers. We are able to add further value by leveraging our institutional network, enhancing consumer reach. This allows us to spot emerging trends and quickly bring new products to market and to rapidly make them competitive.

我們的供應鏈業務也持續為我們創造機會，利用與其他業務的綜效向上游擴展，讓醫美供應鏈有別於製造商使用的傳統上游研發生產供應鏈模式。我們能夠透過利用我們的機構網絡來增加更多價值，擴大消費者影響力。這使我們能夠發現新興趨勢並快速將新產品推向市場並迅速提高其競爭力。

To date, we have seven injectable products available on the market, one R&D center and two robust production lines. We approach each relationship with care by adopting a cautious and safe approach. Developing a healthy market for our products is key to long-term sustainability and pricing power.

迄今為止，我們已在市場上擁有七種注射產品、一個研發中心和兩條強大的生產線。我們採取謹慎和安全的方式謹慎對待每一種關係。為我們的產品開發一個健康的市場是長期可持續性和定價能力的關鍵。

Our cooperation with a Korean brand [Ravi] is a perfect example. We positioned their hyaluronic acid serum as mid-market product. And through the careful selection of partners institutions, we distribute to grow sales significantly last year. Shipments of this product increased nearly 600% with over 120,000 medical injections sold so far.

我們與韓國品牌【Ravi】的合作就是一個很好的例子。我們將他們的透明質酸血清定位為中端市場產品。並且透過精心挑選的合作機構，我們去年的分銷銷售量大幅成長。該產品的出貨量增加了近 600%，迄今已售出超過 12 萬支醫用注射劑。

More than 750 select partners institutions also gained from this, with 500 of our core institutions seeing revenue increase by 20% last year as a result. A single SKU can generate revenue of RMB2 million for them in one campaign. We plan to add a new Ravi product to our portfolio this year and looking at other opportunities in the [NDH] category. Our current portfolio of seven products addresses demand across various segments within the highly demanded corrigent category, including [PLA] and others.

超過 750 家精選合作機構也從中受益，其中 500 家核心機構去年營收成長了 20%。單一SKU一次可為他們帶來200萬元的收入。我們計劃今年在我們的產品組合中添加新的 Ravi 產品，並尋找 [NDH] 類別中的其他機會。我們目前的七種產品組合滿足了高需求的校正類別中各個細分市場的需求，包括 [PLA] 等。

Building a strong upstream presence along the medical aesthetics supply chain requires strategic investment in detail. Through our three years of focused efforts, we have built stronger synergies between our product development pipeline, sales team, and our platform. As we secure additional product certifications, we are confident in our ability to consistently generate incremental revenue and profit growth over the long term.

在醫療美容供應鏈上建立強大的上游業務需要詳細的策略投資。經過三年的專注努力，我們在產品開發管道、銷售團隊和平台之間建立了更強大的綜效。隨著我們獲得更多產品認證，我們對長期持續增加收入和利潤成長的能力充滿信心。

We are currently undergoing a strategic business transformation, with a strong focus on the development and growth of our new ventures with these new initiatives and making promising progress and generating rapid growth. They are still in their investment phase, we are confident that these new business will become significant contributors to revenue in the coming quarters.

我們目前正在進行策略性業務轉型，重點關注新企業的發展和成長，透過這些新舉措，取得了可喜的進展並實現了快速成長。他們仍處於投資階段，我們相信這些新業務將在未來幾季成為收入的重要貢獻者。

The medical aesthetics sector in China still presents significant growth potential. It's all adopting the right strategy. As the industry move towards greater standardization, our comprehensive vertically integrated capabilities and competitive strengths are set to become increasingly evident.

中國醫美產業仍呈現巨大的成長潛力。這一切都在於採取正確的策略。隨著產業標準化的發展，我們的綜合垂直整合能力和競爭優勢將日益顯現。

We will continue to adjust the business to create greater synergies between our business and institutions, doctors and products. This strategy focus will allow us to build more drivers and diverse -- sorry, fueled more diverse and sustainable revenue sources and a solid profit structure, ultimately delivering long-term value to our shareholders.

我們將持續調整業務，使業務與機構、醫生與產品產生更大的綜效。這個策略重點將使我們能夠建立更多的驅動力和多樣性——抱歉，推動更多樣化和可持續的收入來源以及堅實的利潤結構，最終為我們的股東帶來長期價值。

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

現在我將致電我們的財務長尼克，在回答你們的問題之前先回顧一下第四季度的財務表現。尼克，請。

Hello, this is Nick. 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 performance on a year-over-year basis.

你好，我是尼克。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 RMB390.6 million, up 20.1% year over year and in line with our guidance. The increase was primarily due to the increase in revenues generated by So-Young Prime and the sales of cosmetic injectables.

該季度總收入為人民幣 3.906 億元，年增 20.1%，符合我們的指引。這一增長主要是由於新氧Prime和美容注射劑銷售收入的增加。

Information services and other revenues were RMB268.1 million, up 15.8% year over year, primarily due to an increase in revenues generated by So-Young Prime. Reservation services revenues decreased 20.7% year-over-year to RMB20.6 million, primarily due to the operating strategy which gave higher subsidies to end users. Sales of medical products and the maintenance service revenues were RMB101.9 million, up 50.6% year over year, primarily due to an increase in sales of cosmetic injectables.

資訊服務及其他收入為人民幣2.681億元，年增15.8%，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20.7%至人民幣2,060萬元，主要是因為營運策略對終端用戶給予更高補貼。醫療產品銷售及維修服務收入為人民幣101.9百萬元，較去年同期成長50.6%，主要是因為美容注射銷售增加。

Cost of revenues were RMB137.6 million, up 56.0% year over year. The increase was primarily due to an increase in costs associated with So-Young Prime and the sales of cosmetic injectables. Within cost of revenues. Cost of services and others were RMB94.1 million, up 73.6% year over year, primarily due to an increase in costs associated with So-Young Prime. Cost of medical products sold and maintenance services were RMB43.6 million, up 28.1% year over year, primarily due to an increase in costs associated with sales of cosmetic injectables.

收入成本為人民幣137.6百萬元，較去年成長56.0%。這一增長主要是由於新氧 Prime 和美容注射劑銷售相關成本的增加。在收入成本範圍內。服務及其他成本為人民幣9,410萬元，較去年同期成長73.6%，主要是新氧Prime相關成本增加所致。醫療產品銷售及維修服務成本為人民幣4,360萬元，較去年同期成長28.1%，主要是由於美容注射劑銷售成本增加所致。

Total operating expenses were RMB257.8 million, up 21.3% year over year. Sales and marketing expenses were RMB126.2 million, up 28.3% year over year, primarily due to an increase in payroll costs and the expenses associated with the branding and the user acquisition activities. G&A expenses were RMB86.7 million, up 18.4% year over year, primarily due to an increase in payroll costs associated with the expansion of our administrative employees to support our business upgrade and new strategic businesses. R&D expenses were RMB45.0 million, up 9.6% year over year, primarily attributable to an increase in payroll costs.

總營業費用為人民幣257.8百萬元，較去年同期成長21.3%。銷售及行銷費用為人民幣1.262億元，年增28.3%，主要是由於工資成本以及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 8,670 萬元，年增 18.4%，主要是由於為支持業務升級和新戰略業務而擴大行政人員規模，導致工資成本增加。研發費用為人民幣4,500萬元，較去年成長9.6%，主要是因為薪資成本增加所致。

Income tax benefits were RMB10.8 million, which was primarily due to the impact of additional deductions for research and development expenditures compared with income tax benefit of RMB2.4 million in the fourth quarter of 2022. Net income attributable to So-Young was RMB17.5 million compared with a net income of RMB31.3 million during the same period last year.

所得稅優惠為人民幣1,080萬元，主要是由於研發支出加計扣除的影響，而2022年第四季所得稅優惠為人民幣240萬元。新氧歸屬淨利為人民幣1,750萬元，去年同期淨利為人民幣3,130萬元。

Non-GAAP net income attributable to So-Young was RMB35.3 million compared with RMB38.8 million non-GAAP net income attributable to So-Young in the same period of 2022. 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 RMB0.29 and RMB0.29 respectively, during the same period of 2022.

非美國通用會計準則歸屬於新氧的淨利為人民幣3,530萬元，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3,880萬元。歸屬於普通股股東的每股美國存託股票基本收益和稀釋後收益分別為人民幣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收益和稀釋收益分別為人民幣0.29元和人民幣0.29元。

For the full year 2023. Total revenue were RMB1.5 billion, up 19.1% year over year. Within total revenues. Information services and other revenues were RMB1.1 million, up 22.2% year over year. Reservation services revenues were RMB101.3 million, down 21.3% year over year. Sales of medical products and maintenance services revenues were RMB333.5 million, up 28.7% year over year.

2023 年全年。總收入人民幣15億元，較去年成長19.1%。在總收入之內。資訊服務及其他收入為人民幣110萬元，較去年同期成長22.2%。預訂服務收入為人民幣1.013億元，較去年同期下降21.3%。醫療產品銷售及維修服務收入為人民幣333.5百萬元，較去年同期成長28.7%。

Cost of revenues were RMB544.3 million, up 38.4% year over year, primarily due to an increase in costs associated with So-Young Prime and the sales of cosmetic injectables. Total operating expenses were RMB1.0 billion, up 4.9% year over year.

收入成本為人民幣5.443億元，年增38.4%，主要是因為新氧Prime及美容注射劑銷售相關成本增加。總營業費用為人民幣10億元，較去年同期成長4.9%。

Net income attributable to So-Young International Inc were RMB21.3 million compared with a net loss of RMB65.6 million in the fiscal year 2022. Non-GAAP net income attributable to So-Young International Inc was RMB57.6 million compared to a net loss of RMB22.2 million in the fiscal year 2022. Basic and diluted earnings per ADS attributable to ordinary shareholders were RMB0.21 and RMB0.21 respectively, compared with basic and diluted losses per ADS attributable to ordinary shareholders of RMB0.61 and RMB0.61, respectively in fiscal year 2022.

新氧國際應佔淨利為人民幣2,130萬元，2022財年淨虧損為人民幣6,560萬元。非美國通用會計準則歸屬於新氧國際的淨利為人民幣 5,760 萬元，而 2022 財年淨虧損為 2,220 萬元。2022財年，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0.21元和人民幣0.21元，而歸屬於普通股股東的每股美國存託股基本和稀釋虧損分別為人民幣0.61元和人民幣0.61元。

We have ample cash on hand with a total cash and cash equivalents, restricted cash and term deposits, term deposits and short-term investments of RMB1.3 billion as of December 31, 2023, compared with RMB1.6 billion as of December 31, 2022. The decrease was primarily due to share repurchases of RMB125.6 million in 2023 and a RMB111.3 million increase in term deposits with maturities longer than one year.

我們手頭現金充裕，截至2023年12月31日，現金及現金等價物、受限現金及定期存款、定期存款及短期投資總額為人民幣13億元，而截至12月31日為人民幣16億元。年。減少的主要原因是2023年回購股份1.256億元人民幣，以及一年以上定期存款增加人民幣1.113億元。

I'd like to reiterate that our new gains businesses are currently in a critical phase of development as we support them in their early stages of growth. They are critical pieces to the foundation we are building for future growth and recognize that we are just at the start of this journey. We however, are extremely confident that they will increasingly contribute to revenues growth in the quarters ahead.

我想重申，我們的新收益業務目前正處於發展的關鍵階段，我們將在其早期發展階段為其提供支援。它們是我們為未來成長奠定基礎的關鍵部分，並認識到我們才剛開始這趟旅程。然而，我們非常有信心它們將為未來幾季的營收成長做出越來越多的貢獻。

With this in mind. For the first quarter of 2024, we expect total revenues to be between RMB290 million and RMB310 million. The above outlook is based on the current market conditions that reflects in the company's preliminary estimates of market and operating conditions and the customer demand. This concludes our key remarks. I will now turn the call to the operator and open the call for QA. Operator, we are ready to take questions. Thank you.

考慮到這一點。2024年第一季，我們預計總收入在2.9億元人民幣至3.1億元之間。上述展望基於當前市場狀況，反映了公司對市場和經營狀況以及客戶需求的初步估計。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品質檢查電話。接線員，我們準備好回答問題。謝謝。

(Operator Instructions) Katrina Xu, Citigroup.

（操作員指令）Katrina Xu，花旗集團。

(spoken in Chinese) I'll translate myself. Thanks management, for taking my question. My question is about the overall outlook of the medical aesthetic market in 2024 and also the market landscape of the medical aesthetic market into the first quarter of 2024. Thank you.

（用中文發言）我自己翻譯。感謝管理層回答我的問題。我的問題是關於2024年醫美市場的整體展望，以及2024年第一季醫美市場的市場格局。謝謝。

(interpreted) According to data from China National Bureau of Statistics, retail sales of consumer goods are gradually recovering, increasing of 6.7% year over year in January and February 2024. Consumption data from our medical aesthetics platform is also reflecting this trend, with a gradually improving macroeconomic environment and our differentiated strategy taking hold. We remain optimistic about the growth prospect of the medical aesthetics industry in 2024 and over the long-term.

(解讀)國家統計局數據顯示，2024年1月至2月，社會消費品零售總額年增6.7%。我們的醫美平台的消費數據也反映了這一趨勢，隨著宏觀經濟環境的逐步改善和我們的差異化策略的確立。我們對醫美產業2024年及長期的成長前景保持樂觀。

The Chinese medical aesthetics industry is maturing. Structural changes in consumer behavior are driving tremendous shift in demand. As consumers mature, the market is trading away from low frequency and high perception value towards high frequency, high quality, and diversification. As a result, implements platform and medical institutions are shifting their focus upstream and towards acquiring diverse traffic. Competing on pricing will no longer be an option to attract the premium users. The old model will lower the value proposition of products and services and a lead to a smaller shelf of wider market.

中國醫美產業日趨成熟。消費者行為的結構性改變正在推動需求的巨大轉變。隨著消費者的成熟，市場正從低頻、高感知價值轉向高頻、高品質、多元化。因此，工具平台和醫療機構將重心向上游轉移，以獲取多元化的流量。價格競爭將不再是吸引優質用戶的選擇。舊模式將降低產品和服務的價值主張，並導致更廣泛的市場貨架更小。

In 2024, these market shifts will continue. As a result, we will focus on refining our three business and further consolidate the positioning of our platform in the market. We will do this by upgrading our community pub business and adding high end customized services catering to top tier uses by adopting a depreciated operating strategy from our peers. So-Young Prime will focus on offering the best quality to cost ratio for mid-tier users, and our upstream business will support both of these platforms and user growth, capturing opportunities in the light medical aesthetics market and expanding margins. Thank you.

到 2024 年，這些市場轉變將持續下去。因此，我們將專注於完善三大業務，進一步鞏固平台的市場地位。我們將透過升級我們的社區酒吧業務並透過採用同行折舊的營運策略來增加滿足頂級用途的高端客製化服務來實現這一目標。新氧Prime將專注於為中端用戶提供最佳的性價比，而我們的上游業務將支持這些平台和用戶的成長，抓住光醫美容市場的機會並擴大利潤。謝謝。

[Bai Han], CITIC Securities.

[白菡]，中信證券。

(spoken in Chinese) I'd like to ask what are your thoughts on the recent suspension of medical aesthetics live broadcasting? And where do you think the regulation trending are going forward? Thank you.

（中文）請問您對最近醫美直播停播有何看法？您認為未來的監管趨勢是什麼？謝謝。

(interpreted) The medical aesthetics market continues to be regulated scrimpily. For any new marketing models that are deployed, regulators will require an observation period where they can stop any behaviors that breaks the medical and law. We believe medical aesthetics marketing will continue to be restricted to a few channels approved by regulators such as search engines and e-commerce. This regulatory trend actually benefits us indirectly, as a value proposition of our existing legal marketing channels become more pronounced.

（解讀）醫美市場監管持續嚴格。對於任何部署的新行銷模式，監管機構將要求一段觀察期，以阻止任何違反醫療和法律的行為。我們認為醫美行銷將繼續僅限於搜尋引擎和電子商務等監管機構批准的少數管道。這種監管趨勢實際上使我們間接受益，因為我們現有合法行銷管道的價值主張變得更加明顯。

We maintain our belief that a healthy market is a foundation for long-term growth and value creation for our company. We will focus our attention on the supply side of the market going forward, by integrating the core production advantage we have accumulated in terms of institutions, doctors, and users. This will also allow us to set standards for service quality and the delivery, ensuring users receive a premium experience. These comprehensive capabilities will enable us to build a strong competitive barrier. Unlike pure Internet business model, we are in a position to solve issues at deeper level, creating a differentiated model from our competitors. Thank you.

我們堅信，健康的市場是我們公司長期成長和創造價值的基礎。未來我們將聚焦市場供給側，整合我們在機構、醫師、使用者等方面所累積的核心生產優勢。這也將使我們能夠制定服務品質和交付標準，確保用戶獲得優質體驗。這些綜合能力將使我們建構起強大的競爭障礙。與純粹的網路商業模式不同，我們能夠從更深層次解決問題，創造出與競爭對手不同的模式。謝謝。

Chloe Wei, CICC.

魏女士，中金公司。

(spoken in Chinese) Okay, let me translate myself. So my question is concerning So-Young Prime. Could management maybe share some more about the P&L contribution revenue and margins and what we have in 2023 and what we should expect in 2024?

（中文） 好吧，我自己翻譯一下。所以我的問題是關於So-Young Prime的。管理階層能否分享更多有關損益貢獻收入和利潤率以及我們 2023 年的情況以及我們對 2024 年的預期的資訊？

Also could management share some color on the playbook in different cities in China, since we are looking at more chain clinics in operation by the end of 2024. How should we expect the pace and investments Thank you.

由於我們預計到 2024 年底會有更多連鎖診所投入運營，因此管理層也可以分享中國不同城市的策略。我們應該如何預期步伐和投資謝謝。

(interpreted) In So-Young Prime completed this strategic transformation into an asset-light, highly efficient platform, and operational model, which help us to make - take the lead in the surgery and light medical aesthetics sector. The model clinic we opened last August is a logical next step of our previous cooperation with institutions and their products.

（解讀）新氧完成了輕資產、高效率的平台和營運模式的策略轉型，幫助我們在手術和光醫美領域佔據領先地位。我們去年八月開設的示範診所是我們先前與機構及其產品合作的下一步。

We gathered an experienced colleague operating team to promote development of a standardized measurement system for light medical aesthetics institution that takes advantage of our supply chain innovative capabilities. Our model clinic is key to breakeven after only three months for formal operations, which reflects our strong reputation among medical aesthetics users and has strengthened our confidence to begin exploring franchising opportunities.

我們聚集了經驗豐富的同事營運團隊，利用我們的供應鏈創新能力，推動光醫美機構標準化測量系統的開發。我們的示範診所在正式營運僅三個月後就實現了盈虧平衡，這反映了我們在醫學美容使用者中的良好聲譽，也增強了我們開始探索特許經營機會的信心。

In 2024, we plan of opening more than 10 clinics in six cities national wide. Each location has been selected based on data from our cooperation with institution, strict operational requirements, profitability, and the deep market research. That's all, thank you.

到2024年，我們計劃在全國6個城市開設10家以上診所。每個地點的選擇都是基於我們與機構合作的數據、嚴格的營運要求、獲利能力以及深入的市場研究。僅此而已，謝謝。

[Joe Tan], Jefferies.

[喬·譚]，傑弗里斯。

(spoken in Chinese) Let me translate myself. This is Joy from Jefferies on behalf of Thomas Chong. My question is, can management share with us the outlook for the upstream supply chain business? Thank you.

（用中文發言）我自己翻譯一下。我是 Jefferies 代表 Thomas Chong 發來的 Joy。我的問題是，管理階層能否與我們分享上游供應鏈業務的前景？謝謝。

(interpreted) Thank you for your question. We plan to launch a new small business in 2024 and also add a new NDH product sourced through our supply chain business. In addition, from 2025 in the light and non-data corrigent category, we will launch various products, including PWLA, which will establish a strong presence for us in this vertical.

（翻譯）謝謝你的提問。我們計劃在 2024 年推出新的小型業務，並增加透過我們的供應鏈業務採購的新 NDH 產品。此外，從 2025 年開始，在輕型和非資料校正類別中，我們將推出包括 PWLA 在內的各種產品，這將為我們在該垂直領域建立強大的影響力。

With three years of operational experience, the synergies between our product developments pipeline, sales team, and platform are now rapidly strengthening. We expected to add more products and continuously generate incremental revenue and profit growth from the supply chain business. Thank you.

憑藉三年的營運經驗，我們的產品開發管道、銷售團隊和平台之間的協同效應正在迅速加強。我們預計將增加更多產品，並持續從供應鏈業務中產生增量收入和利潤成長。謝謝。

[Yves Lee], Haitong Securities.

[Yves Lee]，海通證券。

(spoken in Chinese) Let me translate myself. Thank you, and good evening management. Here I have a question about the profit margin, and I would like to know what's the reason for the year-over-year decrease in gross margin and what will your margin trend going forward? Thank you.

（用中文發言）我自己翻譯一下。謝謝，晚上好。這裡我有一個關於利潤率的問題，我想知道毛利率年減的原因是什麼？謝謝。

(spoken in Chinese) Okay, I will translate myself. The decrease in gross margin was mainly due to the changes in revenue mix. In Q4 2023, our sales of information and reservation services maintained high margins compared to those for sales of medical products and maintenance, which was lower. While revenue from new business such as So-Young Prime, have already demonstrated their potential. It is still in the early stages of development with a lower gross margin.

（中文）好的，我自己翻譯。毛利率下降主要是由於收入結構變化所致。2023年第四季度，我們的資訊和預訂服務銷售維持較高利潤率，而醫療產品和維護銷售利潤率較低。而新氧Prime等新業務的收入，已經展現了其潛力。目前仍處於發展初期，毛利率較低。

As we strategically expand our presence along the medical aesthetics value chain, each of those new businesses are expected to increasingly contribute to our bottom line. As the synergies created by our presence, both upstream and downstream strengthen, the profitability of our business overall is expected to improve in the mid to long term. Thank you.

隨著我們策略性地擴大我們在醫療美容價值鏈上的影響力，預計每項新業務都將為我們的利潤做出越來越多的貢獻。隨著上下游綜效的增強，中長期來看，我們業務的整體獲利能力有望改善。謝謝。

We are now approaching the end of the conference call. Thank you for your participation in today's conference. You may now disconnect. Have a good day.

我們現在電話會議即將結束。感謝您參加今天的會議。您現在可以斷開連線。祝你有美好的一天。

Portions of this transcript that are marked (interpreted) were spoken by an interpreter present on the live call. The interpreter was provided by the company sponsoring this event.

此文字記錄中標記（翻譯）的部分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。