So-Young International Inc (SY) 2024 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by for So-Young's second quarter 2024 earnings conference call. (Operator Instructions) As a reminder, today's conference call is being recorded. I would now like to turn the conference over to your host for today's call, Ms. Mona Qiao. Please go ahead, Ms. Mona.

女士們、先生們，感謝你們出席新氧 2024 年第二季財報電話會議。（操作員說明）提醒一下，今天的電話會議正在錄音。現在我想將會議交給今天電話會議的東道主喬蒙娜女士。請繼續，莫娜女士。

Thank you, operator, and thank you, everyone, for joining So-Young's Second Quarter 2020 Earnings Conference Call. Joining me today on the call is Mr. Xing Jin, our Co-Founder, Chairman and CEO; and Mr. Nick Zhao, CFO. Please note that the discussion today will contain forward-looking statements made under the safe harbor provisions of the US Private Securities and the 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.

謝謝業者，也謝謝大家參加新氧2020年第二季獲利電話會議。今天加入我電話會議的是金星先生，我們的共同創辦人、董事長兼執行長；和財務長趙尼克先生。請注意，今天的討論將包含根據美國私人證券安全港條款和 1995 年訴訟改革法案做出的前瞻性陳述。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目前的預期有重大差異。

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 statements, except as required under applicable law.

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，新氧不承擔更新任何前瞻性聲明的義務。

At this time, I'd 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. Welcome to today's earnings call. Our performance during the second quarter was solid with total revenue of RMB407.4 million, exceeding the top end of our guidance. Non-GAAP net profit was RMB22.2 million, up 43.1% year-over-year, showcasing our high-quality growth and the effectiveness of industry integration.

（譯）大家好。歡迎參加今天的財報電話會議。我們第二季的業績穩健，總收入達到人民幣 4.074 億元，超出了我們指導的上限。非美國通用會計準則淨利潤為人民幣2,220萬元，較去年同期成長43.1%，展現了我們的高品質成長和產業整合的成效。

We capitalized on industry trades executed on our strategy has made impressive progress during the quarter. Specifically, our new business segments continue to grow rapidly with revenue from the sales of medical products and maintenance services reaching RMB106 million, up 22.6% year-over-year.

我們利用根據我們的策略執行的行業交易在本季度取得了令人矚目的進展。其中，新業務持續快速成長，醫療產品銷售及維修服務收入達人民幣1.06億元，較去年同期成長22.6%。

Product shipments in our upstream supply chain business increased as our chain of clinics expanded, both contributing significantly to growth. We are the only platform covering the upstream, midstream and downstream segments of the entire aesthetic medical industry and are leading the industry into a new era of high-quality and sustainable development.

隨著我們連鎖診所的擴張，我們上游供應鏈業務的產品出貨量增加，兩者都對成長做出了重大貢獻。我們是唯一覆蓋整個美容醫療產業中中下游的平台，正在引領產業進入高品質永續發展的新時代。

Leveraging the synergies created by the vertical integration, we are enhancing industry transparency and operational efficiency across the value chain. This closely aligns the industry value chain with evolving consumer needs, ensures a diverse reach of high-quality and affordable products, optimize the customer experience and redefine standards for medical aesthetic services.

利用垂直整合產生的協同效應，我們正在提高整個價值鏈的產業透明度和營運效率。這使產業價值鏈與不斷變化的消費者需求緊密結合，確保提供多樣化的優質平價產品，優化客戶體驗並重新定義醫美服務標準。

We continue to drive high-quality development in our POP segment and strengthen our competitive advantage in the mid- to high-end market by refining operations and deploying target user subsidies. With client demand for premium customized products growing, we adjust our strategy and upgraded SKUs, ensuring their authenticity and further enrich the categories offered by our leading partner institutions.

我們透過精細化營運、精準用戶補貼等方式，持續推動POP領域高品質發展，強化中高端市場競爭優勢。隨著客戶對優質客製化產品的需求不斷增長，我們調整策略並升級SKU，確保其真實性，並進一步豐富我們領先合作機構提供的品類。

We also strengthened support for high-quality institutional partners by integrating our POP business with our chain of clinics to create deeper and greater synergies, enabling us to better meet the evolving and diverse medical aesthetic needs of mid- to high-end users.

我們也加強對優質機構合作夥伴的支持，將POP業務與連鎖診所整合，產生更深、更大的協同效應，使我們能夠更好地滿足中高端用戶不斷變化和多樣化的醫美需求。

In the second quarter, GMV for medical aesthetic products and services reached RMB428 million over 230,000 verified orders, up around [70% and 80%] respectively. We continue to optimize our traffic acquisition strategy by reallocating budget away from low ROI online channels to our private domains.

第二季度，醫美產品及服務的GMV達到人民幣4.28億元，驗證訂單超過23萬筆，分別成長約[70%和80%]。我們透過將預算從低投資報酬率的線上管道重新分配到我們的私人領域，繼續優化我們的流量獲取策略。

Refined multichannel private domain operations allows us to cultivate and retain a target user base and improve user engagement, as monetization efficiency. In the second quarter, the use of private domains reached 810,000, up 14% quarter-over-quarter.

精細化的多通路私域營運讓我們能夠培養和留住目標用戶群，提高用戶參與度和變現效率。第二季度，私有網域的使用量達到81萬次，較上季成長14%。

Let's move on to So-Young Prime. Currently, we have opened 14 clinics in prime commercial areas in 8 core cities, including Beijing, Shanghai, Shenzhen, Hangzhou, Chengdu, Wuhan, Chongqing and Changsha. All of these clinics are fully operational and performing in line with expectations.

讓我們繼續講So-Young Prime。目前，我們已在北京、上海、深圳、杭州、成都、武漢、重慶、長沙等8個核心城市的黃金商圈開設了14家診所。所有這些診所均已全面投入運營，且表現符合預期。

Leveraging our strong user base, the reputational strength of our brand and standardized fulfillment capabilities, the number of verified customers increased by 85% quarter-over-quarter, the repeat purchase rate exceeded 50%, and customer satisfaction improved to reach an impressive 4.97 out of 5.

憑藉強大的用戶基礎、品牌聲譽和標準化履行能力，經過驗證的客戶數量環比增長85%，重複購買率超過50%，客戶滿意度提升至令人印象深刻的4.97分共 5 個。

We've also achieved solid operational efficiencies. For example, our Beijing clinics generated revenue of RMB6.2 million in June with pretax profit of RMB1.3 million and a profit margin of around 20%. The repurchase rate hit 67% higher than the industry average.

我們也取得了紮實的營運效率。例如，我們北京診所6月的收入為人民幣620萬元，稅前利潤為人民幣130萬元，利潤率約20%。回購率高達67%，高於業界平均。

Notably, both unit area efficiency and monthly revenue per doctor outperformed traditional clinics. The experience we have accumulated from these provide us with valuable insights that we will apply to other new clinics to accelerate their growth.

值得注意的是，單位面積效率和每位醫師的每月收入均優於傳統診所。我們從中累積的經驗為我們提供了寶貴的見解，我們將應用於其他新診所以加速其發展。

We are very optimistic about the future of light medical aesthetic clinics as planned to begin franchising our chain of clinics in the second half of this year in order to rapidly expand our footprint by replicating this proven standardized model in the target cities.

我們對輕型醫美診所的未來非常樂觀，並計劃於今年下半年開始對我們的連鎖診所進行特許經營，以便透過在目標城市複製這一經過驗證的標準化模式來快速擴大我們的足跡。

Lastly, I will provide updates on our supply chain business. Leveraging our extensive consumer behavior data and experienced team, we are building for category upstream medical aesthetic manufacturing capabilities for our broader ecosystem. With over a decade of operations, we have accumulated a wealth of consumer behavior data and user demand insights, laying a solid foundation for the development and customization of our products.

最後，我將介紹我們供應鏈業務的最新情況。憑藉我們廣泛的消費者行為數據和經驗豐富的團隊，我們正在為更廣泛的生態系統打造品類上游醫美製造能力。經過十多年的運營，我們累積了豐富的消費者行為數據和用戶需求洞察，為產品的開發和客製化奠定了堅實的基礎。

In addition, leveraging our extensive institutional coverage and strong customer marketing capabilities, we are able to rapidly strengthen the competitiveness of new products using our clinics to ensure a steady stream of sales. Our core team is composed of professionals from top domestic and international manufacturers, each possessing an average of 5 to 10 years of industry experience and strong expertise in product selection and sales.

此外，憑藉廣泛的機構覆蓋和強大的客戶行銷能力，我們能夠利用診所快速增強新產品的競爭力，確保穩定的銷售。我們的核心團隊由來自國內外頂尖製造商的專業人士組成，平均擁有5至10年的行業經驗，在產品選型和銷售方面擁有豐富的專業知識。

In the second half of the year, we will continue to expand this team with a goal of reaching 100 members by the end of the year. Additionally, we've seen a continuous increase in shipments of True Lift, our newly launched non-surgical anti-aging ultrasound device, reflecting a strong potential to be a market hit.

下半年，我們將繼續擴大這個團隊，目標是年底達到100人。此外，我們新推出的非手術抗衰老超音波設備 True Lift 的出貨量持續成長，反映出其強大的市場潛力。

Meanwhile, the (inaudible) industry has maintained strong growth momentum with second quarter shipments exceeding 40,000 units, up 76% quarter-over-quarter and 130% year-over-year. Revenue from disposable injectables grew by 65% quarter-over-quarter and 170% year-over-year. As of the second quarter of 2024, we partnered with 718 institutions for the sales of injectables.

同時，（聽不清楚）產業保持強勁成長勢頭，第二季出貨量超過 4 萬台，季增 76%，較去年同期成長 130%。一次性注射劑收入較上季成長 65%，年增 170%。截至2024年第二季度，我們與718家機構合作進行注射劑銷售。

Despite this soft recovery in consumption and the macroeconomic challenge over the near term, we believe that the Chinese medical aesthetic market still has enormous potential in the long term. As the industry begins reshuffling and enters a period of consolidation, leading brands like So-Young with a unique ecosystem and full category advantage are well positioned to capitalize on the new opportunities, expand their market share and growth potential and solidify their position as market leaders.

儘管近期消費復甦緩慢且宏觀經濟面臨挑戰，但我們相信中國醫美市場長期仍具有巨大潛力。隨著產業洗牌進入整合期，新氧等領導品牌憑藉獨特的生態系統和全品類優勢，將充分掌握新機遇，擴大市場佔有率和成長潛力，鞏固市場領導者地位。

We believe our POP business is ideally suited to meet demands for non-standardized treatment, while our chain of clinics can service standardized treatment. Supporting both of these businesses with a steady stream of exclusive products in our upstream business, which will also benefit from to see and to be opportunities and guaranteed sales offered by both downstream businesses.

我們相信我們的 POP 業務非常適合滿足非標準化治療的需求，而我們的連鎖診所可以提供標準化治療。在我們的上游業務中透過源源不絕的獨家產品來支持這兩項業務，這也將受益於看到並成為下游業務提供的機會和保證的銷售。

Combined, these three business segments create enormous synergies and from our year-end triangle, we strongly believe that vertically integrating the industry value chain will drive innovation, effectively ensure the quality of services and open up new growth opportunities for So-Young going forward.

這三個業務板塊結合在一起，產生了巨大的協同效應，從年終三角來看，我們堅信，垂直整合行業價值鏈將推動創新，有效保證服務質量，並為新氧未來開闢新的增長機會。

I will let our CFO, Nick, take over now to go through the second quarter's financial results. After that, we'll open up for questions.

我將讓我們的財務長尼克現在接手審查第二季的財務表現。之後，我們將開放提問。

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 impactive financial performances 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，以了解我們同比影響力財務表現的詳細資訊。

Total revenues during the quarter were RMB407.4 million, down 1.1% year-over-year, exceeding the high end of our guidance on the back of 22.6% year-over-year increase in sales of medical products and maintenance services. Information services and other revenues were RMB279.2 million, down 6.6% year-over-year, primarily due to a decrease in the number of medical service providers subscribing to information services in our platform.

本季總營收為 4.074 億元，年減 1.1%，超過我們指導的上限，主要得益於醫療產品和維護服務銷售額年增 22.6%。資訊服務及其他收入為人民幣279.2百萬元，年減6.6%，主要是由於在我們平台訂閱資訊服務的醫療服務提供者數量減少。

Reservation Services revenues decreased 16.9% year-over-year to RMB22.4 million, primarily due to policy changes for commission rates and subsidies. Cost of revenues were RMB155.1 million, up 3.1% year-over-year, primarily due to an increase in costs associated with the sales of cosmetic products.

預訂服務收入較去年同期下降16.9%至人民幣2,240萬元，主要是由於佣金率和補貼等政策變動。收入成本為人民幣155.1百萬元，較去年同期成長3.1%，主要是因為化妝品銷售成本增加。

Within cost of revenues, cost of services and others were RMB101.9 million, down 4.4% year-over-year, primarily due to a decrease in costs associated with So-Young Prime. Cost of medical products sold, and maintenance services were RMB53.2 million, up 21.3% year-over-year, primarily due to an increase in costs associated with the sales of cosmetic products.

收入成本中，服務成本及其他成本為人民幣1.019億元，較去年同期下降4.4%，主要是因為新氧Prime相關成本下降。醫療產品銷售及維修服務成本為人民幣5,320萬元，較去年同期成長21.3%，主要是因為化妝品銷售成本增加。

Total operating expenses were RMB245.6 million, down 13% year-over-year. Sales and marketing expenses were RMB132.3 million, down 4.1% year-over-year, primarily due to a decrease in expenses associated with branding and user acquisition activities. G&A expenses were RMB70.8 million, down 23.3% year-over-year, primarily due to decreases in share-based compensation expenses and the professional consulting fees. R&D expenses were RMB42.5 million, down 18.5% year-over-year, primarily attributable to improvement in staff efficiency.

總營業費用為人民幣2.456億元，較去年同期下降13%。銷售及行銷費用為人民幣1.323億元，較去年同期下降4.1%，主要是因為與品牌和用戶獲取活動相關的費用減少。一般及行政費用為 7,080 萬元，年減 23.3%，主要是因為股權激勵費用和專業諮詢費用減少。研發費用為人民幣4,250萬元，較去年同期下降18.5%，主要由於員工效率的提升。

Income tax benefit were RMB2.6 million compared with income tax benefit of RMB0.8 million in the same period of 2023. Net income attributable to So-Young was RMB18.9 million compared with a net loss of RMB2.6 million during the same period last year. Non-GAAP net income attributable to So-Young was RMB22.2 million compared with RMB15.5 million in the same period of 2023.

所得稅優惠為人民幣260萬元，而2023年同期所得稅優惠為人民幣80萬元。新氧應佔淨利為人民幣1,890萬元，去年同期淨虧損為人民幣260萬元。非美國通用會計準則歸屬於新氧的淨利為人民幣 2,220 萬元，而 2023 年同期為 1,550 萬元。

Basic and diluted earnings per ADS attributable to ordinary shareholders were RMB0.18 and RMB0.18, respectively, compared with basic and diluted losses per ADS attributable to ordinary shareholders of RMB0.02 and RMB0.02, respectively, during the same period of 2023. We have maintained a robust cash position with cash and cash equivalents, restricted cash and term deposits, term deposits and short-term investments totaling RMB1.25 billion as of June 30, 2024.

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2023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虧損分別為人民幣0.02元和人民幣0.02元。截至2024年6月30日，我們維持穩健的現金狀況，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計人民幣12.5億元。

Moving to our outlook. Given the relatively soft macro conditions, especially with respect to discretionary spending, for the third quarter of 2024, we expect total revenues to be between RMB350 million and RMB370 million. This outlook also takes into account the uncertainties of the pace of clinics opening and ramping up, as we are in the early stage of our clinic expansion and our business transformation.

轉向我們的展望。鑑於宏觀環境相對疲軟，尤其是可自由支配支出，我們預計 2024 年第三季總營收將在 3.5 億元至 3.7 億元之間。這一前景也考慮到診所開業和擴張速度的不確定性，因為我們正處於診所擴張和業務轉型的早期階段。

That being said, we are confident our strategic initiatives, integrating the upstream and downstream of the aesthetic medical industry value chain will ideally position us for our long-term growth. Their initiatives will enable us to capture a significant larger share of the market and establish a solid foundation of profitability.

話雖如此，我們相信整合美容醫療產業價值鏈上下游的策略性舉措將為我們的長期成長奠定良好的基礎。他們的舉措將使我們能夠佔領更大的市場份額並奠定堅實的獲利基礎。

As our clinics mature and market conditions stabilize, we expect our financial performance to gradually improve. This concludes our key remarks. I will now turn over the call to the operator and open the call for QA. Operator, we are ready to take questions. Thank you.

隨著我們診所的成熟和市場狀況的穩定，我們預計我們的財務表現將逐步改善。我們的重要演講到此結束。我現在將把呼叫轉交給接線員並打開呼叫進行品質檢查。接線員，我們準備好回答問題。謝謝。

(Operator Instructions)

（操作員說明）

Chloe Wei, CICC.

魏女士，中金公司。

So let me translate myself. Firstly, congratulations on the solid results. The revenue continued to exceed the high end and really strong bottom line. And my question is about the overall trend. So entering the second half of this year, we have seen signs of slowdown in most consuming companies guidance, say, the online platforms, tourisms and et cetera.

那我自己翻譯一下吧。首先，對所取得的紮實成果表示祝賀。收入繼續超過高端和真正強勁的底線。我的問題是關於總體趨勢。因此，進入今年下半年，我們看到大多數消費企業的指導放緩的跡象，例如線上平台、旅遊業等。

So I understand that's mostly due to the macro headwind, but can management share more color on the trends we have seen in July and August from the consumers and also from advertiser side. And looking into the second half, are there anything we would like to share with the market about how we plan to adapt to the new changes? Thanks.

因此，我知道這主要是由於宏觀逆風所致，但管理層能否分享更多有關我們在 7 月和 8 月從消費者和廣告商方面看到的趨勢的資訊。展望下半年，我們有什麼可以跟市場分享的，我們計劃如何適應新的變化？謝謝。

(interpreted) The current state of the medical aesthetic industry isn't quite where we thought it would be at the beginning of the year. According to data from the NBS, the retail sales of consumer goods in China increased by 3.7% year-over-year in the first six months of 2024, a deceleration compared to the first quarter of 2024 at the last quarter of 2023. Despite weak consumer confidence and discretionary spending, the medical aesthetic market continues to grow and offer significant structural opportunities.

（解讀）醫美產業的現況與我們年初的預期不太一樣。國家統計局數據顯示，2024年1-6月我國社會消費品零售總額年增3.7%，2023年最後一季較2024年第一季放緩。儘管消費者信心和可自由支配支出疲軟，但醫美市場仍在持續成長，並提供了重要的結構性機會。

The market share of light medical aesthetic services is expanding, driven by strong consumer demand for minimally invasive and convenient services. Meanwhile, the upstream supply chain is experiencing its surge in growth, fueled by innovations and supply chain optimizations that are propelling the industry's overall advancement.

在消費者對微創、便利服務的強勁需求推動下，輕醫美服務市場佔有率不斷擴大。同時，在創新和供應鏈優化的推動下，上游供應鏈正經歷大幅成長，推動產業整體進步。

Our industry research highlights two key forecasts that will shape the future of the industry. First, we expect to see the standardization of live medical aesthetic services gain momentum. This will lead to emergence of large chain brands and enhanced market norms and efficiency, resulting in a more mature sector.

我們的產業研究重點介紹了將塑造產業未來的兩個關鍵預測。首先，我們預期直播醫美服務的標準化將會取得進展。這將導致大型連鎖品牌的出現，市場規範和效率的提高，從而導致行業更加成熟。

Second, over the next four to five years, we anticipate that leading chains will dominate the market, significantly accelerating industry concentration. As top layers capture larger share of market, new opportunities will be created for investors and entrepreneurs to capitalize on this trade. We plan to begin franchising our chain of clinics in the second half of the year. This will not only contribute to the industry's expansion but also position us for success in rapidly evolving market. Thank you.

其次，未來四、五年，我們預期龍頭連鎖企業將佔據市場主導地位，產業集中度將大幅提升。隨著頂層佔據更大的市場份額，將為投資者和企業家創造新的機會來利用這項貿易。我們計劃在今年下半年開始特許經營我們的連鎖診所。這不僅有助於行業的擴張，而且使我們能夠在快速發展的市場中取得成功。謝謝。

Nelson Cheung, Citibank.

張納爾遜，花旗銀行。

Thanks, management for taking my question. My question is regarding the POP business and wondering what would be the company's outlook on the positioning of the POP business in your future development? And are there any new business strategy that can be shared with us? Thank you.

謝謝管理層回答我的問題。我的問題是關於POP業務的，請問公司對POP業務在你們未來發展中的定位有何看法？有什麼新的商業策略可以與我們分享嗎？謝謝。

(interpreted) The POP business remains a vital component of our growth strategy, and we will continue to focus on its development. As we've said before, we believe that Chinese medical aesthetic market will become increasingly polarized. Consumer spending on standardized treatment is becoming more value-driven while spending on non-standardized treatment is becoming more selective.

（解讀）POP業務仍然是我們成長策略的重要組成部分，我們將繼續專注於其發展。正如我們之前所說，我們認為中國醫美市場將變得越來越兩極化。消費者在標準化治療上的支出變得更加價值驅動，而在非標準化治療上的支出則變得更加挑剔。

With consumers willing to pay a premium for the highest quality care, to adapt to this market landscape, our strategy is twofold. One, for standardized treatment, we leveraged the strength and service quality of our chain of clinics to meet client demand. And two, for non-standardized treatments, we will rely on a diverse array of treatments that our POP business facilitates to satisfy various needs.

由於消費者願意為最高品質的照護支付溢價，為了適應這種市場格局，我們的策略是雙重的。一是在標準化治療方面，我們利用連鎖診所的實力和服務品質來滿足客戶的需求。第二，對於非標準化治療，我們將依靠我們的 POP 業務提供的多樣化治療來滿足各種需求。

We are moving towards a curated model, just like Costco and Sam's Club. By selecting high-quality institutions, leading doctors and premium SKUs in each vertical, we aim to simplify customer decision-making, increased SKU transaction value and ultimately strengthen our control over the supply side to enhance our pricing power.

我們正在走向策劃模式，就像好市多和山姆會員店一樣。透過在各個垂直領域選擇優質機構、領先醫生和優質SKU，簡化客戶決策，提高SKU交易價值，最終加強對供給面的控制，增強定價能力。

Additionally, for partners who are strong technically, but lack operational expertise, we offer comprehensive operational services management. A prime example of this is our master injector team, which consists of injectable specialists each boasting an impressive track record of 10,000 treatments. We provide some with online operational support, enabling them to focus exclusively on delivering service to customers. Demand for this service has grown rapidly and received mostly positive feedback.

此外，對於技術實力強但缺乏營運專業知識的合作夥伴，我們提供全面的營運服務管理。一個典型的例子是我們的主注射團隊，該團隊由注射專家組成，每個人都擁有 10,000 次治療的令人印象深刻的記錄。我們為一些人提供線上營運支持，使他們能夠專注於為客戶提供服務。對這項服務的需求成長迅速，並得到了大部分的正面回饋。

Going forward, our chain of clinics will create strong synergies with our POP business as it grows to scale by identifying non-standardized treatment in demand by customers throughout our chain of clinics and promoting like high-quality institutions and doctors from POP. We are maximizing both customer satisfaction and commercial value. Thank you.

展望未來，隨著POP業務規模的擴大，我們的連鎖診所將透過識別整個連鎖診所客戶需求的非標準化治療並推廣POP的優質機構和醫生，與我們的POP業務產生強大的協同效應。我們正在最大限度地提高客戶滿意度和商業價值。謝謝。

[Patrick Yi] CITIC Securities. Please go ahead.

[Patrick Yi] 中信證券。請繼續。

Okay, so let me just briefly translate for myself. Thank you, for -- management and thank you for taking my question. I'm Patrick Yi from CITIC Securities. So I'm just wondering more questions about the clinical chain business. So I'm wondering what factors might constrain streak of the clinical chain expansion?

好吧，那我就簡單翻譯一下吧。謝謝你們的管理，也謝謝你們提出我的問題。我是中信證券的易先生。所以我只是想知道更多關於臨床連鎖業務的問題。那麼我想知道哪些因素可能會限制臨床連鎖擴張的勢頭呢？

And what are the unique advantages that So-Young have in addressing these constraints so that we can address these constraints more effectively than our competitors? And additionally, what are the current operating metrics for the chain of clinics. And for example, if our clinics have reached breakeven? And what is your -- the future business trends? Yes. Thank you, very much.

那麼新氧在解決這些限制方面有哪些獨特的優勢，使得我們能夠比競爭對手更有效地解決這些限制？此外，連鎖診所目前的營運指標是什麼？例如，我們的診所是否已經達到收支平衡？您的未來業務趨勢是什麼？是的。非常感謝。

(interpreted) In general, factors such as site selection, furniture and renovation, license application, staff recruitment, marketing and operational costs can impact how quickly new clinics can open up. Having said that, we've significantly improved new clinic opening efficiency by creating respective SOPs and implementing effective process management. This has helped us cut down the average time required to open up new clinics from about five months early to around three months now.

（解釋）一般而言，選址、家具和裝修、許可證申請、員工招聘、行銷和營運成本等因素都會影響新診所開業的速度。話雖如此，我們透過制定各自的標準作業程序並實施有效的流程管理，顯著提高了新診所的開設效率。這幫助我們將開設新診所所需的平均時間從早期的約五個月縮短到現在的約三個月。

However, we believe the following factors are what truly determine how quickly we can scale our chain clinics. One, the ability to acquire customers; if we cannot guarantee that, we will simply incur losses. Two, the ability to recruit a sufficient number of leading doctors and specialists.

然而，我們相信以下因素真正決定了我們擴大連鎖診所規模的速度。一、獲客能力；如果我們不能保證這一點，我們只會蒙受損失。二是能夠招募到足夠數量的頂尖醫生和專家。

Three, the strength of our supply chain, which is key to offering products at competitive price while keeping profit margins. Four, sufficient capital as the initial investment for each new clinic can cost millions of RMB. And five, the ability to obtain the necessary license. We are already positioned to address each of these factors.

第三，我們供應鏈的實力，這是在保持利潤率的同時以有競爭力的價格提供產品的關鍵。第四，充足的資金作為每個新診所的初始投資可能需要數百萬元。五、有能力獲得必要的許可。我們已經準備好解決這些因素。

We have solid customer acquisition capabilities that leverage our strong brand recognition and the extensive user base already on our platform. This is further enhanced by our contact and online marketing capabilities. Our strong brand recognition, scale of our business and compliance with regulations give us a significant advantage when recruiting professionals when compared to small- and medium-sized institutions.

我們擁有堅實的客戶獲取能力，充分利用我們強大的品牌認知度和平台上已有的廣泛用戶基礎。我們的聯繫和線上行銷能力進一步增強了這一點。與中小型機構相比，我們強大的品牌知名度、業務規模和合規性使我們在招募專業人員時具有顯著優勢。

On the supply chain side, our initiatives over the past few years are already beginning to yield positive results. As more of our products receive certification, we expect our competitive advantage in this vertical to positively impact our financial performance more meaningfully.

在供應鏈方面，我們過去幾年的措施已經開始產生積極的成果。隨著我們越來越多的產品獲得認證，我們預計我們在這一垂直領域的競爭優勢將對我們的財務表現產生更有意義的正面影響。

By continuously enhancing our platform capabilities through the So-Young Prime program over the past year, we are able to ensure standardized management across multiple clinics in different regions. We believe that the key to standardized management lies in the breadth and depth of digitalization area where we have a natural advantage as an Internet company.

過去一年，我們透過新氧Prime計畫不斷提昇平台能力，保證了不同地區多個診所的標準化管理。我們認為，規範化管理的關鍵在於數位化領域的廣度和深度，這是我們作為網路公司擁有的天然優勢。

We have ample capital to deploy in new clinics as well. The franchise model that are launching in the second half of the year will also allow us to expand without the need to invest our own capital. In terms of license applications, aside from Beijing and Shanghai, obtaining license in other regions of China is relatively simple and fast. Having already set up clinics nationwide, we have accumulated experience in this area.

我們也有充足的資金來部署新診所。下半年推出的特許經營模式也將使我們能夠在無需投資自有資金的情況下進行擴張。在牌照申請方面，除北京和上海外，中國其他地區獲得牌照相對簡單、快速。我們已經在全國設立了診所，累積了這方面的經驗。

And for today's earnings call, we have opened 14 clinics in prime commercial areas. All of these clinics are fully operational and performing in line with our expectations. Our Beijing clinic has been operational for 15 months and has already become profitable, recouping its initial investment. Among the other clinics, 3 have been operational for 5 months with the remaining 10 for less than 3 months. They are following a similar growth trajectory, but will require a little more time to reach breakeven.

在今天的財報電話會議上，我們在主要商業區開設了 14 家診所。所有這些診所均已全面投入運營，且表現符合我們的預期。我們的北京診所已經運作了15個月，已經實現獲利，並收回了初期投資。其他診所中，有3間已開業5個月，其餘10間則不足3個月。他們遵循類似的成長軌跡，但需要更多時間才能達到收支平衡。

To provide some more context, our clinics typically follow a well-defined growth curve. They generally go through a 3-month trial period, followed by 9 months of accelerated growth. Maturities usually are reached after about 12 months of operations. For example, our Beijing clinic began to treat operations in May and officially opened in August last year.

為了提供更多背景信息，我們的診所通常遵循明確的成長曲線。他們通常會經歷3個月的試用期，然後是9個月的加速成長期。通常在運營約 12 個月後到期。例如我們北京診所從5月開始治療手術，去年8月正式開幕。

Since then, value has grown to RMB6.2 million in June this year with pretax profit of RMB1.3 million and a profit margin of around 20%. This outstanding performance validates the effectiveness of our site selection, clinic opening and operational strategies, providing valuable insights that we will apply to other new clinics to accelerate their growth.

此後，今年6月價值已增至人民幣620萬元，稅前利潤達人民幣130萬元，利潤率約20%。這一出色的表現驗證了我們的選址、診所開設和運營策略的有效性，為我們提供了寶貴的見解，我們將應用於其他新診所以加速其發展。

By leveraging our middle platform, we have reduced overall costs while ensuring standardized services delivery, allowing us to outperform other institutions. In the future, as procurement volume and use our self-branded products increase, cost across our chain of clinics will gradually fall and profit margin will increase.

透過利用我們的中間平台，我們降低了整體成本，同時確保標準化的服務交付，使我們能夠超越其他機構。未來，隨著自有品牌產品的採購量和使用量的增加，我們連鎖診所的成本將逐漸下降，利潤率將增加。

Looking ahead, our future business plans are centered on expanding our clinics across target cities, with a focus on increasing the density of clinics within each city. By the end of 2024, we plan to open over 20 clinics. In the second half of the year, we will also launch our franchise model with external partners to leverage our self-operated clinics as training centers and flagship clinics.

展望未來，我們未來的業務計劃集中在目標城市擴大診所，重點是增加每個城市內診所的密度。到2024年底，我們計劃開設20多家診所。下半年，我們也將與外部合作夥伴推出特許經營模式，將自營診所作為訓練中心和旗艦診所。

This will enable us to standardize and scale rapidly. We expect a significant year-over-year increase in the number of clinics, which will not only strengthen our market position, but also create new opportunities for revenue growth. Thank you.

這將使我們能夠快速標準化和擴展。我們預計診所數量將比去年同期大幅增加，這不僅將加強我們的市場地位，還將創造新的收入成長機會。謝謝。

[Joe Hahn] Jefferies.

[喬·哈恩]傑弗里斯。

So let me translate myself. Thanks, management for taking my question. My question is how does So-Young's upstream sector differentiates itself from other competitors? And could you elaborate on the management's perspective regarding the strategic positioning and the business plan for the upstream sector this year? Thank you.

那我自己翻譯一下吧。謝謝管理層回答我的問題。我的問題是新氧的上游產業如何與其他競爭對手區分開來？您能否詳細介紹管理層對今年上游業務的策略定位和業務計劃的看法？謝謝。

(interpreted) Unlike traditional manufacturers that rely on linear R&D to production to sales model, we capitalize our unique ecosystem and full category advantage to create synergies with our existing business lines. The integrated approach allow us to amplify the strength of our brand, reputation among customers and network coverage through institutional partners.

（解讀）與傳統製造商依賴研發、生產、銷售的線性模式不同，我們利用獨特的生態系統和全品類優勢，與現有業務線產生綜效。綜合方法使我們能夠透過機構合作夥伴擴大我們的品牌實力、客戶聲譽和網路覆蓋範圍。

As a result, we can rapidly build market competitiveness for new products and achieve customer targeting through our app and media matrix while using our clinics to ensure a steady stream of sales, a capability that set us apart in the industry.

因此，我們可以快速建立新產品的市場競爭力，並透過我們的應用程式和媒體矩陣實現客戶定位，同時利用我們的診所確保穩定的銷售流，這是我們在行業中脫穎而出的能力。

For example, True Lift, our non-surgical anti-aging ultrasound device generated tremendous preorder volumes and saw sales volumes beyond expectations when it's launched not long ago. This performance showcased its potential to become a market hit and the capabilities of our team.

例如，我們的非手術抗衰老超音波設備True Lift在不久前推出時就產生了巨大的預訂量，並且銷量超出了預期。這次表演展示了其成為市場熱門的潛力以及我們團隊的能力。

Similarly, sales of the Korea brand Elravie continue to grow. In addition, we have been actively expanding our pipeline with high growth potential. Our road map is robust with two new products ready for launch next year and three more in 2026, all targeting popular segments of injectables and energy-based devices. We are confident these products will make significant contributions to revenue growth.

同樣，韓國品牌Elravie的銷售量也持續成長。此外，我們一直在積極拓展具有高成長潛力的產品線。我們的路線圖很穩健，兩款新產品將於明年推出，另外三款將於 2026 年推出，所有產品都針對注射和能源設備的熱門領域。我們相信這些產品將為收入成長做出重大貢獻。

Leveraging our broad extensive consumer behavior data and experienced team, we are building for category upstream capabilities for our broader ecosystem. In the second half of the year, we will continue to expand our team, which is currently composed of seasoned experts from a leading domestic and international manufacturers. We aim to grow this team to a total of 100 members by the end of the year. Thank you.

利用我們廣泛的消費者行為數據和經驗豐富的團隊，我們正在為更廣泛的生態系統建立品類上游能力。下半年，我們將繼續擴大我們的團隊，目前團隊由來自國內外領先製造商的經驗豐富的專家組成。我們的目標是到今年年底讓這個團隊的成員總數達到 100 人。謝謝。

Ivy Lian, Haitong Securities.

連伊薇，海通證券。

Thank you for taking my question. I'll translate myself. With current gross margins around 60%, can you just please provide some insights into the expected trend for the gross margin going forward? Thank you.

感謝您回答我的問題。我自己來翻譯一下。目前毛利率約為60%，您能否提供一些關於未來毛利率預期趨勢的見解？謝謝。

Thank you for the question. Over the near term, macroeconomic risks such as slowing global growth and inflationary pressures continue to weigh on consumer sentiment. As a result, consumer willingness and capability to spend may be constrained, increasing market uncertainty. This is reflected in our third-quarter revenue guidance. As we transform our business beyond the POP business, our revenue structure is undergoing a shift alongside, which is impacting gross margin levels.

謝謝你的提問。短期內，全球成長放緩和通膨壓力等宏觀經濟風險持續打壓消費者信心。因此，消費者的消費意願和能力可能受到限制，增加市場的不確定性。這反映在我們第三季的營收指引中。隨著我們的業務轉型超越 POP 業務，我們的收入結構也在發生變化，這正在影響毛利率水準。

While our traditional information and reservations facilities services continue to enjoy high gross margins, the increasing share of medical product sales, which have stable but lower margins is affecting our overall margin profile. Furthermore, our chain of clinics, which is still in its early stages, has seen gross margin temporarily impacted by promotional activities.

雖然我們的傳統資訊和預訂設施服務繼續享有高毛利率，但利潤穩定但較低的醫療產品銷售份額不斷增加正在影響我們的整體利潤狀況。此外，我們的連鎖診所仍處於早期階段，毛利率暫時受到促銷活動的影響。

In the short term, we expect gross margins will continue to be impacted by the expansion of our chain of clinics and medical product sales. However, as our upstream supply chain capability strengthen and operations across our clinics mature, we will anticipate a corresponding improvement in gross margin. Additionally, the introduction of our franchise model is expected to support gross margin through greater economies of scale, optimizing our profit structure even further. Thank you.

短期內，我們預期毛利率將繼續受到診所連鎖店和醫療產品銷售擴張的影響。然而，隨著我們上游供應鏈能力的增強和診所運作的成熟，我們預計毛利率將相應改善。此外，我們的特許經營模式的引入預計將透過更大的規模經濟來支持毛利率，進一步優化我們的利潤結構。謝謝。

This concludes our question-and-answer session as well as our conference call for today. Thank you for attending today's presentation. You may now disconnect.

我們今天的問答環節和電話會議到此結束。感謝您參加今天的演講。您現在可以斷開連線。

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。