Earnings Call: H2 2024

Mar 26, 2025

Summary

Revenue grew 19.9% to CNY 2.57bn in 2024, with improved gross margin and higher net profit. Naturade integration, sub-health growth and a minimum 50% three-year dividend payout policy shape the strategy ahead.

Welcome to Beauty Farm's 2024 annual results conference call. Please note this meeting is being recorded. If you have any questions, feel free to hang up now. If you'd like to ask a question during the Q&A, press the star key plus one on your mobile phone, or you can use the raise hand button on the internet side, or you can type your question in the chat box. Now we'd like to invite Mrs. Zhou Min, Beauty Farm's board secretary and CFO, to host this meeting for us. Ms. Zhou, please. Hello, everyone. Welcome to Beauty Farm's 2024 annual results conference call. Joining us today are Chairman of the Board, Mr. Li Yang, and Vice Chairman and CEO, Mr. Lian Songyong. Please note, the meeting may contain forward-looking statements involving risks and uncertainties. Actual results may differ. Unless legally required, our company does not undertake to update forward-looking information. We will discuss non-IFRS financial metrics. Definitions are in today's annual performance announcement. The meeting includes management presentations and a Q&A session. Now let's have CEO Mr. Lian speak. Throughout history, economic cycles have come and gone, ups and downs. Exceptional companies can stand strong among all the changes, leading trends through these cycles. After 31 years, Beauty Farm has witnessed industry's ups and downs, becoming a leader in China's high-end beauty sector. Entering 2025, we adapt to changing times, align with economic trends, pursue steady organic growth, and seize industry consolidation opportunities to enhance our market share and create value. We firmly believe our unique public platform, we believe in our strong brand influence, as well as our leading industry position and flexible, resilient business model, they are the key to navigating economic cycles for us. In the year of 2024, we were encouraged as the capital market increasingly recognized our value. Over the past year, our market value rose by 60% against the trend, reflecting confidence in our future. Looking back at 2024, Beauty Farm followed a dual strategy of organic growth and external expansion. Notably, we completed a landmark acquisition in this industry, investing CNY 350 million to acquire Naturade, a leader in China's intelligent beauty and wellness sector. This milestone merger between number one and number two players scales up our business and marks our official entry into the wellness sector. It also represents a strategic upgrade from our tri-beauty model to a more comprehensive dual beauty and dual wellness model. I personally led the post-merger integration of Naturade, gaining valuable experience in managing large-scale consolidation, which will support our future growth initiatives. Next, I'd like to share our group's operational performance for 2024. In 2024, we saw a strong rise in foot traffic at our self-operated stores, reaching 1.52 million visits, a year-on-year increase of 20.4%. Many of these visitors became our loyal members. Our active membership base at self-operated stores grew to 137,000, a 46.3% year-on-year jump, driving both revenue and profit to new records. Our total revenue for the year reached CNY 2.57 billion, up 19.9% from the previous year. With our scale benefits, our gross profit margin improved to 46.3%, up 0.7 percentage points year-on-year. Net profit reached CNY 253 million, an increase of 9.7%. In terms of store expansion, we surpassed 554 stores for the first time, with a net addition of 154 stores year-on-year. Our expansion strategy follows both organic and external growth. Organically, we focused on boosting single-store revenue and opened strategically branded locations. Externally, we pursued M&A opportunities to strengthen Beauty Farm's presence in key tier 1 cities Beijing, Shanghai, Guangzhou, and Shenzhen. Next, I will walk you through the performance of our three major business sectors. First, beauty and wellness. in 2024, foot traffic at self-operated stores reached 1.4 million, up 19.5% year-on-year. Among these, we had 131,000 paying customers, up 44.8%. Membership at franchised stores also grew strongly to 62,000, a 59% increase. The solid customer base supported our stable revenue growth. Total revenue from beauty and wellness services reached CNY 1.44 billion, up 20.9% year-on-year. Gross margin improved to 40.7%, a one point increase. Many investors are concerned about how the macro environment affects our discretionary spending, whether demand for beauty services is weakening. What we are seeing is the opposite. More customers are choosing to walk into our beauty and wellness sectors. Our target customers are highly educated, intelligent women living in top-tier cities. They are among the most powerful consumer groups, balancing emotional needs with rational decision-making. On the emotional side, they often face pressure from both work and family, seek moments of physical and mental relief. A soothing, enjoyable beauty treatment is not just about enhancing appearance. It also brings emotional comfort and healing, offering both visible results and inner peace. That is why more and more loyal customers continue to choose Beauty Farm, choose to come to Beauty Farm. At the same time, these customers are highly rational. They seek true value, not just in terms of price. It is not that simple, but in the overall experience. To them, value for money means alignment with brand values, cultural depth, emotional warmth, and service quality. It reflects a deep trust in what we stand for. We understand the weight of that trust. That is why we always put customer needs at the center and work to deliver a premium, high-value experience that exceeds expectations, so we can continue to earn and honor that trust. Specifically, we focus on three key areas. First, we are going back to the essence of membership value, creating thoughtful service, and building a cohesive brand family. Our goal is to define high-end beauty services with what we call craftsmanship service. That means striving for excellence in both product and techniques. And heart means truly listening to customers and delivering our warm, attentive care beyond standard procedures. We want every customer to feel our quality from the very first visit and become a lifelong partner of Beauty Farm. We are also strengthening the Beauty Farm brand family. We want to ensure each sub-brand to have a strong presence in its niche and enhancing overall brand identity. Second, we continue to innovate around women's evolving need for beauty and health. In 2024, we launched more body-focused services, including the pain relief and slimming LPG program, which achieved over CNY 100 million in sales within 12 months. In the first half of 2025, all our beauty and wellness stores will roll out professional AI skin analysis devices, providing scientific insights into skin needs and enabling more accurate dual beauty treatment plans. Third, we are boosting our ability and efficiency in acquiring new customers. In 2024, new membership in beauty and wellness grew by 27% year-on-year. This success was driven by stronger brand influence, improved digital marketing, and effective M&A integration in the sector. In particular, we made major breakthroughs in private domain traffic using digital segmentation, referral programs, and live streaming to acquire new members. For example, in 2024, we launched over 2,000 segmented marketing campaigns via WeChat and mini programs, reactivating dormant clients and converting long-tail users. New members from private domain channels doubled year-on-year, accounting for 34% of new customer acquisition, excluding natural rate. This shift helped lower our acquisition costs. Our cost per new member dropped 8.9% in 2024. In public domain marketing, we've continued to deepen our partnership with platforms like Meituan and Dianping. This year, we will further expand collaborations with live streaming influencers. Now let's look at aesthetic medical business. In 2024, competition in this sector intensified. Looking at the industry chain, we saw faster product approvals upstream, giving service providers more options and stronger bargaining power. On the service end, providers focused on building more refined operations to improve both quality and efficiency. Against this backdrop, leading players, thanks to scale, precise customer acquisition, and efficient business models, helped drive continued consolidation in the industry. In 2024, revenue from aesthetic medical services reached CNY 930 million, up 9.1% year-on-year. The number of aesthetic medical clinics grew to 25, with a net addition of three clinics. Self-operated clinics recorded 91,000 visits, up 26.2% year-on-year. Active members rose to 34,000, a strong 37.4% increase. Notably, 24.9% of beauty and wellness members at self-operated stores also purchased aesthetic medical or sub-health services. Within Beauty Farm and the Palaispa clinics, that figure was even higher, 28.7%, a 3.7 percentage point increase from last year. Since the launch of the CellCare brand in 2010, we've been committed to setting the standard for high-end aesthetic medical services, upholding a doctor-first philosophy, scientific rigor, and aesthetic excellence through our proprietary time fractal aesthetic system, all delivered with warm, thoughtful service. This has earned CellCare wide recognition in the industry. In 2024, we made a major leap in professional medical capabilities. We launched CellCare's innovative two-tier, five-level doctor development system, building a high-caliber team led by 90 senior physicians and supported by more than 100 nurses and technicians. This strong multidisciplinary team ensure a safe, reliable, and natural experience for our clients. To further guarantee quality, we introduced a three-level medical quality control system, which covers over 130 quality control measures stricter than industry standards, ensuring every step of the service process meets the highest levels of safety and precision. On the digital front, in May 2024, we launched the CellCare proprietary aesthetic medical management system. This enabled seamless collaboration across our dual beauty business and empowered our acquired entities with efficiency. In December, we also rolled out a dedicated CellCare mini program, offering smarter user analysis and laying a solid foundation for personalized data-driven engagement at scale. Our sub-health medical services also delivered impressive results. This segment focuses on functional medicine and women's gynecological anti-aging treatments. Whilst still in early stage of market development, we seized the growth window and rapidly expanded. By the end of last year, our sub-health clinic network had grown to 11 locations, experienced an explosive increase in foot traffic, reaching 27,000 visits, a 62.5% jump year-on-year. Active members rose to 7,552, up 80.2%, driving total revenue to over CNY 200 million, an impressive 98.9% growth. This reflects both strong demand and our ability to convert it efficiently. On the business front, our sub-health medical services focus on two core areas: functional medicine and women's specialty care. Last year, we further refined our product offerings, increasing cross-sell penetration from beauty clients. Take our customized IV therapy program, the Energy Drip Series, as an example. We expanded it from 6 individual treatments to 6 full categories with 31 specific offerings, enriching personalized options for our clients. At our women's specialty centers, we also launched a comprehensive lineup of professional medical-grade gynecological anti-aging treatments. In 2024, revenue from this segment exceeded CNY 100 million for the first time, making a year-on-year growth of over 300%. That wraps up our three major business segments. Next, I will share our progress in industry consolidation. Last year marked a milestone for our consolidation in the beauty industry. We made a major breakthrough in our M&A strategy by completing the full acquisition of the Naturade brand in Guangzhou. This was a landmark deal representing the integration of the industry's number 1 and 2 players. It has demonstrated our strong capabilities in managing large-scale acquisitions and integrations. From July 1st, Naturade financials were officially consolidated into our statements, contributing CNY 287 million in revenue and CNY 21 million in net profit. Its net profit margin improved from 6.5% in 2023 to 7.3% post-integration. After the acquisition, we conducted a full business review and introduced a clear strategy. Leverage core strength, focus on profitability, supported by a three-phase integration plan. First, Naturade focused on strengthening its smart beauty and wellness capabilities. By optimizing store layout and increasing per-store revenue, we saw clear improvement in performance during the second half of 2024. Second, we fully embedded Naturade into our dual beauty business model, taking over its aesthetic medical and sub-health operations. This led to a strong increase in value-added service revenue. The conversion rate from beauty and wellness members to sub-health services reached 13.5%, up 1.8 percentage points year-on-year. Third, we integrated Naturade's back-end systems. Our group's digital center and supply chain capabilities now fully cover Naturade, enabling shared use of core infrastructure and improving operational efficiency significantly. Looking ahead, we will accelerate industry consolidation through both horizontal and vertical strategies. Horizontally, we will continue to deepen integration within the beauty sector to expand our market share. Vertically, we will explore upstream acquisitions and partnerships within the value chain, which will help us enhance gross margins in our beauty business and support expansion of our franchise model. Lastly, I'd like to share some of our key capital market initiatives. In our first year post-IPO, we experienced market volatility, but that set the stage for a strong rebound in our second year. Thanks to solid business performance, consistent shareholder returns, and an increasingly optimized capital structure, we achieved an impressive 60% increase in market value in 2024 against the overall market trends. To further enhance our capital market value and improve shareholder returns, Beauty Farm announced three key initiatives in March 2025. First, on shareholder returns, we commit to a long-term payout policy. Starting from the date of the announcement, for the next three full financial years, no less than 50% of net profits attributable to shareholders will be distributed as dividends. It demonstrates our strong belief in sharing our success with shareholders. Second, we will continue optimizing our shareholder structure by introducing long-term strategic investors. This will improve liquidity and bring sustainable momentum to the company's long-term growth. Third, we will launch an innovative long-term incentive plan, a stock-based compensation program. This will align management interests with our company performance. Our KPIs will focus on future revenue and profit targets, aiming for sustainable growth and long-term value creation for shareholders. Looking ahead, we have a clear three-year roadmap focusing on both scale and profitability. The new incentive plan will fully align management interests, energize our team, and drive acquisition with a strong sense of purpose. At a strategic level, we remain committed to our organic plus external dual-engine growth model. On the organic side, on the internal side, we focus on four core capabilities. First, expand our customer base. Second, deepen refined operations. Third, accelerate forward-looking product R&D. Four, advance digital transformation to boost the per-store revenue and overall efficiency by our group. On the external side, Naturade serves as a strategic anchor for us as we build a scalable framework for large-scale M&A and integration. Our goal is to bring acquired companies in line with group-level profit margins and then unlock synergies. We will also stay alert to shifts in the market cycle and actively explore horizontal and vertical M&A opportunities, creating a strong strategic moat for the group's long-term growth. With these strategic initiatives and a continued rise in our capital market value, we are confident in building greater competitiveness and investor appeal, paving the way for our next major goal, inclusion in the Stock Connect Program. This concludes my presentation. Now I will hand it over to our CFO, Mrs. Zhou Min, to walk you through the group's financial performance. Thank you, Mr. Lian. Now I'd like to walk you through our financial performance for 2024. In 2024, Beauty Farm navigated macroeconomic changes with confidence, staying committed to our dual-engine strategy of organic growth and external expansion. As a result, we achieved encouraging results. Total revenue rose 20% to CNY 2.57 billion. Revenue from beauty and wellness services at self-operated stores grew 21% year-on-year to CNY 1.31 billion. High-end beauty services brought in CNY 1.14 billion, up 6%, driven by improved per-store performance. High-end smart wellness services led by Naturade contributed CNY 160 million after being consolidated into our group from July. Franchise and other service income reached CNY 140 million, up 21%, mainly due to the addition of new Naturade franchised stores in the second half. Aesthetic medical revenue reached CNY 930 million, up 9% year-on-year, supported by both organic and external growth. Meanwhile, stronger member conversion from beauty and wellness to medical aesthetics also contributed to increased traffic and membership. What's more, subhealth medical services nearly doubled with revenue up 99% to CNY 200 million. Thanks to the addition of four new clinics and the continued success of our women's specialty care offerings. Cross-selling from beauty to subhealth services also improved significantly, driving revenue growth to a great extent. In terms of gross profit, our gross profit rose from CNY 980 million in 2023 to CNY 1.19 billion in 2024, a year-on-year increase of 21.8%. Overall gross margin improved from 45.6% to 46.3%, up 0.7 percentage points. This was mainly driven by two aspects. First, the addition of high-end smart wellness services in the second half, which delivered a gross margin of 46.7%, lifting the group's average. Second, the 99% growth in our subhealth medical revenue helped dilute our fixed costs and boosted that segment's gross margin by 11.5 percentage points due to scale effects. In terms of operating expense, our operating expense ratio came in at 34.4%. The ratio for our organic operations decreased by 0.37 percentage points. Naturade costs are expected to align with our group levels over time as integration progresses. Despite a CNY 12 million impact from reduced VAT benefits from the government, our net profit still rose by 9.7% year-on-year, increasing from CNY 230 million to CNY 253 million. Adjusted net profit rose from CNY 240 million to CNY 253 million. We maintained a strong cash position throughout the year. As of December 31st, 2024, total cash and cash equivalents reached CNY 1.83 billion, up CNY 260 million year-on-year. Operating cash flow stood at CNY 800 million, a significant 27.4% increase. This solid cash reserve not only supports business growth, but also enables us to reward our shareholders. Today, Beauty Farm formally announced the establishment of a long-term dividend policy, starting from the announcement date for the next three full financial years. At least 50% of our net profit attributable to stakeholders will be distributed as dividends, underscoring our commitment to sharing growth with investors. Looking ahead, we will continue executing our strategic roadmap with a focus on scaling up and boosting profitability. While improving internal efficiency, we will stay alert to market opportunities to drive long-term growth for the group. This concludes our presentation for today. Now let's move into the Q&A session. Thank you for your sharing. We will now begin the Q&A session. Feel free to raise your hands or type your question in the chat box. If you're on your phone, you can press the star key on your phone, plus one. If you're on the internet, then you can type your question in the chat box, or you can press the Raise Hand button to ask your question verbally. 5693. Number 5693, please ask your question. Hello, everyone. I'm Sundan Yang from Huatai Securities. Thank you for giving me the opportunity. Congratulations on the management team. Despite the macroeconomic environment and the market trends, you achieved a really remarkable result. Just hearing from Mrs. Zhou Min and Mr. Lian Songyong, I have a question I'd like to ask Mr. Lian. Just now, you shared about your insights into the market, and you mentioned the company's overall plan for industry consolidation and the successful integration of Naturade. Could you elaborate on the specifics of this integration? For example, business synergies and resource allocation. How about the measures and the effects? Also, as the company emphasized a dual focus on organic growth and external expansion in 2024, how does management view M&A opportunities in 2025, and are there any new plans to share with us? Thank you. Thank you for your question. I'd like to answer your questions in the following aspects. First of all, in terms of the whole market, let's look at the whole market. We can see that currently, the beauty industry has a lot of M&A opportunities. In 2024, we could see the overall market size of the beauty industry remains stable, but the industry landscape is undergoing significant structural shifts. According to the China Beauty Services Report 2024, the store closure rate in the first half of the year reached 37.8%, a record high in recent years. This actually reflects the acceleration of our market reshuffling. It also shows a valuable window of opportunity for the leading companies like us to drive consolidation. What's particularly noteworthy is the current lack of capital exit channels within the industry. As a result, customers, employees, and shareholders alike are increasingly inclined to rely on listed company platforms for better resource allocation and long-term stability. Against this backdrop, we have already engaged in in-depth discussions with more than 10 high-quality beauty brands over the past year. That's the first aspect I'd like to share with you about the market overall. Next, I know that you are all very concerned about Naturade, and let me share with you more insights. In March, we announced the acquisition of Naturade's self-operated stores in Guangzhou and Shenzhen. In August, we followed up with the acquisition of the remaining stores, which will be operated on the franchise model. Following the acquisition, over 150 Naturade stores were brought into our group's brand portfolio. As of the end of 2024, Naturade operated 145 stores, and its financials were officially consolidated into our group starting July 1st of 2024. In the second half of last year, Naturade contributed CNY 287 million in revenue and CNY 20.55 million in adjusted net profit, with its net profit margin improving from 6.5% in 2023 to 7.2% in 2024. This reflects early success in cost optimization and efficiency improvements. Looking ahead, it's expected to continue trending toward our group's overall level. After the acquisition, whether we can make it better to have better results. Our whole group pays great attention to this acquisition, and I personally led the post-acquisition integration of Naturade. After the acquisition, I personally took charge of integrating Naturade and implemented the following transformations. First, on enhancing organizational capability. We've conducted a lot of work. First, at the top level, at the high level, we actually restructured Naturade to be more corporate-like. We've actually introduced a three-year plan. We set goals for Naturade for the next three years and created a seamless connection between strategy formulation and execution. This allows every employee to understand the direction and objectives of our whole group. Then, at a store level, we optimized our employee incentive mechanisms and upgraded the promotion systems for community stores and the mall stores, revising our job design and salary structures to match different store types. This has energized the organization and improved efficiency. It has actually activated the energy and efficiency of the organization. What's more, we highlight the importance of training since we are in the beauty industry, to enhance customer satisfaction and service quality. In 2024, we completed our reform from traditional Chinese medicine apprentice-based training to standardized service protocols. We rebuilt our organization and the training systems. We conducted two rounds of large-scale training to significantly improve our service quality. That's our work at the top level, at the store level, and at the training level. What's more, we understand the importance of strengthening the core competencies of Naturade. Over the past 70 years, its most valuable brand asset is its intelligent wellness services, which combine Chinese medicine theory with beauty, wellness, and pain management services. We focused on reinforcing and expanding these capabilities of Naturade. Specifically, we are assessing these stores, and we are optimizing these stores. We've actually relocated and consolidated 20 stores. In the second half of 2024, the single-store revenue increased by 5%, with early signs of improved net profit margins. What's more, we are enhancing our core business line. In 2024, last year, Beauty Farm supported the facial beauty program development and introduced two flagship facial treatments. We are improving our R&D abilities. We've introduced these two flagship facial treatments, the oxygen therapy and the bubble. These new offerings have attracted a large number of our new facial customers from Naturade. In 2025, we plan to introduce product sales within the Naturade brand. Additionally, Naturade will be equipped with Beauty Farm's AI skin testing devices to improve our beauty service professionalism. This year, we will continue to enhance our core intelligent wellness services, strengthening existing treatments like meridian therapy, and introducing new strategic offerings like body conditioning, dampness removal, and blood circulation, tailored to the preferences of clients in the Greater Bay Area in China. We aim to solidify our position as the leading brand in intelligent wellness through R&D. In addition to core business line enhancements, what's very important for us is that we understand it's very important to empower value-added services. We officially took over Naturade's medical aesthetics and sub-health services. Therefore, against this backdrop, we would like to transform the company from a mere channel provider to a fully integrated institution offering tri-beauty fusion services. We want to keep the services, the Chinese traditional medicine services of Naturade. But meanwhile, we want to integrate it into our services to improve our service delivery. Through these services or through these improvements, in the second half of 2024, the penetration rates of value-added services among Naturade members reached 13.3%, a 1.9 percentage point increase. Of this, 11.8% for medical aesthetics members, up 0.7 percentage points. Our medium-term goal is to continue increasing this penetration with a long-term target of reaching 25.8%, the current level at Beauty Farm. There's great room for improvement. In sub-health medical services, our penetration reached 2.6% in the second half of 2024, significantly up 1.8 percentage points. Naturade customers have a strong focus on body care with a high willingness to pay. The average spending per sub-health member in the first half of the year was CNY 26,000, even higher than our group's average. However, Naturade previously lacked the functional and the regenerative medical services, which have now been integrated from the group, driving significant growth in medical service revenue. In addition to enhancing the core business lines and empowering value-added services, we are also doing digital system empowerment. Starting in August 2024, Naturade began fully adopting our group's digital systems, including an integrated service platform for beauty, wellness, and medical aesthetics, along with customer management systems, a supply chain that connects all stores. We expect to complete full IT system integration by the first half of this year. In terms of AI applications, as China's leading intelligent wellness brand, Naturade has a rich database and proprietary Chinese medicine AI algorithms. Thus, in 2025, Naturade will continue to connect the value-added business data to provide the customers with an integrated beauty plus health solution. In addition to digital system empowerment, we pay great attention to cost reduction and efficiency improvement. Naturade's net profit margin increased from 6.5% in 2023 to 7.2% in 2024, showing the effectiveness of our efforts. The primary sources of efficiency gains include labor cost optimization through organizational adjustments. Second, rent cost savings. Through store consolidation, renegotiating lease, and reducing office space, we significantly reduced our rental expenses. Thirdly, we have made middle office capacity reuse and improvement. We integrated back office functions such as supply chain, digital systems, medical management, and R&D, improving operational efficiency. Notably, digital capabilities, including store management system upgrades and targeted marketing through mini programs, have had a significant impact. Looking ahead, we achieved the systematic integration in 2024. In 2025, we will continue to move forward to build replicable, highly efficient service stores. We will continue to increase our value-added services. In 2025, we will continue the expansion of Naturade in China. It is a relatively large-scale consolidation. It is a very well-known chain store brand. By this half-year integration, it has increased our confidence. We have achieved key learnings from the integration. Looking forward, we will continue to deepen our industry consolidation from both horizontal and vertical dimensions. Horizontally, we will focus on the beauty service sector, accelerate the integration of high-quality regional brands through M&As to expand market share. We currently have a lot of acquisition leads in the beauty industry. Vertically, we will explore acquisition of partnership opportunities in the upstream skincare product sector to enhance our profitability and support franchise business expansion. This will help build a sustainable growth ecosystem for the group. That is the answer. Thank you very much. Thank you, Mr. Lian Songyong, for your detailed answer. We look forward to the performance of Beauty Farm and Naturade in 2025. We look forward to your future progress of market consolidation. Thank you for the management team. Thank you for your answer. Now, 0622. Number 0622, please mention your name and the agency you are from. Hello, everyone. Dear management team, I am Shi Ruonan from CICC. Congratulations. I am very glad to meet you online. Very glad to hear that the company has achieved strong results. You have achieved great results internally and externally. We have noticed that both financial revenue and operation foot traffic saw significant growth. Could you provide some insights into how much of this growth was driven organically versus how much came from M&A contributions? What is more, while overall customer numbers increased, we have observed some changes in average transaction value per customer, particularly in medical aesthetics segment. Could you share the reasons behind? Has it been influenced by the broader consumption downgrade we are seeing in the market? Thank you for your question. You have two questions, so let me answer them one by one. First, let me talk about the internal and external growth. The basic situation, our total revenue reached CNY 2.57 billion in 2024, up 19.9%. Revenue from the group's organic operations reached CNY 2.28 billion, up 6.5% year-on-year. The main driver was a 9.7% increase in active members at self-operated stores, which in turn boosted same-store sales. Naturade contributed CNY 287 million in revenue in the second half of 2024. Adjusted net profit, CNY 20.55 million. Adjusted net profit margin, 7.2%, indicating early signs of improved efficiency post-integration. Also you mentioned the changes, the reasons for the decline in average annual spending per member. We have had some observations, and we pay great attention, and we are analyzing the reasons behind it. You can see for the internal members, actually, their performance is still very solid. There is still strong performance among our core organic members. Despite the overall decline, spending from them remains solid. For Beauty Farm members, the average annual spending in 2024 was CNY 20,000, showing stable consumer engagement. Breakdown by the segment, you could see for the sub-health medical services, the average annual spending, CNY 21,000 with 24.5% year-on-year growth, driven by the expanded women's specialty offerings and ongoing consumer education, which improved our conversion, upselling, and repurchase rates. Second, in terms of beauty and wellness service, average annual spending per member, CNY 11,000, year-on-year decline 3%. The spending remained relatively stable. The slight drop was mainly due to, for example, the 9% increase in self-operated active members. There is a 9% increase in self-operated active members. It means we've attracted some new members, and you see, it has been a large influx of new members, lowering the average. Next, in terms of medical aesthetic services, our active members show 15.3% year-on-year, well above the industry growth rate. The average annual spending per member, CNY 30,000, year-on-year decline 13.2%, and the decline was largely due to the new member additions. It's worth noting that the industry overall saw this 15%-20% drop in the ticket size. In 2024, there was intense competition in the medical aesthetic services, so generally there was this 15%-20% drop in the average spending in the market due to the intense competition. In contrast, self-care clients maintained a high spending level, reflecting strong consumer quality and spending power. As we incorporate Naturade in 2024, the group added 34,000 new active members from Naturade's self-operated stores. However, Naturade historical membership standards differ from our group. For example, there is also this dilution effect. For example, the minimum recharge threshold was only 1,500. This resulted in a dilution effect on the group's overall average spending per member. Additionally, Naturade's member profile is younger, mostly post-1990s or 1980s consumers whose average spending is about 70% of our group's typical customer. Resulting in the dilution effect. In the second half of 2024, we see that Naturade's average spending per active member was around CNY 7,600. That's my understanding of the average annual spending per member. Thank you for sharing. Very clear. No more questions from my side. Looking forward to your better performance this year. Next question, 0196. Please mention your name and the institution you are from. Hello, everyone. Hello, management team. I'm Jo Xin from Founder Securities. Thank you for giving me this opportunity. Thank you for the earlier responses. Looking at your announcement and hearing from your presentations, we can see a very clear point. We could see that you pay great attention to the capital market and your emphasis on the market. I'd like you to share more insights into this part and in the future, how about your plan to enter the Stock Connect Program? You could see some of the movements of the shareholders, and we pay great attention. Taking this opportunity, we've heard about your stock plan. Can you elaborate more on the strategy? Talking about the stock market, thank you for your question. Yes, we are facing these changes in the stock market, and the Stock Connect Program is very important. We could see that's our goal in the stock market, to enter to be included in the Stock Connect Market and the program. We look forward to it, and we have confidence in achieving this goal. But of course, there are many changes and there are many requirements about the liquidity and about the valuation to enter the Stock Connect Program. Just now, Mrs. Zhou and Mr. Lian introduced our performance and our data in 2024 and the challenges we face. You could see that we've adjusted our shareholder structure, the CPE adjustment. Through the transactions, there was already some transactions of the shares of the equities, and these movements are likely to continue. We estimate that in the short term, we will finish this task in the short term. Of course, certainly for the shareholders, we want to diversify our shareholders, and then their shareholding can be more diversified, and it would contribute to the liquidity of our group. Step by step, slowly, gradually, we are going to see this transformation. Talking about the valuation, we believe we will gradually demonstrate our value in the stock market. We've been listed for 2 years. Over the past 2 years, over the past period, we have demonstrated that we are a stable and a transparent company with stable financial performance and transparent operation. It has demonstrated our strength, and it has demonstrated our improvement in the next period. We have confidence in the development over the next few years. After the acquisition of Naturade, we believe it has been a proof of our consolidation ability. It has enhanced our internal growth and our consolidation assets. It has increased our abilities of both internal growth and external growth. It can further boost our growth in the future. Dear investors, please rest assured, for the next period, you are going to see similar movements, and we take confidence in our performance. Of course, there are some concrete measures. We will efficiently make our efforts to enter the Stock Connect Program. What's more, we will interact more with the stock market. We have some concrete measures. Just now we mentioned that our policies for dividend. We'd like to establish this long-term value-sharing mechanism for shareholders. We will distribute no less than 50% of our annual net profit attributable to shareholders as dividends over the next 3 years. This demonstrates our dedication to stable returns and long-term shareholder value. We could see this positive connection makes us more confident to achieve our growth plan, our growth strategy. This plan closely aligns our management's interests with the company's performance, using both revenue and profit targets to drive sustainable growth and value creation. We will continue to move forward, and that's our answer to the question. Thank you very much. Thank you, Mr. Li Yang, for your answer. We have seen your confidence in entering the Stock Connect Program, and also your strategies and your plans for achieving the goal. You will definitely deliver a good performance in the near future. We also have the confidence. Thank you. Thank you for your answer. Due to time limits, now we move on to the last question. We'd like to let 0720 to ask your question. Please state your name and your institution. Yes, welcome. Distinguished management team. Hello, everyone. Good evening. I'm Achuan Xu from Guohai Securities. Congratulations on your great results. Thank you for giving me the opportunity. I'd like to ask a question about women's health. We've seen women's health and specialty care have shown strong demand and momentum recently with impressive performance in 2024. How does the company view the long-term potential of this segment, and what are your future plans for the YanYuan brand? Will there be a strategic focus in terms of resource allocation? Well, thank you for your question. Indeed, we could see in 2024, we delivered great results in women's health and specialty care. In 2024, we've shown strong demand and momentum in this field. Let me share the industrial data with you. You could see that the global women's health market is showing explosive growth potential. There are a lot of data from leading industry research. It is projected to exceed $97.3 billion U.S. dollars, around $100 billion by 2030, with a compound annual growth rate of 16% over the next decade. The market is now entering a strong growth phase. We have taken a forward-looking approach by making early strategic moves into the emerging gynecology segment since about 2 to 3 years ago. We aim to secure a first-mover advantage and drive consumer education. We could see that women's health awareness is evolving from a focus on purely physical awareness to a more multidimensional understanding encompassing physical, mental, emotional, behavioral, and relational wellbeing. The market is transitioning from traditional clinical services to holistic health solutions as well. There is a growing demand for personalized and professional health products and services. The emerging segment is gaining momentum and shaping up to be a promising blue ocean opportunity. In particular, we've observed that women in top-tier cities, driven by their rising health consciousness and emotional stress in their work, in their life, are paying increasing attention to topics like premature ovarian failure, highlighting significant unmet needs in this space. For YanYuan, for Beauty Farm, we have confidence in doing this work and there are some logics behind. We have our core competitiveness. We have our customer strength and advantages. You could see that we have 30 years experience in the private traffic. We have millions of the potential customer in the dual beauty and dual wellness business model. Under this model, our programs are very favorable for the promotion in the private traffic sector. So we are able to reach the customer base in this sector. We have our private traffic strength in this regard. Second, we have professional medical team in this regard as well. You could see that there are. Currently at the professional medical level, a large number of existing new gynecological service providers are delivered in medical aesthetic plastic surgery or non-medical institutions, which cannot ensure medical safety in the industry while taking into account the diversified needs of customers. But YanYuan is a medical clinic with a professional medical license, with dual departments of gynecology and internal medicine, and is professionally delivered by a strong team of doctors. At present, there are 40-plus doctors and 60-plus nurses graduated from the top universities and other institutions of higher learning, and the average practice time of our gynecologists is 27.6 years, and the senior professional title exceeds 55%. These demonstrate our professional medical services and our expertise in this regard. We will continue to enrich our product blueprint. For example, we will increase basic testing items, and we would lower the threshold for our customers to try the women's specialty care programs. We will get to know more of the data and lower the threshold for the customers to try these care programs and to provide them with a more comprehensive and efficient solution for women's anti-aging from the customer's gynecological, physical, and other symptoms. Based on our forward-looking layout of the industry, strong channel advantages, and professional medical level, it constitutes a differentiated competitive advantage of women's intensive care centers. in 2024, the revenue of our women care centers exceeded CNY 100 million for the first time, a year-on-year increase of more than 300%. The number of customers in women's intensive care centers increased by 200% year-on-year. There is great business potential of Naturade centers as well because it also has these advantages. In the Greater Bay Area, customers naturally have a strong demand for health conditioning, and we believe there's great potential for us in this sector. We have great confidence in this. Thank you very much. Thank you for your detailed answer. We hope that for YanYuan, for Beauty Farm, you can grow stronger and better. We would look forward to see the increase in your valuation to the next record. That's all for the question part due to time limits. Thank you all for joining today's earnings call. Thank you for attending our annual results conference call. After listening to our breakthroughs and achievements in 2024, you'll also listen to the future plans for 2025. In 2025, we will continue to increase our craftsmanship, embrace AI technologies, improve our services to inject more vitality into the beauty sector. We look forward to working with you to write a beauty and a more prosperous chapter. Thank you for listening and attending our session. Thank you all. See you next time. Thank you for attending our meeting. The meeting has come to an end. Wish you a good life and career. See you next time.