Huaxi Biotech (688363.SH), known as the "King of Hyaluronic Acid" in the A-share market, has long boasted a gross margin of around 80%, comparable to that of baijiu (Chinese liquor). However, in recent years, the company has faced a triple whammy of market value evaporation, declining performance, and a crumbling business logic.
In 2021, Huaxi Biotech's market value once exceeded 150 billion yuan, but now it is only slightly over 20 billion. Regarding performance, since 2023, the company's profits have been on a continuous decline, with a nearly 40% year-on-year drop in 2023, followed by another nearly 20% drop in the first half of 2024.
Advertisement
Huaxi Biotech is experiencing a classic "kill valuation, kill performance, and kill logic" triple ghost story. The "kill valuation" and "kill performance" are apparent and easy to understand. The so-called "kill logic" may not only be due to the sluggish social consumption and the intensifying competition within the medical aesthetics industry but also related to the financial constraints faced by the "good big brothers," the loyal consumer group of medical aesthetics—women who rely on their beauty to gain economic benefits in nightclubs and "gold diggers"—whose payment capacity has significantly decreased. The combination of various factors has exacerbated the overall decline in the prosperity of the medical aesthetics industry.
Once sold for tens of thousands, now sold at a 90% discount,
Hyaluronic acid is no longer moving!
In the past, there was a saying in the industry, "Ten bottles of high-priced face cream are not as good as one injection of hyaluronic acid."
As a "standout" in light medical aesthetics, many women are well-versed in the effects of hyaluronic acid. Hyaluronic acid, on its own, has created a wealth-making myth in the medical aesthetics industry. Some media have calculated that the factory price of hyaluronic acid is between 18 and 35 yuan per vial, but downstream, at beauty institutions, the price for an injection of Bonita can reach nearly 10,000 yuan.
In recent years, however, the hyaluronic acid market has suddenly encountered a cold winter!
Since last year, medical aesthetics live broadcast rooms have started a "big sale" of hyaluronic acid, with leading institutions tacitly offering Juvederm for 1,999 yuan, and even as low as 980 yuan.
Furthermore, according to research reports from Founder Securities, the bonus period for the supply side of hyaluronic acid products has ended, with oversupply and excess capacity.At the same time, the medical beauty industry is also experiencing a significant slowdown.
According to a report in China Business News, the "China Medical Beauty Industry 2024 Annual Insight Report" indicates that the domestic medical beauty market is expected to grow at a rate of about 10% in 2024, and it can still maintain a growth rate of 10% to 15% in the next few years. In contrast, the report from 2023 projected a growth rate of around 20%.
What's going on?
It's not that women don't love beauty,
There are fewer "good big brothers" to bear the bills.
Everyone has a love for beauty, and it is reasonable for women to please themselves through medical beauty.
However, if "improving appearance to earn greater returns" is considered a business model, then the "nightclub girls" and "gold diggers" clearly have more motivation to invest in medical beauty than the average woman.
In 2019, media reports stated that the Chief Risk Officer (CRO) of a financial technology company specializing in medical beauty loans said, "(Nightclub) hostess loans account for a large proportion of the entire medical beauty loan market, conservatively estimated at around 30% to 40%."
That is, nightclub ladies invest in medical beauty through loans and repay the loans after earning income, forming a positive cycle.
From a business perspective, although gold diggers pay for medical beauty, the actual payers are the "good big brothers" who pay for the gold diggers' appearance.So, the financial capacity of the "big brother" determines the marginal value of "beauty."
When the economic environment changes and the "big brother's" payment ability declines, they can no longer afford the beauty of the "gold diggers," making the cost-effectiveness of medical cosmetology increasingly lower.
Not long ago, netizens posted that ride-hailing drivers complained that many of the young ladies from KTVs no longer take taxis to work but have started using shared bicycles.
There are also netizens who posted what is said to be a chat record from a "gold digger group," stating "the economy is not good, so the prices automatically come down," and "a few years ago when I first started this line of work: hooking up with big brothers was very easy."
These signs indicate that the business model of women earning economic benefits by investing in their own beauty is becoming increasingly competitive. This will undoubtedly exacerbate the downturn in the medical cosmetology industry.
For industry leaders like Huaxi Biotech,
The situation has changed, and transformation is the only way!
In fact, in recent years, Huaxi Biotech has been actively deploying in the emerging field of "synthetic biology," trying to create a second growth curve beyond hyaluronic acid.
Huaxi Biotech's semi-annual report for 2024 shows that the company, relying on synthetic biology technology, focuses on the research and development, production, and sales of six major categories of bioactive substances such as functional sugars, proteins, peptides, amino acids, nucleotides, and natural active compounds, and is gradually building synthetic biology as a "benchmark for bio-manufacturing, a benchmark for the entire industry chain, and a benchmark for green manufacturing."Let us wish Huaxi Biotech success!