Aesthetic Medical International Holdings Group Limited (AIH) on Q1 2021 Results - Earnings Call Transcript
Operator: Good morning ladies and gentlemen. Thanks for standing by and welcome to Aesthetic Medical International First Quarter of 2021 Earnings Conference Call. During today's presentation, all parties will be in a listen-only mode. As a reminder, today's conference call is being recorded. On the call today Aesthetic Medical International are Dr. Pengwu Zhou, Chairman and Chief Executive Officer, and Toby Wu, Chief Financial Officer. Dr. Zhou will review the business operations and the company highlights, followed by Mr. Wu, who will discuss financial performance. There'll be a Q&A session that follows. Before we get started, I'd like to remind you that some of the information is cost will include forward-looking statements regarding future events and our future financial performance. These include statements about our future expectations, financial projections, and our plans and prospects. Actual results may differ materially from those set forth in such statements. For discussion of these risk and uncertainties you should review the company's filings with the SEC, which include today's press release. You should not rely on our forward-looking statements as predictions of future events.
Pengwu Zhou : Thank you, operator and everyone for joining the call today. We are pleased to announce that we recorded a strong financial and operating result in the first quarter of 2021 with revenue increase 131.4% year-on-year. Thanks to the economic recovery of China from the COVID-19 pandemic and our dedicated team members who seize every opportunity to help us weather the storm. In order to counter people’s strong medical duties, we are committed to integrating the Aesthetic medical industry with the overall market continues to expand and government policy to support centralization, will further radiate our non-surgical aesthetic medical services across different regions in China. Recently, we plan to accelerate the establishment of satellite and community hospitals in the Southern and Eastern China regions to meet the local demand for non-aesthetic medical services and to provide more satellite services to clients. As of the first quarter of 2021, we owned about 26 Aesthetic medical clinics across region including Beijing, Shanghai, and Shenzhen. We hope our services can be inclusive to anyone at any age with any beauty preferences. With our professional and comprehensive services, everyone can achieve the ideal from to desire. In May 2021, we have entered into a Definitive Share Subscription agreement with Lafang China Company Limited in May. Lafang is a company engaged in production and sale of personal care products. The private placement is subject to customary closing conditions and expected to close within four months from the execution of the agreement. We intend to utilize the proceeds from this private placement to fund our business environment and working capital. I believe this will benefit our future growth and we will cherish the abundant resources provided by this opportunity and further upgrade our products and services.
Toby Wu : Okay, thank you Dr. Zhou and hello everyone. I will summarize some of our key unaudited financial result and operating results for the first quarter ended March 31, 2021. In Q1 of 2021, our total revenue rose 131.3% to RMB210.5 million or USD32.1 million primarily due to an increase of 98.2% of a number of achievements we saw from raising customer demand as China greatly recovered from the aftermath of the COVID-19 pandemic. Revenue from non-surgical aesthetic medical service in the first quarter was RMB109 million or USD16.6 million increased by 128.5% year-on-year from RMB47.7 million in the first quarter of 2020. Revenue from minimally invasive aesthetic treatments was RMB51.8 million or USD7.9 million, representing an increase of 98.5% from RMB26.1 million in the first quarter of 2020. Revenue from energy-based treatments was RMB57.2 million or USD8.7 million, representing an increase of 164.8% from RMB21.6 million in the first quarter of 2020. Revenue from surgical aesthetic medical service was RMB86.8 million or USD13.2 million representing an increase of 118.1% from RMB39.8 million in the first quarter of 2020. Revenue from general healthcare service and other aesthetic medical service was RMB14.7 million or USD2.2 million, representing an increase of a 320% from RMB3.5 million in the first quarter of 2020. Gross profit was RMB122.1 million or USD18.6 million representing an increase of a 249.9% from RMB34.9 million in the first quarter of 2020, primarily as a result of a significant growth in the revenue. Gross profit margin was 58.0%, representing an increase of a 19.7 percentage point from 38.3% in the first quarter of 2020. As a portion of our cost of sales our fixed costs, which remained relatively stable during the first quarter by 2021. Together with an increase of 39.1% year-over-year in the selling price of surgical aesthetic medical service for the first quarter of 2021. Cost of sales and service rendered rate at a slower rate than our revenue in the first quarter of 2021.
Operator: Thank you. . Thank you. Our first question comes from the line of Lisa Lee . Your line is open. Please go ahead.
Unidentified Analyst: Hi, dear management, thank you so much for the presentation today. I actually have two questions here. First, the first question would be previously you have mentioned that we are actually developing those satellite clinics to facilitate a venture and also the expansion of our network in China. And do you have a plan or target for the number of satellite clinics that are going to establish in this year? That's the first question. And my second question is about our collaboration with Lafang. I saw that because Lafang -- shall we consider as a passive financial investor, or shall we consider Lafang as a strategic investor? Are we going to have any strategic collaborations or a strategic plan to co-develop any business with Lafang in the future? Thank you very much.
Pengwu Zhou: Okay, thank you Ms. Lee. Thank you for your question. For the second one, actually, we are planned to set up. We will be around the first place where we will fill up those clinics in the Shenzhen city. So, in the Shenzhen and also in the Guangzhou or the other suburban cities, so the number of satellite clinics clinic setup for this year, we are planning to set 10 to 20 clinics. So, this is our plan, but for the future, we will fill up about 100s clinic through three to five years. So, we will be around Shanghai and Shenzhen, Guangzhou this area to source our satellite clinic. So, this is the first question. For the second, the cooperation with Lafang we see -- we define Lafang as a strategic investor for us, because we still want, as I mentioned that we will set up more than 100s satellite clinics in China. So what they're starting not only the energy-based treatment starting in this clinic, also we want to have some medical products for the skin or for some after treatment for the recovery of those treatments. So, we are still negotiating with Lafang on those areas.
Unidentified Analyst: Thank you. Can I also add one more question? So, what would be the CapEx or the expected CapEx for each of those satellite clinics? Or do you have a total number of CapEx that we are going to invest in this year?
Operator: Go ahead.
Unidentified Analyst: Hello? Sorry, shall I repeat my question?
Operator: Please go ahead. Go ahead with the question.
Pengwu Zhou: I'm sorry, Ms. Lee just disconnect. My phone just -- is connected just now. So, for the CapEx for each clinic we plan is we’ll need to invest about RMB2 million to RMB3 million for each of clinics. So, for this year, we’re planning to have about RMB60 million to invest on those clinic.
Unidentified Analyst: Okay, I see. Thank you very much. Thanks a lot.
Pengwu Zhou: You're welcome.
Operator: Thank you. . Yes, we have a question from the line of Tom Zhang . Your line is open. Please go ahead.
Unidentified Analyst: Thank you, management for your presentation. Could you please provide some guidance on the Q2 performance? And also appreciate if you could provide some color on both the top line and margin trend in the coming quarter? Thank you.
Toby Wu: Okay, Mr. Tom, thank you for your question. So, as you know that now we are talking about the Q1 results so, I cannot give you the specific numbers of Q2’s results. Also, you know that have a one week to go to finish though for the Q2. What I can say is now that at the top line we can say that we will have at least double-digit growth compared with the Q1 and also if we compared to the Q2 at the same period of 2020, there will be a huge number. So, normally I just want to go back to 2019.
Unidentified Analyst: Thank you.
Toby Wu: You’re welcome.
Operator: Thank you. . As there are no further questions, I'd now like to hand the conference back to Mr. Toby Wu. Please go ahead.
Toby Wu: Thank you. Thank you, operator. On behalf our entire management team, I would like to thank you everyone again for joining us today for our conference call. If you have any questions, please contact us or email at ir@pengai.com.cn or reach our IR consultant DLK Advisory at aih@dlkadvisory.com. We appreciate your interest and support in Aesthetic Medical International and look forward to speaking with you again next time. Operator, please go ahead.
Operator: Thanks everyone again for attending Aesthetic Medical International’s first quarter of 2021 unaudited earnings conference call. This concludes our call today and we thank you all for listening in. Good-bye.
