Beautiful Countryside’s 2025 revenue hit 3.001 billion yuan; CEO Lian Songyong: Consumption pressure weighs on the medical beauty industry

Ask AI · M&A integration cycles are long, how to balance short-term profits and long-term expansion?

【Text/Wang Li Editor/Zhou Yuanfang】

On March 27, Meili Tianyuan Medical and Health Industry Co., Ltd. (02373.HK) released its annual performance announcement for the year ending December 31, 2025, and held a simultaneous earnings conference. During the reporting period, the company achieved total revenue of 3B yuan, a year-on-year increase of 16.7%; net profit of 340 million yuan, up 34.8%; and adjusted net profit of 381 million yuan, up 41.0%. Overall revenue, profit, and cash flow all grew year-on-year, with direct-operated store traffic and active members increasing simultaneously. The consumer medical sector has become an important growth engine.

The company continues to promote a dual-driven approach of “internal growth + external M&A,” completing acquisitions of Nairui’er and Siyanli, further expanding its store network, while building a commercial system, advancing digital intelligence and AI development, and strengthening long-term competitiveness.

However, behind these impressive results remain multiple challenges: under pressure in the overall aesthetic medicine industry, the company’s aesthetic medicine business growth lags behind health and sub-health sectors; external M&A brings integration costs, personnel, and management expenses rising, and the integration effects of Siyanli have not yet fully manifested; issues such as franchise store management, compliance operations, and uneven regional expansion persist, compounded by industry homogenization competition and stricter regulations. The quality of subsequent growth and integration efficiency still require observation.

Senior executives including Chairman Li Yang, CEO Lian Songyong, and CFO Zhou Min responded to questions on M&A integration, business growth, and profit outlook at the earnings conference, affirming the advantages of scale expansion and business model, while also addressing the realities of integration difficulties, cost pressures, and industry competition.

Revenue, profit, and cash flow grow in tandem; sub-health medical revenue increases by 62%

In 2025, Meili Tianyuan’s core operational indicators saw comprehensive growth, with revenue surpassing 3 billion yuan for the first time, gross profit margin rising to 49.1%, an increase of 2.8 percentage points year-on-year; net cash flow from operating activities reached 1 billion yuan, up 25.4%; as of the end of the year, cash and cash equivalents plus near-cash items totaled 2.59 billion yuan, up 41.6%, indicating ample cash reserves.

From a business structure perspective, the company has formed three main segments: beauty and health services, medical aesthetic services, and sub-health medical services. Revenue from beauty and health services was 1.66B yuan, up 14.9%, serving as the cornerstone business; the consumer medical sector totaled 1.34 billion yuan, up 18.9%, accounting for 44.8% of total revenue, an increase of 0.9 percentage points year-on-year, becoming the core growth driver.

Segment performance varies significantly: revenue from sub-health medical services reached 326 million yuan, a sharp increase of 62.2%, with a gross margin of 64.3%, up 6.1 percentage points; customer flow and active members increased by 35.7% and 37.9%, respectively, leading growth across all segments; revenue from medical aesthetic services was 1.02B yuan, up 9.6%, the slowest among the three core businesses. Despite gross margin rising to 55.9%, growth was hampered by industry adjustments and homogenization competition, with weaker momentum compared to health and sub-health sectors. In terms of direct-operated stores, annual store traffic reached 1.8635 million, up 22.8%; active members numbered 154.4k, up 12.7%; average annual member spending increased, but same-store growth was only 6.9%. Internal growth was relatively moderate, somewhat relying on scale expansion through acquisitions.

Lian Songyong stated at the earnings conference that in 2025, the overall aesthetic medicine industry faced consumption pressure and uncertain competitive landscape. The company adheres to high-end value-driven strategies, avoiding price wars, focusing on anti-aging tracks and high-net-worth clients, achieving simultaneous growth in VIP customer volume and pricing, as well as an increase in basic customer base. However, he also acknowledged that aesthetic medicine growth is constrained by industry environment.

Zhou Min pointed out that the overall gross margin increase was driven by supply chain optimization, scale effects, and higher proportions of high-margin businesses. However, sales and administrative expenses grew by 11.5% and 22.9% respectively year-on-year, mainly due to increased share-based compensation and M&A consulting fees, indicating rising cost management pressures.

Uneven growth also reflected in city layout and store types: 20 first- and new first-tier cities contributed 93.2% of direct revenue; Beijing, Shanghai, Guangzhou, and Shenzhen contributed 64.9%, with high regional concentration and slow expansion into lower-tier markets. The total number of stores was 550, with 289 directly operated and 261 franchise or managed stores. Franchise store revenue growth was only 5.9%, far below the 15.8% growth of directly operated stores. Efficiency and service standardization of franchise systems still need improvement. R&D expenses increased by 16.7%, mainly invested in digital intelligence and AI, but the scale of R&D investment remains relatively small, and building technological barriers requires ongoing input.

Accelerated external M&A drives industry consolidation, with both results and risks

Since going public in 2023, Meili Tianyuan has made investment and acquisitions a core strategy. In 2025, external expansion accelerated, completing the deep integration of Nairui’er, acquiring Siyanli, and regional stores in Zhuhai and Dongguan, continuously increasing industry consolidation and rapidly expanding market share. After acquiring Nairui’er in March 2024, the company implemented a “three-step integration strategy” to improve store revenue and profit margins. Post-integration, Nairui’er’s single-store revenue increased from 5.75 million yuan before acquisition to 8.1 million yuan, with adjusted net profit margin rising from 6.5% to 10.5%, validating the integration model.

In October 2025, the company acquired 100% equity of Siyanli for 1.25 billion yuan. Siyanli was officially consolidated in January 2026. Combined with Nairui’er, the company now owns the top three brands in the industry, with over 700 stores, reshaping the competitive landscape. Lian Songyong explained that Siyanli’s integration borrowed from Nairui’er’s experience, adopting a “reverse path of backend integration, consumer medical support, and business upgrade.” Currently, some backend functions such as finance, HR, and digitalization have been integrated; six city-level medical institutions have been consolidated, with plans to complete remaining regional medical resource integration by 2026, and to optimize about 20 store locations and upgrade experience systems. The company expects better results than Nairui’er but admits that brand positioning and store optimization will take about two years, and the integration cycle is longer than expected.

While M&A expansion drives scale growth, risks and cost pressures also increase. In 2025, the company borrowed from banks to finance the acquisitions of Siyanli and Nairui’er, with year-end bank loans reaching 732 million yuan, an increase of 582 million yuan from 2024, raising debt levels. Consulting fees in general and administrative expenses increased by 68.1% year-on-year, mainly due to professional service fees from Siyanli’s acquisition and personnel expansion, leading to a rise in period expenses ratio.

In March 2026, the company launched the “Find 100 Beauty Industry Partners” plan, focusing on 20 high-tier cities to attract industry organizations into the ecosystem and further promote integration. Lian Songyong also admitted that selecting high-quality targets, post-merger empowerment, and collaboration among small and medium-sized institutions are challenging, and the replicability of the value growth system remains to be tested by the market. Zhou Min responded to profit outlooks, stating that in 2026, profits generated from efficiency improvements will be reinvested into branding, digitalization, and medical talent deployment, balancing short-term profits and long-term expansion. However, continuous investment in M&A and integration may temporarily impact profit margins.

Business system and super-strategies implementation, intertwined long-term competitiveness and short-term challenges

After 33 years of development, Meili Tianyuan officially launched its business system in 2025, establishing four major systems: customer value growth, a strong platform + multi-brand, M&A value growth, and digital intelligence + AI. It also announced three super-strategies: super-brand, super-chain, and super-digitalization, aiming to become China’s leader in beauty and health, with ongoing long-term competitiveness layout. The customer value growth system builds a full-link membership operation cycle, with a 80% retention rate of active members in the following year, 51% retention over 15 years, and continuous release of member lifetime value. The strong platform + multi-brand system coordinates supply chain, digital, and financial middle-office capabilities, supporting efficient multi-brand operations and reducing M&A integration difficulties.

Digital intelligence and AI development have become core strategies, with nearly 500 million yuan invested in digitalization, promoting AI skin testing, personalized diagnosis and treatment, and intelligent operations. Yanyuan Medical relies on AI models for personalized health management; Xiukouer Medical Beauty uses data-driven precision services to improve operational efficiency and customer experience. Lian Songyong emphasized that the core of the business system is transforming experience into standards to support internal growth and external M&A, addressing industry uncertainties. He also acknowledged that digital implementation and AI application still require time, and short-term efficiency gains are difficult to realize immediately.

On the capital market front, in 2025, the company promoted shareholder structure optimization, high dividend payout, and management incentives. It proposed a final dividend of HKD 0.72 per share, up 38.5%, planning to allocate 50% of net profit attributable to shareholders for dividends, and included in the MSCI Global Small Cap Index, increasing market attention. However, senior management also admitted that after optimizing shareholder structure, cultivating long-term investors and managing market value still require ongoing efforts. The upward revision of management’s equity incentive targets also increases performance pressure.

In the short term, the company still faces multiple challenges: the aesthetic medicine industry’s ongoing price competition, despite high-end positioning avoiding price wars, makes customer acquisition difficult and marketing costs rise; sub-health medical growth is rapid but based on a small base, making it hard to support overall performance in the short term; store optimization, personnel training, and compliance upgrades require continuous investment. Coupled with rigid rent and labor costs, profit improvement potential is limited. Zhou Min stated that in 2026, the company aims to maintain profit growth through promoting high-margin projects, supply chain cost reduction, and improving M&A efficiency, but intensified industry competition and integration delays could impact these goals.

Long-term, the trend toward chain operation, compliance, and digitalization in the beauty and health industry is clear. The company leverages scale, branding, and integration capabilities to occupy a leading position, but industry concentration remains low, with fierce competition from regional brands and small to medium-sized institutions. Multi-brand management, compliance, and technological innovation will be key tests. Lian Songyong concluded that the company will adhere to a customer-centric approach, balancing scale expansion and profit quality, and through the implementation of three super-strategies and business systems, achieve sustainable high-quality development. However, external factors such as industry cycles, integration effects, and changing consumer demand will continue to be critical variables influencing the company’s future.