Text: Ginkgo. Edited by Cheng Mo.
* 10,000 point research
The lips are red without dotting, the eyebrows are green without painting, the face is like a silver basin, and the eyes are like apricots. The sentence "Dream of Red Mansions" expresses the essence of beauty. Every woman wants to have a beautiful face and a devilish figure, but the reality is often not as good as it should be.
How to make the ** elastic and more shiny, how to slow down the aging rate of the skin and even freeze the age, reverse growth has become the pursuit of beauty lovers. As a result, medical beauty programs such as photorejuvenation, skin boosters, spot needle lasers, hyaluronic acid injections, and Thermage have emerged one after another.
In the eyes of investors, if the frequency of use is high or the unit price is high, at least one of them must be accounted for in order to become a good business. Low frequency of use and low unit price are the worst businesses. It would be better if the frequency of use and the unit price were both high, especially in response to the emerging needs of the changing times, which is a once-in-a-lifetime opportunity.
Medical aesthetics is often regarded as a double-high industry. There are many beautiful women who spend more than 100,000 yuan in the medical beauty industry every year, and it is increasing year by year, and even many fashionable men have entered the ranks of big players in medical beauty. Appearing younger through advanced medical treatment is no longer a forbidden area for morality and ethics. This industry will definitely come out of the supergiants.
However, there are still frauds and inducements and non-standard operations in China's medical aesthetic industry. According to statistics, only 12% of the industry is legally and compliantly carried out by institutions that carry out medical aesthetic projects, there are more than 100,000 illegal practitioners of medical cosmetology, only 28% of the industry are legal doctors, and 77% of illegal injections (parallel imports and fakes).7%。As a relatively new industry, the medical aesthetic industry has been subject to "savage growth" due to the illegal operation of institutions and the limited cognition of beauty seekers.
But "medical aesthetics" and "medical aesthetics" are different. The location of the industrial chain is different, the product characteristics and the market competition pattern are different, and this track often presents "different lives of peers".
For example, the "first stock of Internet medical cosmetology" Xinyang (listed on NASDAQ, SYo), its business model is similar to the beauty industry's "** continue to increase the number of active users on its own platform, attract more medical beauty institutions, doctors, hospitals, etc. to settle in, match transactions, and earn more commissions and advertising revenue."
However, under the wave of the Internet, the traffic of trading platforms such as Meituan and Ali is amazing, coupled with the diversion of "beauty experts" on social platforms such as Douyin and Xiaohongshu, it is not easy for Xinyang to live as a vertical medical beauty platform. Its stock price has repeatedly hit new lows.
Xinyang's share price has been from a peak of 22$8 all the way**, CEO Jin Xing launched a privatization and delisting offer in November 2021.
In May 2022, Xinyang was included in the "pre-delisting list" by the U.S. Securities and Exchange Commission (SEC), and since then, the stock price has been around $1 for a long time, and the privatization is obviously a loss-making transaction (privatization**5.).$3 per share), Venus had to withdraw the privatization proposal at the end of October 2022.
Xinyang's stock price is currently fluctuating around $1 for a long time, and it sometimes falls below $1.
According to the delisting rules of the NASDAQ exchange, if the stock price is below $1 for more than 30 trading days, the company will be warned to delist, and if the company's performance cannot be improved within 90 days to bring the stock price back above $1, it will be ordered to delist.
Fortunately, it also has a subsidiary that is applying for the Beijing Stock Exchange - Qizhi Laser carries another "hope" of Xinyang.
Qizhi Laser has long had an IPO plan, but it has been caught in product quality problems, related party transactions and listing failures one after another, and the road to listing has been full of twists and turns.
On March 24, 2014, it was warned by the Wuhan Food and Drug Administration for producing medical devices that did not meet the standards, ordered to stop the production of unqualified medical devices, and fined 10,000 yuanOn July 10, 2015, the company was officially listed on the stock marketIn June 2017, the company submitted an application for an IPO on the Growth Enterprise Market (GEM) to the China Securities Regulatory Commission, but it ultimately failed.
At present, the IPO of Qizhi Laser has entered the inquiry stage.
New Oxygen, which is on the verge of delisting, is clear about its "capital ambition".
It is reported that "photorejuvenation" was introduced and named by Peng Guohong, the founder of "Qizhi Laser".
In the 90s of the last century, when Peng Guohong went to the United States to study, he was attracted by a "photon rejuvenation" laser beauty device that can brighten wrinkles and improve pores, so Peng Guohong introduced this machine and refined the concept of "photorejuvenation", a new term of medical cosmetology that has become popular to this day.
Returning to China, Peng Guohong immediately organized scientific research personnel to improve them in combination with the characteristics of Asians. In the 21st century, Qizhi Laser, founded by Peng Guohong, took the lead in launching the country's first queen photon rejuvenation instrument in China, quickly seized the market through the advantage of cost performance, and entered the Chinese medical beauty market.
According to the prospectus, Qizhi Laser is mainly engaged in the research and development, production, sales and sales of lasers and other optoelectronic medical equipment. The main products include optical equipment, laser surgery equipment and others, involved in the fields of **department, urology and ophthalmology.
Qizhi Laser was listed in July 2015, and then completed two rounds of private placement in 2016, and successively raised funds from Optics Valley Talents, Xinzhong Lizi, Rushan Capital, and Zhongjie Investment from 2017 to 2019.
In July 2021, the new oxygen ended with 79.1 billion yuan acquired Wuhan Qizhi Laser 8449% of the shares, which is widely interpreted by the market as the "first step" for Xinyang to enter the product side from the medical beauty social platform.
After the acquisition of Qizhi Laser, the following year, Xinyang announced the exclusive ** hyaluronic acid unicorn product Arasti. It can be seen that Xinyang continues to deepen the layout of the upstream of the industrial chain.
As of the signing date of the prospectus, Beijing Xinyang Wanwei Technology Consulting directly held 4593% of the shares, and indirectly holds 41 through Wuhan Zeqi Technology Co., Ltd67% of the shares, the two together hold 8760% of the shares are the controlling shareholders.
If Qizhi Laser successfully applies for the Beijing Stock Exchange, its market value will most likely be higher than the market value at the time of acquisition, and will be higher than the current market value of the parent company Xinyang.
If Xinyang is delisted, the business will be transferred to Qizhi Laser, and even the absorption and merger will realize the domestic listing of the parent company", which is quite a "secondary listing, capital operation master" meaning.
Due to the rigor of the research, the author should not make conjectures about the company, and this article will focus on the analysis of the fundamentals of Qizhi Laser.
From beauty equipment to medical devices, how to price Qizhi Laser?
In 2020, 2021, 2022 and the first half of 2023, the operating income of Qizhi Laser will be about 1800 million yuan, 2400 million yuan, 2500 million yuan and 62.6 million yuan;The net profit attributable to the parent company was 288340,000 yuan, 335680,000 yuan, 402230,000 yuan and 111230,000 yuan, gross profit margin reached. 6% and 599%, there are fluctuations.
According to the prospectus, Qizhi Laser's revenue is mainly in three categories: optical equipment;Laser Surgery Equipment;Spare parts and maintenance. Among them, optical equipment is the majority, accounting for about 60%-70%;This is followed by laser surgery equipment, accounting for about 20%.
Seeing this, ordinary investors are estimated to have a lot of doubts: what is the difference between laser and light, light and laser?What are the application scenarios of the two?Is the surgical equipment a ** device?What is the basis for the division of optical equipment and laser surgery equipment?
Encyclopedia shows that phototherapy is mainly improved by wavelength light, which can change the characteristics of tissues. However, the laser is the use of the laser beam generated by the laser, which is focused through the mirror to make the laser beam highly concentrated, so that the tissue can die, so as to achieve the effect of curing the disease. (The purpose of laser application: one is disease, the other is cell repair, and the third is to relieve pain and other uncomfortable symptoms).
According to the announcement of the General Administration of Food and Drug Administration on the issuance of the classification catalogue of medical devices (No. 104 of 2017) issued by the Food and Drug Administration, the optical equipment is the first-level product category of 09 physical equipment, and its secondary classification includes 5 sub-categories of laser equipment, photodynamic laser equipment, photodynamic equipment, intense pulsed light equipment, and red and blue light equipmentLaser surgical equipment and accessories are a first-class product category under 01 Active Surgical Instruments.
It is worth noting that before the IPO is declared, the classification and statistics of Qizhi Laser's product revenue are "beauty equipment, urological equipment, spare parts and maintenance technical services".
Laser cosmetology, with laser beams, can directly destroy the deep pigment cells and pigment granules through the epidermis and dermis without damaging or rarely damaging the epidermis, coagulate and expand the capillaries, and promote the reorganization and regeneration of collagen fibers and elastic fiber structures in the dermis, so as to achieve pigmentation and whitening.
According to the 2022 annual report, 92% of the company's revenue comes from beauty equipment.
Optoelectronic medical aesthetic projects** are generally close to the people. According to the "2022 Optoelectronic Medical Aesthetic Industry Consumption Trend Report", the average unit price of optoelectronic medical aesthetic projects in 2022 is the lowest, and even much lower than the average unit price of the overall medical aesthetic projects, which is a "people-friendly project" in the medical aesthetic market.
On the other hand, the optoelectronic medical aesthetic project has a low experience threshold, less risk, and inclusive genes. As a non-invasive medical aesthetic procedure, the user's acceptance threshold for optoelectronic medical aesthetic treatment is relatively low.
It can be said that photorejuvenation equipment, as the most universal medical aesthetic instrument, has a very high position in the field of global medical aesthetic equipment and is the first choice for the configuration of medical aesthetic institutions.
Although medical cosmetology is good, everyone has opportunities, but the competition is also fierce, and everyone has no moat.
Because of this, Qizhi Laser tries to "cut" with medical aesthetics.
According to the latest product classification, ordinary investors will classify Qizhi Laser as a medical device company, rather than the beauty industry.
At present, there are about 100 laser medical device companies in China, which can be divided into two echelons according to their comprehensive competitiveness. Among them, the first echelon is dominated by foreign-funded enterprises and a small number of domestic advantageous enterprises, and the representative manufacturers include Israel Fitton (ALMA), Qizhi Laser, Lumenis and Cynosure, Eurostar (Fotona), Syneron (Syneron), Peninsula Medical, Shenzhen Gisti, Jilin Keying, etc.
The second echelon is represented by a number of small domestic manufacturing enterprises, which generally started late, have less technology accumulation, and are subject to the high threshold of the medical device industry itself, and it is difficult for its products to enter the high-end markets such as hospitals surrounded by foreign capital and local advantageous enterprises.
From the perspective of localization rate, among all kinds of laser equipment, gas lasers, ND:YAG lasers and other products with more mature technology have been localized, while the development of high-power semiconductor laser medical equipment is relatively scarce, and key products still need to rely on imports.
On the other hand, with the maturity of medical equipment and the homogenization of the market, the competition in the domestic laser and other optoelectronic medical equipment market will become more and more fierce.
In addition to overseas brands such as Keyiren, Israel Feiton, and Sinoshow, Qizhi Laser mainly competes with domestic brands such as Jilin Keying. According to incomplete statistics, since 2021, more than 30 upstream companies such as Fumailei, Nanjing Baifu, Yaguang Medical, Jingyu Laser, and Weimai Medical have received financing.
At the business level, the equipment produced by Qizhi Laser has both "self-developed" and first-class. That is to say, its business is relatively comprehensive (for the sake of revenue, it is quite suspicious of making up the numbers), which is a bit too fragmented for a medical device. In recent years, the medical industry has become more and more professional in the division of labor, and this kind of "want everything" business layout has given this company a lot of historical baggage.
In fact, for investors, classification is just a play on words, and the core is the company's products and long-term development potential.
Lack of innovation
Innovation is an unavoidable topic for medical devices. The author believes that the product innovation of Qizhi Laser is insufficient, and the reasons are as follows:
1) Most of the company's executives have a sales background
The company currently has nine directors, except for two independent directors, the remaining seven have information systems, legal affairs, public relations and other backgrounds, and none of them have a manufacturing technology background as directors.
Among the seven senior executives of Qizhi Laser, in addition to the general manager and the secretary of the board of directors, only one Li Mingbin (deputy general manager), who will reach retirement age next year, has a certain technical background, and the rest are sales experience.
Among them, Ms. Cui Lan has a bachelor's degree from Communication University of China, majoring in broadcasting and hosting. From October 1988 to February 1990, he served as the column editor of Hong Kong Phoenix Satellite TV, from December 2002 to August 2004, he served as the general manager of Hong Kong Emperor International Wuhan Branch, and since July 2009, he has served as the deputy general manager of the company and the sales director of urinary line in West China.
2) The products are mainly assembled, and the raw material procurement cost of "complete machine procurement" accounts for a high proportion
According to the disclosure, the company's self-produced optical equipment is similar to the production process of laser surgery equipment, and the production process includes laser or light source assembly, circuit board assembly, complete machine assembly, debugging, inspection, packaging and other processes. According to the prospectus, from 2020 to 2023Q1, the company's raw material procurement cost accounted for 3486%，40.55%，47.91% and 4367%。
This means that "buying someone else's ready-made product" accounts for nearly half of the cost of raw material procurement.
Since 2005, the company has continued to adhere to the dual-track development model of independent research and development and continuous development, developed high-power LED light wave analyzers, carbon dioxide laser machines, etc., and successively introduced urology laser systems, excimer laser equipment, a new generation of erbium laser lattice equipment, etc., that isWhen customers buy products, they can choose the company's first-class products or choose the products produced by Qizhi Laser themselves.
During the reporting period, the company's ** product revenue was 4,473$850,000, $6,025250,000 yuan, 6,783040,000 and 1,096190,000 yuan, accounting for the proportion of the company's main business income. 78% and 1758%。In the case of revenue accounting for about 25%, the cost accounts for about 45%, according to the Qizhi laser prospectus, the top three companies are the world's well-known laser beauty equipment manufacturers, Sciton, Strata Skin Sciences and Asclepion Laser Technologies.
If it's very profitable, or an exclusive deal, it's a good business. But the author found that this is not the case.
3) Low R&D expense rate
According to the prospectus, the company's R&D expense ratio is much lower than the average of comparable companies in the same industry.
In this regard, the company's explanation is that "mainly due to the difference in employee salary, the number of full-time R&D personnel in the company is small, and the salary level is lower than that of R&D personnel in first-tier cities such as Aohua Endoscopy and Kaikai Medical." In addition, the company has the largest imported product business, and the corresponding product revenue accounts for about 25%, and the R&D investment required for the first product is low, which further leads to the company's low R&D expense rate. ”
Everyone pays attention to this wording, and the small number of full-time R&D personnel further proves that it lacks investment in product research and development.
In addition, Qizhi Laser also has a common problem in the medical device industry: high sales expense rate.
From 2020 to 2023Q1, the issuer's sales expenses were 4,488780,000 yuan, 6,252530,000 yuan, 5,81866 and 1,688820,000 yuan, accounting for the proportion of operating income respectively. 74% and 2699%。
The salary of sales personnel of Qizhi Laser is relatively high, and the proportion of each period in the reporting period is respectively. 73%, the number of sales personnel of the issuer is 121, accounting for 42 of the total number of employees01%。Compared with the single-digit R&D expense rate, the full-time and part-time R&D team of 30 people is put together.
Questionable independence: Almost all of the non-independent directors are from New Oxygen
Why focus on independence: If a company lacks independence, it can harm the interests of minority shareholders;It means that its financial reports may be manipulated, which is close to fraud in nature.
According to the prospectus, there are currently nine members on the board of directors of your company. Except for the three independent directors who are outsiders, Peng Guohong is the actual controller of the original company, and the other five directors are all from Xinyang. Of the three supervisors, except Ms. Zhou Bing, who was the head of human resources of the former company, the other two are also from Xinyang.
According to the agreement at the time of the previous acquisition, Xinyang promised that after the completion of the acquisition, it would continue to maintain mutual independence from Qizhi Laser during the period when it held a controlling stake in Qizhi Laser, strictly abide by the relevant regulations on the independence of public companies, and not interfere with Qizhi Laser's business decisions.
The reality is that New Oxygen has a firm grip on the board.
Considering that Xinyang is engaged in the integration of resources in the beauty industry, and there are many and complicated customers and merchants, as a shareholder of Qizhi Laser, is it suspected that some related parties or other entities will conduct some host trials, storage and other means to regulate revenue and profits?
Therefore, in the first round of inquiries, the Beijing Stock Exchange focused on asking questions:
Among the enterprises controlled by Xinyang, Beijing Qingyang Medical Aesthetic Clinic has obtained a medical device business record certificate, which can be engaged in the sales of Class II medical devices, and has not actually carried out business at presentHainan Xinyang Medical Technology Co., Ltd. has obtained the medical device business record certificate and medical device business license, and can be engaged in the sales of Class II and Class III medical devices. The issuer is requested to: explain the background, specific content, pricing basis, fairness and compliance of the aforesaid related party transactions, whether the issuer and related parties bear costs and expenses to each other, adjust business performance, and whether there is any benefit transfer or special interest arrangement. How does the issuer ensure the fairness and independence of production and operation of its dealings** with Xinyang and the enterprises controlled by it at the level of internal control. Combined with the business situation of Xinyang and the enterprises controlled by Xinyang, it is explained whether the business of the issuer and the controlling shareholder is substituent, competitive, whether there is a conflict of interest, and whether it is sold within the same market, and whether it is sold within the same market, and whether the other enterprises controlled by Xinyang and the other enterprises controlled by Xinyang constitute intra-industry competition with the issuer. ”
Compliance: Product and internal controls need to be strengthened
In January 2018, the company took the initiative to report to the Food and Drug Administration of Wuhan Donghu Technology Development Zone, reflecting that the company's internal audit system found that it had sold Class II and Class III medical devices to enterprises that had not obtained medical device business qualifications, and the penalties were: ordering the company to immediately correct the illegal acts and imposing an administrative penalty of a fine of RMB 15,000 on the companyIn March 2018, the company received an administrative penalty decision from the Wuhan Food and Drug Administration due to the non-compliance of the semiconductor laser hair removal instrument produced by the Shanghai Medical Device Quality Supervision and Inspection Center of the State Food and Drug Administration, ordering the company to immediately correct the illegal acts, allowing the company to rework the production of the seized products in strict accordance with the approved registration standards, and then sell them after passing the inspection, and imposed an administrative penalty of a fine of 20,000 yuan on the company.
In addition, there is a need to strengthen compliance at the financial level. After reading the prospectus, the author found that there are several points that need special attention from investors:
1.Qizhi Laser adopts a sales model that combines middleman sales and direct sales, and middleman sales are divided into first-class business sales and dealer sales. It is necessary to pay attention to whether the top merchants and distributors agree on rebates with Qizhi Laser, whether to strip commercial bribery and other unfair competition behaviors to the middlemen, and whether to adjust income and profits through return and exchange policies, dealers and other forms of pressing goods.
2.A search can find that there are many beauty salons or companies related to beauty equipment with the word "Qizhi". Is it a related party?
Conclusion: "The road of medical beauty is not easy to follow".
Although the domestic medical aesthetic market is growing at a rate of 24 per yearThe compound rate of 2% is advancing rapidly, but the majority of profits are in the front-end equipment production on the one hand, and the terminal brand on the other hand.
As a laser equipment manufacturer, Qizhi Laser occupies a good industrial position.
However, in the upstream pharmaceutical consumables and equipment industry, overseas companies currently account for the majority of the market share, and there is a large space for domestic substitution.
It is precisely because of the realization that "the road of medical beauty is not easy to walk", Qizhi Laser has been transforming into medical devices.
According to the Regulations on the Supervision and Administration of Medical Devices (revised in 2020 and implemented from June 2021), the registration and filing of medical device products shall be subject to clinical evaluation, but if the circumstances specified in Article 24 are met, they may be exempted from clinical evaluation. The company's main products, lasers and other optoelectronic medical devices, belong to Class II (Class II) and Class III (Class III) medical devices, which need to complete product registration before they can be listed.
All under the management of the Food and Drug Administration, there is a strict clinical trial and approval system. In addition to the company's technical strength, there are also clinical resources: the company needs doctors in various regions to lead the clinical trials of its own products and endorse their own products.
For the best business of Qizhi Laser, like a channel provider, sales is a challenge, usually the circulation of medical equipment to hold a product listing meeting, pull experts to train on the use of products, regularly visit doctors to collect feedback on product use, and continue to promote, which is the mainstream circulation method that has been regarded as the industry for more than 30 years.
Due to the so-called "self-developed" business and imported laser equipment, in fact, Qizhi Laser is a "medical beauty + medical" comprehensive company.
The so-called comprehensive means that it can be both self-produced and sold, which is a bit too decentralized for a medical device company.
In recent years, the medical industry has become more and more professional in the division of labor, and this kind of "want everything" business layout has given this company a lot of historical baggage.