Guotai Junan International: Maintains "Buy" rating on BEAUTYFARM MED (02373) with a target price of 45 Hong Kong dollars.

Guosen Securities International released a research report, maintaining its financial forecast for BEAUTYFARM MED (02373), with estimated revenues of 30.5 billion yuan/34.1 billion yuan/37.6 billion yuan for the years 2025-2027, and net profits attributable to shareholders of 3.2 billion yuan/3.8 billion yuan/4.4 billion yuan. Referring to the valuation levels of two terminal medical consumption stocks, YONGHE MEDICAL (02279) and GUSHENGTANG (02273), the company is given a 30x PE for 2025, with a corresponding target price of 45 Hong Kong dollars (previous value was 19.6 Hong Kong dollars), and maintaining a "buy" rating. Guosen Securities International's main points are as follows: Event: The company achieved a record high adjusted net profit in the first half of 2025, with ample cash flow and strong hematopoietic capacity. Adjusted net profit reaches a record high, ample cash flow In the first half of 2025, the company achieved revenues, net profits, and adjusted net profits of 14.6 billion yuan, 1.7 billion yuan, and 1.9 billion yuan respectively, representing a year-on-year growth of 28%, 36%, and 38% respectively. Operating cash flow was 4.1 billion yuan, an 84% year-on-year increase; cash and cash-like assets were 20 billion yuan, a 28% year-on-year increase. In terms of business segments, revenue from beauty and healthcare services reached 8.1 billion yuan, a 30% year-on-year increase; revenue from medical beauty services reached 5 billion yuan, a 13% year-on-year increase; revenue from sub-health medical services reached 1.5 billion yuan, a 108% year-on-year increase. The number of sub-health medical clinics in the first half of 2025 has expanded to 11. The Women's Special Care Center, as the most important sector of sub-health medical business, saw a 173% year-on-year growth in revenue in the first half of 2025. The company continues to establish collaborative relationships with medical partners for research and education, and has established the "Designated Clinical Training and Exchange Center for Gynecology" and the "Benchmark Base for Gynecology Research and Training," promoting the professional development in the field of female gynecological anti-aging. Increased holdings in Nairer to 90% equity, profitability improved after acquisition In May, the company announced an increase in its stake in Nairer by 20%, raising its ownership to 90%. After the acquisition, Nairer's profitability further improved, with revenues of 2.8 billion yuan in the first half of 2025, and the adjusted net profit margin increased from 6.5% before the acquisition to 10.4%, demonstrating significant integration effects. As an intelligent beauty and health brand based on traditional Chinese medicine theory, Nairer was once again awarded the "China's No. 1 Intelligent Beauty and Health Brand" certification by Frost & Sullivan on the occasion of its 18th anniversary celebration. At the same time, the group's first AI data intelligence transformation benchmark project, the "Intelligent Beauty and Health 2.0 System," will be implemented at Nairer. Focus on shareholder returns, cumulative dividends of 3 billion yuan over three years In March, the company officially announced the "Capital Market Value Enhancement Plan," which includes three main measures aimed at enhancing shareholder return capabilities, optimizing capital structure, and promoting long-term sustainable development. Over the past three years, the company has announced cumulative dividends of 3 billion yuan. The first dividend under the "Shareholder Return Plan" will be distributed by September 26, 2025, with a dividend of HK$0.52 per share. Risk warning: policy risks; store expansion below expectations; sales below expectations; intensified industry competition, etc.