Aesthetic Medical International Holdings Group Limited
Q4 2020 Earnings Call Transcript

Published: 20 Apr 2021

[Operator:]

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Aesthetic Medical International 4Q and Fiscal Year 2020 Unaudited Financial Results Conference Call. During today's presentation, all parties will be in a listen-only mode. This conference has been recorded today, Tuesday, April 20, 2021. Joining us today from Aesthetic Medical International are the Company's Chairman and CEO, Dr. Pengwu Zhou; and Company's IRD, Mr. and the Company's Chief Financial Officer, Mr. Guanhua Wu. Before we get started, I would like to remind you that some of the information discussed 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 risks and uncertainties, you should review the Company's filings with the SEC, which includes today's press release.

[Pengwu Zhou:]

Thank you operator and everyone for joining Aesthetic Medical International's fourth quarter and fiscal year 2020 unaudited earnings call today. I will begin my remarks by providing an overview of the company's response to the COVID-19 outbreak during the fiscal year 2020 followed by a summary of the company’s fiscal year 2020 performance. Then Mr. Zhou Yi Tao, our IRD will review our financial results and operation performance in more detail. And he will elaborate a few other items related to our outlook and the approaches we are taking to implement our core initiative in the next fiscal year. Despite the fact that COVID-19 is under effective control in China at the current stage, we are implementing a thorough COVID-19 prevention scheme and measures, including, but not limited to regularly, sterilizing and ventilating the company's facilities, taking strict protective measures to protect our frontline employees and our customers and segregating employees’ lunch time, monitoring the body temperature of our employees and customers and keeping records of the travel history and health of our employees and their immediate family members. In 2020, we actively took initiatives to contain the COVID-19 pandemic and carry out Aesthetic Medical Service and the – of ensuring the safety of our customers and employees. We insist on needing our customers Aesthetic Medical meet its high standard medical technology, strong medical teams and high quality service and building trust with our customers.

[Unidentified Company Representative:]

So, thank you, Dr. Zhou, and good morning, everyone. Next on behalf of the management team, I will summarize some of the key unaudited financial results and operation results for fourth quarter 2020 and fiscal year ended December 31, 2020. So, let me begin with the fourth quarter 2020. In fourth quarter 2020, our total revenue increased by 52.3% to RMB362.6 million, which is about US$55.6 million excluding the impact from the consolidation of Guangdong Hanfei Investment Management Co., Ltd. result. The company entered into agreement to purchase a 51% equity in interest of Guangdong Hanfei Investment Management on the July 14, 2020. But and then – but, subsequently entered into an agreement to dispose of the 51% equity interest of Hanfei on December 25 of the same year. The disposal was mainly due to slower than expectation, recovery of COVID-19 and the overall less than satisfactory performance of Hanfei during the post-acquisition period.

[Operator:]

Our first question today is from Carolyn Yang, a private investor. Go ahead.

[Unidentified Analyst:]

Thank you for taking my question. I have two related questions. The first one is, was this year’s performance largely influenced by COVID-19? How you assess the impact of this pandemic? Thank you.

[Guanhua Wu:]

Yes. Actually this year’s performance is largely influenced by COVID-19, because some of our treatment centers and hospital is shutdown for the first couple months of the year. So, we simply cannot do any treatments. And so, that is the reason that we record a loss. We’ve done very good in the previous year which is 2019 and we actually look forward to 2021. Yes. Thank you for your question.

[Unidentified Analyst:]

Okay. Thank you. My second question is, whether the overall operations this year will be adjusted in the future? Thank you.

[Guanhua Wu:]

Yes. The strategy is – if I just report and share the general strategy, we will say, remains the same. But we will adjust some of our strategy. For example, we are now more focusing on the eastern part and southern part of China instead of doing M&A in expanding business all over China. So, we are more focused now. Thank you for the question.

[Unidentified Analyst:]

Okay. Thank you. And my last question is with the COVID-19 improving, what’s your expectation on this year? Is the performance still in 2021 was looking forward to?

[Guanhua Wu:]

Yes. Thank you for your question. Yes. We actually are very optimistic about 2021. I don’t have the exact number with me right now. But we are expecting a increase of revenue and the number of treatments and number of customers basically – based on the results of 2019 instead of 2020. 2020 was a very special year. So, we are expecting a good year this year. Thank you.

[Unidentified Analyst:]

Okay. Thank you.

[Operator:]

Our next question is from Tammy Wang from Sunscreen Capital. Go ahead.

[Unidentified Analyst:]

Hi there. I have, like, three questions and the first one I will begin with the operations side. Does the number of non-surgical customers chose like upward trend? I mean, may I know what the expected annual growth rate? This is the first question.

[Guanhua Wu:]

Yes. Thank you. Let me answer the first question first. Yes, we actually do see a upward trend for the non-surgical customers because of the industry is more acceptable and popular among the younger customers. So the teenagers are – and the young adults are more acceptable to this treatment. So, in fact, we actually see a trend in both surgical and non-surgical treatments in our company. But, yes, we do see a trend. And the expected growth rate annually I think, it’s about 25% or even more.

[Unidentified Analyst:]

Okay. Cool. The second question is, yes, we can see that the repurchase rate of the company like, relatively high and now it’s from like, we cannot project, may I know that?

[Guanhua Wu:]

Yes. Yes. Of course. The repurchase rate mainly come from the laser treatment and the minimal invasive treatments. And because the laser treatment and the minimal invasive treatments, you can do it on the monthly or maybe quarterly basis. So, we do see a very prudent rate on these repurchase rate on these treatments.

[Unidentified Analyst:]

Okay. And the last question is, will the company continue to increase the investment in the projects in the coming year to 2021?

[Guanhua Wu:]

Yes. We are actually planning to increase more investment in this part of the game, because we do see a trend of the younger customers who are more likely and who are more friendly to these non-surgical medical treatments. So, I mean, like nobody like surgeries, right, nobody likes doctors cutting off your skin and doing surgery. So, these non-surgical treatments are more and more popular in Asia basically.

[Unidentified Analyst:]

I see. Okay. Thank you. That’s all the questions.

[Guanhua Wu:]

Yes. Thank you.

[Operator:]

Seeing no further questions let me turn the call back over to Mr. for closing remarks.

[Unidentified Company Representative:]

Thank you, Kate. On behalf of our entire management team, I would like to thank everyone again for joining us today for our conference call. If you have any questions, please contact us through emails at [e-mail] or reach our IR counsel ascent Investor Relations at [e-mail], management will respond to your question as soon as possible. We appreciate your interest and support in Aesthetic Medical International and look forward to speaking with you again next time. Kate, please go ahead.

[Operator:]

Thank you everyone for attending Aesthetic Medical International’s fourth quarter and fiscal year 2020 unaudited earnings conference call. This concludes our call today, and we thank you for listening. Goodbye.