Core view
Market volume: relatively small and low penetration, China may be at the leading level. Driven by economy + technology, the volume and price of the global hair transplant market rose simultaneously. From 2004 to 2019, the scale of the global hair repair market increased by 12.2%, reaching US $4.6 billion by 2019, and the volume is still relatively small. In terms of consumption structure, non-surgical patients are dominant, and the marginal contribution of women is increased. Women account for 40% of non-surgical patients. In terms of penetration rate, based on the population, hair loss rate and the number of patients undergoing ISHRS surgery, the penetration rate of surgery in the world is generally low, and China may be at the leading level; Non surgery has the advantages of low price, short recovery period and wider adaptability. The permeability is about 2-3 times that of hair transplantation.
Penetration rate: the penetration rate of hair implant in the whole world is low, while China’s penetration rate of only 0.25% is at the leading level. The lower penetration rate overseas is expected to be more due to the factors of supply side price and efficiency than the social concept of demand side. Human society has the same pursuit of beauty, and hair loss at home and abroad is a problem. (1) higher market efficiency, higher technology penetration and other factors that affect the development of China’s market are more rare, but they are rooted in higher market efficiency and technological innovation.
Supply side – high price: the labor cost of developed economies is high, and the price of hair transplantation (US $80 Shanxi Securities Co.Ltd(002500) 0) is generally higher than that of developing economies (US $25006000). In the American Medical and American market, the price of hair transplantation (US $13600) is also much higher than that of other surgical (US $4 Jointo Energy Investment Co.Ltd.Hebei(000600) 0) and non-surgical projects (within us $2000); The high cost of developed economies promotes the development of medical tourism in developing economies. Turkey attracts a large number of medical tourists from the United Kingdom, Ireland, Wales, Germany, the Middle East and Gulf countries based on price (global hair transplant price depression, and some clinics provide all inclusive packages) and regional advantages (the connection between Asia and Europe).
Supply side – low efficiency: fut technology is suitable for European and American hair quality, and fue operation takes a long time and requires the cooperation of many medical staff during the operation. However, due to the high labor cost in European and American countries, fue is difficult to be popularized on a large scale and rapidly, and the innovation of overseas hair transplantation technology is slow; In addition, the long treatment cycle in European and American countries, the long waiting time and the high price in China have also prompted some patients to choose Turkey, India and other countries for hair transplantation.
Supply side: lack of regulation: globally, the hair transplant market is lack of regulation. Developed economies with relatively perfect medical systems such as the UK and the United States still lack regulation of the hair transplant industry. The regulation of the hair transplant industry depends more on the self-discipline of industry associations.
Demand side: common differences exist between China and foreign countries. Commonness: the price of hair transplantation is high, complex and not required; The pursuit of “beauty” in human society is consistent, and the problem of hair loss is a problem at home and abroad, but limited by the price, awareness of hair transplantation, social cognition, postoperative recovery and other problems, the penetration rate of hair transplantation at home and abroad is at a low level. Differences: different genes, white hair loss is more common and not rare; Moreover, due to the difference of head type, the impact of hair loss on the beauty of Europeans and Americans is less than that of Asia, and bald head even has a symbol of power.
Competition pattern: market size and growth are different, with the United States scattered and Japan concentrated. The competition pattern of American hair planting market is scattered, and CR1 (Bosley) is expected to be less than 5%. The pattern of Japanese hair planting market is relatively concentrated, and the leading ilantower city accounts for 50% +. The difference in pattern is due to the size and growth of the market.
Japan: the volume of hair implants in Japan is small (tens of millions of dollars) and shrinking (compound growth rate of – 2.1% from 2007 to 2020). There are few entrants and more doctors prefer self-employed business (“adopting multi store expansion strategy, it must” give up the full score of 100 “, so famous doctors can only grow into one person at most). The chain operation of i-landtowerclinic and affinity clinic ranked at the top leads in the number of doctors and institutions and has been established for a long time There are many accumulated cases, and then the share is leading. The number of doctors in the remaining hair transplant institutions is mostly 1-2, which is relatively scattered.
The United States: the volume of hair transplantation is large (US $1 billion +) and growing. The pattern is similar to that of medical and American institutions. The barriers are not high and doctors prefer self-employed; Individual medical and beauty institutions are small and scattered. On average, the number of employees in individual institutions is only 5, with an average annual income of 1.5 million US dollars. The core cost is salary expenditure rather than fixed assets or marketing investment, and the chain rate is less than 15%; American plastic and cosmetic chain organizations are mainly regional chains. Long Island plastic surgery group (lipsg) has the largest scale and the longest continuous operation time in the industry (established in 1948), with a market share of 0.3% according to the income caliber; The barrier of hair transplantation is lower than that of medical and American institutions (no high-value equipment investment and doctors can have the qualification of practicing doctors), but the degree of standardization is good. Bosley and MHR (the second largest hair transplantation institution in the United States) merged in 2010, so the market share has reached more than 4%, which is much higher than that of medical and American institutions. five
Leading enterprise – aderans: Bosley’s parent company, global hair medical beauty group.
Introduction: it was established in 1969 and listed in 1987, with poor management and delisting in 2017; It owns five core brands including aderans, ladies’ aderans, Fontaine, Bosley and hairclub, covering businesses such as male and female wigs, hair transplants, non-surgical repair, hair care products and hair loss solutions; Japan is the leader in the wig industry, and the wig and hair transplant business in North America is the leader.
Financial performance: as of fiscal year 2021, there were 6119 employees and more than 60 subsidiaries, with an operating revenue of 67.6 billion yen (about 3.7 billion yuan); The overall gross profit margin of the company is relatively high (about 80%), and the net profit margin before fiscal year 2005 is about 10%; However, with the intensification of competition in China’s wig business, the continuous rise of sales management fee rate, as well as the external effects such as the 2008 financial crisis and the 2011 Japanese earthquake, the profit margin gradually declined and even turned into a loss; The market value once reached 165 billion yen (about 26.9 billion yuan at the exchange rate at that time), and the historical PE valuation center was about 20x.
Delisting resumption. 1) Industry factors: the local wig market has been highly mature since the 21st century, with the rise of medium and low-end wigs and the weakening of the competition pattern; 2) Individual factors: Marketing M & a dependence; Strategic lag (low price wig double line was established only in 2014); Shareholder conflict (years of high-profile struggle with steel partners, an American investment fund, hindering reform); Unclear product positioning; The operation efficiency is not high (there are a large number of business lines, subsidiaries, employees and stores, but it does not boost the income and the rising speed of cost is too fast).
China Outlook: it is still in the business cycle, and the pattern is always strong, focusing on Yonghe medical.
Market: entering the business cycle driven by penetration, non-surgical or future trend. Since 2016, the publicity of large chain hair transplant institutions has been strengthened, the growth of disposable income has driven the upgrading of consumption, and new technologies such as artas intelligent equipment / 3D hair transplant have been emerging. The hair transplant industry has entered a business cycle driven by penetration. The factors driving the expansion of hair market in the future mainly come from: ① the rise of consumer demand; ② Consumption capacity improvement; ③ Awakening of consumption consciousness; ④ The industry is becoming more standardized and transparent. In terms of consumption structure, Yanggu is non-surgical treatment, and the customer unit price is low, which is easier to bear; Compared with life beauty, the treatment effect is better. It is expected that the increase in the supply of medical hair care will replace the current life beauty hair repair scheme; Referring to the consumption structure of global hair business, surgical and non-surgical categories also show a pattern of three to seven, and non-surgical may be the future trend.
Pattern: the advantages of chain hair planting institutions are prominent, and the competition pattern is expected to be strong. In terms of initial capital investment, the entry barrier of hair planting industry is not high, but there are several characteristics of hair planting consumption that deserve attention. ① Less SKU for hair transplant consumption (more professional and clear consumer decision-making path. Compared with Yimei, only hyaluronic acid has 40 + brands to choose from); ② The hair transplant service is relatively homogeneous (it is difficult for different institutions to differentiate the product and service itself to overtake on the curve); ③ Hair transplant services have high requirements for doctors and experience (the scale of institutions, the number and experience of doctors and the number of cases are the factors considered by consumers); ④ High customer orders, high trial and error costs and continuous tracking after operation (the importance of brand lies in reducing information asymmetry, enhancing trust and ensuring stable performance). Based on the above characteristics, the entry barrier of hair transplant service is low, but it has “scale barrier” and “brand barrier”, and it is not easy to generate the dispute between doctor brand and institutional brand of medical beauty institutions. The pattern of hair transplant market is expected to be strong and strong.
Yonghe medical highlights: in the short and medium term, it still lies in store expansion and business upgrading, and in the long term, the profitability is optimized. Referring to the global hair medical group aderans, the sales rate in its cost structure is moderate (about 20%), and the cost mainly comes from labor costs and trivial salons and other expenses. The cost structure of boselybusiness, whose business is close to Yonghe, also shows such characteristics. In the future, with the improvement of the penetration rate of the hair transplantation industry, the increase of the public’s understanding and acceptance of hair transplantation, the increase of the company’s share, the improvement of brand awareness, and the integration of planting, raising and fixing, there is room for the downward trend of marketing and promotion rates.
Investment suggestion: focus on Yonghe medical, the leader of one-stop hair medical service. With rich technology and market education, the hair medical service industry has entered a high business cycle driven by penetration since 2016. It is optimistic about the growth potential of the hair medical service industry and gives the industry a “recommended” rating. Based on the consumption characteristics of hair transplantation, it is expected that the industry pattern will be stronger and stronger. Yonghe medical, as the leader of one-stop hair medical service, is expected to fully benefit from the increase of industry dividend and share in the future. It is estimated that the revenue from 2022 to 2024 will be RMB 2.760/3.686/4.798 billion respectively, with a year-on-year growth rate of 27.3% / 33.5% / 30.2% respectively; The net profits were 203 / 300 / 405 million yuan respectively, with a year-on-year growth rate of 68.9% / 48.0% / 35.0% respectively. According to the closing price on April 8, the corresponding dynamic PE from 2022 to 2024 is 27 / 18 / 13X respectively, maintaining the “overweight” rating.
Risk tip: policy impact of hair transplant industry; The opening of the store was not as expected; Vulnerable to major medical accidents; Intensified market competition; The epidemic situation worsened further, impacting terminal consumption; Risks related to uncertainty of cross industry comparison; Stock price fluctuation risk; China and overseas markets are not completely comparable, and relevant materials are for reference only.
