So-Young International's Growth Story May Rebound

Summary

• So-Young International went public in the U.S. in early May, 2019.
• The firm operates a heretofore rapidly growing online marketplace for medical aesthetic treatments in China.
• SY has reported only through Q3 19 and I suspect Q4 19 and Q1 20 will produce negative results.
• I'm watchlisting SY for review in six months.
• Looking for more stock ideas like this one? Get them exclusively at IPO Edge. Get started today »

Quick Take

So-Young International (NASDAQ:SY) went public on May 2, 2019 on the Nasdaq Global Market, raising $180 million, excluding underwriter options.

The company has developed an online marketplace that connects plastic surgery and other aesthetic service providers with Chinese consumers.

SY had generated strong growth before the coronavirus outbreak began.

I’m Neutral on the stock at its current level but am watchlisting it for review in six months.

Company

Beijing, China-based So-Young was founded in 2013 to bring beauty and health to residents of China as well as connect plastic surgery providers with customers through its mobile medical aesthetics platform that facilitated $306.6 million worth of transactions in 2018.

Management is headed by Co-Founder, Director, CEO Xing Jin, who was previously vice president and general manager of social operations at IM2.0 Interactive Group.

So-Young has developed a one-stop mobile platform for discovery of a wide variety of medical aesthetic procedures, assessment of their quality, and scheduling appointments while engaging the user with original content and social features.

On the SY platform, people share their personal experiences with plastic surgery providers thus helping its users choose the deal that suits them best. As of December 31, 2018, the company had a collection of more than 2 million day-by-day case-based blogs which it refers to as Beauty Diaries.

The firm divides its revenue segments into two:

• Information services - 67.3% of revenue in 2018. Videos and links, to help plastic service providers on its platform to increase their exposure, customer acquisition, and reservation volume.

• Reservation services - 32.7% of revenue in 2018. When users book medical aesthetic procedures with service providers through the firm’s online platform, it receives a fee rate of approximately 10% of the amount paid by consumers.

According to a 2018 market research report by HKTDC, the total

Analyst’s Disclosure:I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.