So-Young International Inc.

Ladies and gentlemen, thank you for standing by for SoYoung's fourth quarter and full year 2024 earnings conference call. At this time, all participants are in listen-only mode. After management gives their prepared remarks, there will be a question and answer session. As a reminder, today's conference call is being recorded. I would now like to turn the meeting over to your host for today's call, Ms. Mona Kuo. Please go ahead, Mona.

Thank you, Operator, and thank you, everyone, for joining Soyang's Fourth Quarter 2024 Orleans Conference Call. Joining me today on the call is Mr. Xin Jin, our co-founder, chairman, and CEO, and Mr. Nick Zhao, CFO. Please note that the discussion today will contain four looking statements made under the safe harbor provisions of the U.S. private securities. As the Litigation Reform Act of 1995, four looking statements are subject to re- and alternatives that may cause actual results to differ materially from our current expectations. Potential risks and alternatives include, but are not limited to those outlined in our public balance with SEC, including our annual report on Form 20F. Soyang does not undertake any obligation to update any forelooking statements, except as required under applicable law. Finally, please note that, unless otherwise stated, all fingers mentioned during this conference call are in RMB. At this time, I'd like to turn the call over to Mr. Xinjin.

Hello, everyone. Welcome to today's financial phone call meeting. In the fourth quarter of 2024, our total income per capita was 3.69 billion yuan, which is a net loss of 6.08 billion yuan, which belongs to Xinyang. Hello everyone and welcome to today's conference call.

In the fourth quarter of 2024, our total rent reserve in the quarter was $369.2 million. Net loss attributable to Soyoung was $676 million, while non-GAAP net loss was $53.2 million. The fluctuation in our bottom line was primarily driven by a one-time goodwill impairment charge of $540 million for our subsidiary, Miracle Laser, as well as our continued investment in the self-operated aesthetic center network.

We continue to promote the full industrial chain vertical integration strategy. With the large number of user data and brand trust base accumulated in traditional community e-commerce business and the deep layout of the upstream supply chain, we have brought brand and cost advantages to the chain business and promoted the rapid development of the chain business. Our Qingyi Mei chain brand, XinYang Youth Clinic, has completed the launch of a new brand. The brand is focused on providing high-performance light medical services, providing consumers with comprehensive medical prevention and treatment solutions, promoting the spread of medical services, and assisting Chinese consumers to achieve medical freedom. The continuous growth of chain business has proven its business model and development potential. In the future, we will continue to invest in chain business, making it a new growth engine for the group.

During the quarter, we continue to undertake our vertical integration strategy, leveraging our extensive user base and upstream supply chain capabilities to drive the rapid expansion of our aesthetic centers. Our Soyang Clinic officially launched with a refreshed, bright identity that is focused on providing high-quality, cost-effective light medical aesthetics and anti-aging solutions. They provide refreshments to make medical aesthetics more accessible and empower Chinese consumers to individually pursue aesthetic freedom. They continued high growth of our aesthetic center network, domesticates the viability of its business model and growth potential. Moving forward, we will continue investing in the business to establish it as a new growth energy for the group.

Let's take a closer look at the development of our business in the fourth quarter. As of the fourth quarter, we have set up 19 XinYang Youth Homes in Beijing, Shanghai, Guangzhou, Shenzhen, Hangzhou, Chengdu, Wuhan, Chongqing, Changsha, and nine core cities, and have invested in them. Among them, 11 stores have achieved monthly operating cash flow at the end of the year. The overall satisfaction is maintained at 4.98 points, 5 points full, proving that we have reached the leading level of the industry in terms of service quality. In the last four quarters, the chain business income reached 8,130 million RMB, with a 79% growth rate and a 702% growth rate. The number of people paid for the joint sale exceeded 38,000 people. The number of paid service points has exceeded 81,500 times. By the end of 2024, we have accumulated more than 39,500 active users, and we have verified our brand appeal, and we have demonstrated accurate control over the market demand. Due to the price strategy of the double 11 and double 12 promotion activities, and the initial promotion strategy of the entry-level US group evaluation, Now, let me give you a closer look at our quarterly performance.

In Q4, we have opened 19 Zilin clinics across nine core cities, including Beijing, Shanghai, Guangzhou, Shenzhen, Hangzhou, Chengdu, Wuhan, Chongqing, and Changsha. all of which are fully operational. Among them, 11 aesthetic centers have already achieved positive monthly operating cash flow in December. Our customer satisfaction remains at an industry-leading 4.98 out of 5. Revenue from our aesthetic center business surged to $81.3 million during the quarter, up 79% quarter-to-quarter and 702% year-over-year. We recorded over 38,000 verified paid visits, total number of verified paid aesthetic treatments surpassed 1,500. As of the end of 2024, total number of active users exceeded 39,500. Highlighting the strong appeal of our brand and our deep insight into market demand, we successfully acquired a large number of verified users. There were our pricing strategies for the Double 11 and Double 12 sales events, and promotional activities following the debut of our aesthetics center on May 20 appeal. This, however, led to a temporary decline in our per capita revenue, which was an anticipated result of our user acquisition strategy.

具体到门店运营层面,以出于成熟期的北京宝丽样板店为例, Our old customer income accounted for 68% It fully proves that stable and efficient standardized service Attracts customers for a long time Take Shanghai Zhengda Square Store as an example in the growing period In the fifth month of opening Service people have exceeded 2,000 people per month Efficiency has exceeded RMB 10,000 With the outstanding user reputation and widespread brand fame XinYang promotes high-efficiency market scientific organization management, and outstanding operating efficiency. The average customer cost will be controlled below the average level of the industry. In the fourth quarter, the chain stores officially joined Meituan Dianping to quickly increase brand recognition. The ROI of the channel is outstanding and has become a stable and effective customer channel. So far, all the stores of Xinyao chain stores have not yet joined the Xinyao APP. Customers are mainly due to brand influence,

Our Beijing Head Aesthetic Center has now matured with repeat customer revenue accounting for the 8% of total revenue, demonstrating the long-term appeal of our uniform high-quality services. Our Shanghai Center in Super Black Mall is in business and received over 2,000 monthly visits during its fifth month of operation. with per square meter sales exceeding 10,000. Still strong broad awareness, efficient marketing, and robust operational management. We have successfully maintained customer acquisition costs below the industry average. During the quarter, our aesthetic centers officially debuted on the Meituan Dianping, quickly reinforcing its broad recognition. This channel has generated strong ROI and become a reliable customer acquisition source for us. To date, none of our aesthetic centers have been integrated into the SoYang app. Instead, customers primarily come from various channels, including the broad-influenced private domain traffic, other platforms, and user referrals.

未来,新阳青衣美联锁将计划在现有核心城市进一步加密布局, 并将我们成功的联锁运营模式快速复制到更多城市,

We plan to deepen our presence in core cities, replicating our proven aesthetic centers across small locations to further expand our network.

In terms of top-level business, we continue to build a full-fledged ecosystem. The strategy of the medical supply chain has also made progress. In the fourth quarter, the number of real estate agency customers we serve continues to rise. more than 1,200 in total. In terms of real estate business data, the total amount of real estate exports has made a significant increase of more than 52,000. Compared to the increase of up to 20%, it highlights the market's recognition and demand for products, and also proves our strength in product development, quality control, and market promotion.

Our comprehensive medical aesthetic supply chain is yielding results as well. During the quarter, we served over 1,200 medical institutions with our injectable solutions, reflecting continued growth in our customer base. The amount for injectable remained robust, with over 52,000 units shipped during the quarter, up 20% sequentially. This highlights strong market recognition and demand for our products and underscores our product development, quality control and promotional capabilities.

社区电商业务板块作为我们的传统业务, 不仅持续推进自身业务的高质量发展战略, 更在公司的整体战略中发挥着关键作用。 作为当前的利润支柱, 社区电商业务将持续为我们贡献利润, We continue to carry out the high-quality initiatives for pub, which remains the cornerstone for our traditional business and plays a pivotal role in our overall strategy.

As a key profit driver, it will continue to generate stable earnings to support our new business. During the quarter, GM Wave for Verified Medical Aesthetic Services reached $356.6 million, up 3% sequentially. Total transaction volume increased 10% year-over-year, while per capita install GTV grew by 6% sequentially.

As China and the United States become the absolute mainstream of Chinese and American consumption, As large medical aesthetics is component of the large medical aesthetics market,

the rise of large-scale light medical aesthetic chains is inevitable. Unlike traditional institutions that rely on doctor-briding and personalized treatments to command high premiums, these chains will expand rapidly by offering uniform, highly cost-effective services to achieve economic soft skills.

Is it possible to form a scale effect? For the chain, it is important. First of all, There should be a sufficient number of stores, a sufficient number of stores and density to form a brand effect and reduce the cost of goods and customer service. Seventh, a large enough scale can support the self-made supply chain from the fundamental reduction of product costs to increase the space for profit. Finally, a large enough scale can support the strong digital platform. And the comprehensive digitalization is to lock the store management, reduce the dependence on people, and achieve a high standardization of consistent key.

GAO is critical to the success of chains. First, its sufficient number of locations and market density are essential for building broad awareness and reducing customer acquisition costs. Second, greater scale enables the development of an in-house supply chain, lowering procurement costs and expanding profit margins. Lastly, a large network supports its strong digital operations platform. where comprehensive digitalization reduces reliance on human management and ensures a high degree of standardization and consistency across all locations.

新亚做清一美联手的优势在于有广泛知名度的品牌, 布局了四年的完整产品供应链和天然优于传统一美机构的互联网科技基因与AI技术能力。 We just need more time so that we can safely open up more high-quality clinics. We believe that China will have thousands of轻医美连锁 in the future. And even if we achieve such a scale, it will not reach 5% of the total number of Chinese medical institutions. This will be a long and bloody track. We have enough patience to win the final victory.

So we have the advantage in building a light medical aesthetic chain, allowing our strong brand recognition if we integrated product supply chain established over the past four years. Our corporate internet DNA and AI capabilities, which far exceeds those of traditional medical aesthetic institutions. What we need now is time to consistently expand and establish more high quality aesthetic centers. We believe that China will see the emergency of a leading light medical aesthetic chain with over a thousand locations. Even at that scale, it would account for less than 5% of the total number of medical aesthetic institutions. This is a long-term growth opportunity, and we have the patience and commitment to emerge as the market leader.

现在请Nick来介绍四季度的财务结果,之后我们将进行问答环节。

Now I'll hand over to our example, Nick, who will walk through the financial results followed by the Q&A session.

Hello, this is Nick. Please be reminded that all amounts quoted here will be in RMB. Please also refer to our earnings release for detailed information of our comparative financial performances on a year-over-year basis. Total revenues during the quarter were RMB $369.2 million, down 5.5% year-over-year, primarily due to the decrease in revenue generated by Soyang Prime. Information reservation services and other revenues were RMB 201.5 million, down 27.7% year-over-year, primarily due to a decrease in revenue generated by Soyang Prime. Aesthetic treatment services revenues reached RMB 81.3 million, a remarkable 701.6% year-over-year growth increase, primarily due to the expansion of our aesthetic center business. Sales of medical products and maintenance services were RMB 86.2 million, down 15.2% year-over-year, primarily due to a decrease in order volume for medical equipment. Cost of revenues was RMB 153.1 million, up 11.2% year-over-year, primarily due to the expansion of our aesthetic center business. Within cost of revenues, cost of information, reservation services, and others will RMB $44.5 million, down 48.2% year-over-year, primarily due to a decrease in costs associated with Soyang Prime. Cost of aesthetic treatment services will RMB $65.2 million, up 702.3% year-over-year, primarily due to the expansion of our aesthetic cost center business. Cost of medical products sold and maintenance services were RMB 43.3 million, down 0.5% year-over-year, primarily due to a decrease in costs associated with the sales of cosmetic injectables. Total operating expenses were RMB 815.2 million, up 216.2% year-over-year. Sales and marketing expenses were RMB 134 million, up 6.2% year-over-year, primarily due to an increase in payroll costs. G&A expenses were RMB 98.4 million, up 13.6% year-over-year. primarily due to an increase in professional service fees and allowance for credit losses. R&D expenses were RMB 42.8 million, down 5% year-over-year, primarily attributable to improvements in staff efficiency. Impairment of goodwill was RMB 540 million, primarily due to an impairment assessment related to our subsidiary, Miracle Laser, Income tax expenses were RMB 2.1 million, compared with income tax benefits of RMB 10.8 million in the same period of 2023. Net loss attributable to Soyang International Inc. was RMB 607.6 million, compared with a net income of RMB 17.5 million during the same period last year. Non-GAAP net loss attributable to Soyang International Inc. was RMB 53.2 million compared with net income of RMB 35.7 million during the same period of 2023. Basic and diluted loss per ADS attributable to ordinary shareholders were RMB 5.92 and RMB 5.92 respectively compared with basic and diluted earnings per ADS attributable to ordinary shareholders of RMB 0.18 and RMB 0.18 respectively during the same period of 2023. For the full year 2024, total revenues were RMB 1.47 billion down 2.1% year-over-year. Within total revenues, information reservation services and other revenues were RMB 929.5 million down 19.3% year-over-year. Aesthetic treatment services revenues were RMB 169.3 million, up 1,206.1% year over year. Sales of medical products and maintenance services were RMB 368 million, up 10.3% year over year. Cost of revenues were RMB 567.6 million, up 4.3% year-over-year, primarily due to the expansion of our aesthetic center business. Total operating expenses were RMB 1.52 billion, up 50.1% year-over-year. Net loss attributable to Soyang International Inc. was RMB 589.5 million, compared with the net income of RMB 21.3 million in 2023. Non-GAAP net loss attributable to Soyang International Inc. was RMB 4.7 million compared with non-GAAP net income of RMB 58 million in the fiscal year 2023. Basic and diluted losses per ADS attributable to ordinary shareholders were RMB 5.72 and RMB 5.72 respectively compared with basic and diluted earnings per ADS attributable to ordinary shareholders of RMB 0.21 and RMB 0.21 respectively in fiscal year 2023. We have maintained a robust cash position with cash and cash equivalents, restricted cash and term deposits, term deposits and short-term investments totaling RMB 1.25 billion as of December 31, 2024. Moving to our outlook, For the first quarter of 2025, we expect total revenues to be between RMB 280 million and RMB 300 million. Several of our business initiatives, including both our aesthetic center business and the sales of medical equipment and maintenance services, have already yielded impressive results, reinforcing our leading position in the industry. we remain confident that our long-term strategy focusing on the vertical integration of the entire aesthetic medical industry and leveraging our core strengths will enable us to capitalize our new growth opportunities, diversify our revenue streams, and drive sustainable growth. Ultimately, This transformation will help us to fulfill our vision of making aesthetic and medical treatment services accessible to a much wider consumer base. With the continuous expansion of our aesthetic center businesses and market conditions stabilizing, we anticipate a steady improvement in our financial performance. This concludes our key remarks. I will now turn over the call to the operator and open the call for QA.

Thank you.

Operator, we are ready to take questions.

Yes, sir. Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, we ask that you please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. Today's first question comes from Nelson Chung with Citibank. Please go ahead.

Good evening, Mr. Director. Thank you for accepting my question. My question is about our POP business. I would like to ask, in this POP business, we have some new developments this year in terms of third-party payment and cooperation. How do these developments help them to pass through the entire period of our current industry? So let me translate the question into English. Thank you very much for taking my question. My question is related to the pop business and what are the latest developments in merchant support and empowering on your platform during the industry consolidation period? Thank you.

Hello, thank you for your question. With the acceleration of the industry integration process, market concentration has become an inevitable trend. With the scale effect, brand influence, standardization of services and other advantages, Daqin's joint-stock organization occupies a larger market share. For many high-end institutions on the POP platform, only by differentiating the strategy, digging deep, and showing their unique features and product advantages in technology, service characteristics, and other aspects, can they effectively improve the value of products and services, and thus take root in fierce market competition. Currently, we continue to optimize the POP business by diversifying the cooperation relationship between multi-dimensional energy consumers, improving platform supply capacity, and optimizing user experience to help consumers go through the cycle to seize market opportunities and promote business stability and development. At the institutional level, we continue to deepen the cooperation with head and specialty institutions to establish closer cooperation relationships and provide targeted customized energy-saving solutions As industry consolidation accelerates, market concentration is inevitable.

large chain institutions are getting greater market share due to their economics of scale, broad influence, and standardized service models. For many specialized medical aesthetic institutions on other platforms, an initiator is key to highlighting their unique technical expertise, specialized services, and product offerings. With these differentiators, they can increase their pricing power and secure a solid foothold in a fiercely competitive market. We continue to optimize our platform business by empowering aesthetic institutions across multiple dimensions, deepen partnerships, reinforcing platform capabilities, and improving the user experience. These efforts help institutions navigate market cycles, capitalize opportunities and achieve sustainable business growth. For institutions, we continue to strengthen partnerships with top-tier and specialized medical aesthetic institutions, fostering closer collaborations through tailor-made solutions that empower them to ensure that they maintain their leadership in a competitive market through a segmentation strategy that targets different cities, institutions, and service offerings. We optimize our supply structure to better match market demand and supply, improving the overall efficiency of our platform.

In the application operation, we insist on economic management, combine user behavior data, and optimize the application strategy, and continue to optimize the user path at the app end, shorten the decision period, and increase the user conversion rate. In addition, we rely on good clothes and good products. We provide personalized medical products and services for users to further increase customer satisfaction and at the same time drive the increase in customer price. At the user end, we continue to strengthen private operation, expand the user community in ways such as private marketing, buying hands, listing, and so on, increase user connectivity, activate long-term value, help medical institutions expand the customer group, and dig up growth potential. With the promotion of this series of recommendations, we have achieved stage-level results. In terms of operations, we are here to refine management practices, leveraging user behavior data to optimize subsidy plans.

Additionally, we continue to enhance the user journey on our app, shortening decision-making times and increasing decision rates. Furthermore, through the Good Doctor, Good Product initiative, we provide personalized recommendations for medical aesthetic products and services, further enhancing user satisfaction while increasing transaction value. On the user side, we are continuously strengthening our private domain operations expanding our user base to provide domain marketing and influencer-driven referrals. These efforts enhance our user engagement, unlock customers' LTV, and help medical aesthetic institutions reach a broader audience and drive more growth. Driven by these initiatives, we have achieved notable results at this period. Meanwhile, in terms of annual framework agreements we are making strong progress in both volume and progress. Further validating the effectiveness of our strategy, looking ahead, we will continue to enhance our platform ecosystem, strengthen collaboration with institutions, and improve the user experience, fostering the long-term sustainable development of the industry. Thank you.

Thank you. And our next question today comes from Yibeng Li with Haitong Securities. Please go ahead.

Okay, good evening, Mr. Li. Thank you for this opportunity. I would like to ask about the chain business. Yes, because it is the end of the fourth quarter, we have seen that the chain has opened 19 stores. For the growth period, such as different life cycle stores, do the companies have any different strategies and methods? Let me translate myself. We are glad to see that Soyoung has opened 19 aesthetic centers as of Q4. So how does the company adapt its strategies and operations for centers at different stages of development? Thank you.

Hello, thank you for your question. We have developed a differentiated operation strategy for different stage stores to ensure that each stage store can achieve the best business effect and continue to enhance brand influence and user experience. As for the starting period, which is 0 to 3 months, the core goal is to establish brand awareness, so that the target audience within the 5 km radius of the surrounding area can quickly know and understand XinYang Autonomous Hospital. We carry out standardized operation processes. During the formation of the team, the doctors, nurses, consultants, and other service personnel to carry out a large number of training and rigorous assessment to control every service detail. With the development of the industry for 12 years, we have established a private community of millions of users, so that we can directly reach the total number of users, thereby greatly reducing the cost of marketing. At this stage, we pay great attention to the experience management of the total number of customers, strictly control the waiting time, optimize user evaluation, and at the same time, quickly create high-quality, high-quality store images, strengthen the online reputation, and lay the foundation for the subsequent customer flow.

The employment differentiated operational strategies are providing aesthetic centers at various rates of development to ensure they can reach their optimal performance, while continuously expanding, broadening, and enhancing their experience. For aesthetic centers in the realm of race, which lasts about three months from opening. The main goal is to build bread awareness and ensure that target customers in a five-kilometer radius recognize Soyang's aesthetic centers. We follow SOPs while building the team, providing comprehensive training and strict assessment of doctors, nurses, and consultants to ensure service quality at every stage. With 12 years of industry experience, SoYang has built a private domain community of 1 million users, facilitating engagement with initial customers and significantly lowering market costs. At this point, we focus on delivering an outstanding experience to initial customers, minimizing waiting times, improving customer reviews, and quickly building an extraordinary high-quality aesthetic center image through major portal platform like Meituan Dianpiu. These efforts help strengthen our online reputation and establish a solid foundation for long-term customer acquisition and retention.

Entering the growth period, that is, from the fourth month to the twelfth month, MenDian starts from brand construction to managing efficiency optimization. The focus is on the quality of medical delivery and customer storage. As aesthetic centers enter the growth phase, which was from the fourth month to the 12th month after opening, the focus shifts from bright buildings

to optimize an operational efficiency with an emphasize on service quality and customer retention. We strengthen repeat customer engagement and referral programs to maximize customer lifetime value while gradually balancing operational efficiency to improve financial performance. To this point, most aesthetic centers have established a stable business foundation and are able to generate several consecutive positive cash flows.

When the store enters the maturity period, which is more than 12 months of opening, the focus will turn to the optimization of the life cycle and product structure of the long-term customer group to ensure the continuous health development of the business. At this stage, we will divide customer data such as customer consumption frequency, consumption amount, consumption project, etc. to manage customers. For the characteristics and needs of different levels of customers, we carefully design a differentiated service strategy, Through this type of division operation strategy, deep-dive into each level of customer potential, strengthen the loyalty of users, and effectively improve the value of customer loyalty.

When synthetic centers reach the maturity phase 12 months after the opening, the focus moves to long-term customer lifecycle management and service control optimization to ensure sustained business growth. At this phase, We implement customer segmentation based on frequency, spending levels, past service records, and other data. We then develop tailored service protocols of different customer groups. By adopting these segmented operational plans, we can enhance customer loyalty and effectively increase customer lifetime value. Through these real structured strategies, we can ensure that our branded athletic centers and different free schools progressively achieve their operational goals and continuously strengthen our brand influence and competitiveness in the market.

Through this series of strategies, we ensure that stores at different stages can grow steadily, achieve business goals, and at the same time continue to enhance the market influence and competitiveness of the brand.

So this well-structured strategy we can ensure that our branded aesthetic centers and different trades grow progressively, achieve their operational goals, and continuously strengthen our brand's influence and competitiveness in the market. Thank you.

Let me translate myself. Can aesthetic-centered business maintain growth? Thank you.

Hello. In my opinion, Xinyang's joint business growth is sustainable. From a market perspective, there are currently more than 20,000 institutions in the domestic medical market, but the proportion of joint operations is extremely low. There is no brand that has more than 100 stores and 1% market share, leaving a lot of space for joint operations. The development of the Korean medical market is extremely valuable. In Korea, In my view, Soyang's aesthetic center network has the capability for sustained growth.

From a market-wide perspective, there are currently over 20,000 medical aesthetic institutions in China, but the penetration rate of chain clinics remains extremely low, with no single brand exceeding 100 locations, representing just a 1% market share. This leaves ample room for expansion. The development of South Korea's medical aesthetic industry serves as a valuable reference, as the sector is highly developed with chain brands collectively holding a market share exceeding 10%. Softwares case domestic stats as customer awareness and acceptance of medical aesthetics grow. The chain model can leverage brand influence, economics of scale, and a professional service system to capture a larger market share.

新养的联手模式在国内市场呈现出极具竞争力的差异化优势, In the past, the operating model of most traditional medical institutions in China adopted a restaurant logic, seriously relying on the star chefs in the institution, and a few core doctors. Once the key doctor is lost, the amount of business, customer trust, and market reputation of the institution will be hit hard, and the risk ability will be weakened. What is different is that the operating model adopted by Xinyang Co., Ltd. is a fast food logic, Its core advantage lies in the construction and promotion of standardized service systems. From customer reception process, medical technology operation regulations, to medical product selection standards, each link is carefully polished and strictly unified.

Soyang's chain model presents a highly competitive and differentiated edge in the domestic market. Currently, most traditional institutions follow a restaurant model, where operations rely heavily on a few key doctors, similar to how restaurants rely on seasoned chefs. If these doctors leave, the institution suffers a decline in sales volume, loss of customer trust, and damage to its market reputation, making it highly vulnerable to risk. In contrast, Soyang's aesthetic centers adopt a fast food model, where the core strength lies in the establishment and expansion of a uniform service system. Every aspect of operations, from customer reception, medical procedure protocols, to product selection standards, is thoughtfully designed and standardized.

这种标准化服务带来了多重优势。 首先,无论消费者身处哪一家信仰联手门店, can enjoy a high-quality and stable medical service experience. It greatly improves user satisfaction and brand sincerity. Second, standardization reduces the excessive dependence on specific doctors' individual technology, so that institutions are no longer subject to the changes of individual doctors, and strengthens the stability and risk resistance of operation. In addition, the highly standardized model provides a solid foundation for the rapid magnification and expansion of Xinyang chain, and ensures the continuity of growth. This uniform approach offers multiple advantages.

First, it ensures that regardless of which Soyang Aesthetic Center a customer visits, they receive a consistent, high-quality, and reliable medical aesthetic experience, significantly enhancing customer satisfaction and broad loyalty. Second, it reduces dependency on an individual doctor's proficiencies, preventing institutions from being overly affected by staff turnover, thereby improving operational stability and reducing risk. Lastly, this highly standardized model creates a solid foundation for rapid scaling and replication, ensuring long-term growth. Thus, we are confident we can maintain a leading position in the highly competitive market going forward.

Thank you.

Thank you.

Thank you. And our next question today comes from Jim Peng at CITIC Securities. Please go ahead.

Hello, Jim.

Your line is open. Please proceed. Okay.

Thank you, Mr. Lin. I'm He Jingtian, the CEO of SMIC. I'd like to ask you about the future plans and expectations of SMIC. Okay, so let me just briefly translate for myself. So I am Jason from City Security. Thank you for taking my question. So I have one question about the company's upstream business. So as we can see, we have acquired like a miracle laser in China, and we have multiple partnerships with the upstream companies. So what is our strategy for our upstream business in general? Thank you, that's my question.

Hello, thank you for your question. Recently, Xinyang has successfully completed the comprehensive supervision work of the shareholder enterprises and Qizhi Jigwang. Qizhi Jigwang, as the leading light electricity medical equipment service provider in China, has strong technical strength and market advantage. Based on the strategic layout of Xinyang in the future and the planning for the upstream market, to achieve high-efficiency integration of resources and promote business coordination, we have now included Qizhi Jigwang into the upstream business system. The focus is to promote the integration of core talent teams. In the light version, the company will rely on Qizhi Jigwang as the core business base, combine market needs to promote product growth and technology innovation, strengthen technology and product reserves. As the upstream business merges and develops, product support will also further promote the company's sustainable growth in new business versions such as power supply, chain, and so on.

Recently, we successfully completed the full integration of our subsidiary, Miracle Laser, a leading provider of medical aesthetic laser devices in China. With strong technical expertise and market advantage, this move is part of Soyang's upstream business and long-term planning. To optimize resource integration and in-house business synergies, Miracle Laser has now been incorporated into Soyang's upstream business unit. with a focus on integrating key talent and reinforcing team collaboration. In the medical aesthetic laser segment, medical laser will serve as the core foundation, driving product upgrades and innovation to meet market demand and enhance our technology and product portfolio. As the upstream business continues to expand, our product resources will further empower aesthetic centers, driving sustainable growth for the company.

Based on this, Xinyang will use the following development strategy in the future. We will strengthen the research and development of high-end commercial products. Through in-depth research on market needs, analysis of consumer preferences, and narrowing the technical trend of the medical industry, we will put our full effort into professional research and development resources, and strive to create a series of high-end medical products with innovative, high-quality, and market-appropriate needs.

Based on this, our upstream business will focus on several key strategies in the future. First, we will enhance the R&D of high-end and best-selling products by conducting in-depth market research, analyzing customer behavior, and staying ahead of industry traits. we will invest heavily in R&D to build a series of innovative, high-quality medical aesthetic products tailored to market needs. This will enable us to meet growing need for premium and personalized aesthetic solutions.

In addition, we will make a solid fusion of the flagship team and the faith team, play the unique advantage of the two teams, form a highly efficient working model, to improve the professionalism and performance of the entire team and provide a solid foundation of talent for upstream business development. Subsequently, with the strong resources and ability advantages after integration, we will focus on providing better and more stable product supply for new chain business, from product type richness, supply of timely to product quality guarantee, etc., for chain business. Help to improve service quality and market competitiveness,

Additionally, we will ensure a seamless integration between the Miracle Laser and Soyang teams, leveraging the unique model both sides to establish a high-efficient and collaborative working model. This will enhance the overall expertise and action-oriented capabilities, creating a solid talent foundation to support the growth of upstream business Following the team integration with the combined resources and enhanced capabilities, we will focus on providing Soyang's aesthetic center with a highly quality and more stable product supply. From expanding products variety and ensure delivery to strengthen assurance, we aim to empower our aesthetic center network and enhance its service quality and competitiveness. This effort will drive Soyang's continued growth in the upstream sector. Thank you.

Thank you. And our next question today comes from Harry Zhao with Deutsche Bank.

Please go ahead. Let me translate by myself. Thanks for the management for taking my questions. Management just gave the guidance of 2025 revenue guidance and could the management share more insight into the company's financial outlook in the future? Thank you.

Thank you, Henry, for your question. Looking ahead, we are committed to driving sustainable and high-quality growth through the execution of a vertical integration strategy. We have successfully established a full value chain, covering both upstream supply chain capabilities to downstream aesthetic treatment services, which creates synergies across our business units. This diversified and balanced model lays a strong foundation for long-term financial stability and operational resilience. From a financial perspective, while near-term profitability may be impacted by the pace and scale of our new aesthetic center expansion, this business is critical to transitioning towards sustainable, high-quality growth. we recognize that different business units are at different stages of development. Some high-growth initiatives, such as our aesthetic center business, have just begun to scale and improve operational efficiencies after the success of pilot projects. With healthy cash flow and a disciplined capital allocation approach, we will continue to invest in strategic initiatives that reinforce our market leadership while maintaining a prudent approach to cost management. Our focus remains on balancing growth with profitability, enhancing financial resilience, and ultimately driving long-term value for our shareholders. Thank you.

Thank you. And ladies and gentlemen, this concludes today's question and answer session and today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.