Banking & Finance, Healthcare

Stars in their eyes

Yestar to IPO on the back of plastic surgery craze


Going under the knife

Two actresses climbed the celebrated steps at this year’s Cannes Film Festival. One was Fan Bingbing, one of China’s most famous stars. The other was Fan Bingbing too, or at least that is what many news outlets were erroneously reporting when they published photos of He Chengxi captioned as Fan.

He, a former reality show contestant who was also at the festival, has undergone a string of cosmetic surgeries to become a doppleganger of Fan’s. And mistaken identity will become more of an occupational hazard for photo editors because of the expansion plans of a plastic surgery clinic in Shenzhen – which specialises in turning ordinary people into their favourite movie stars and singers.

Like many private healthcare providers, Yestar Aesthetic Medical Group hails from the city of Putian in Fujian (see WiC242 for more on why the city has spawned so many hospital groups). Owned by brothers Chen Guoxing and Chen Guoxiong, Yestar has profited from a growing tribe – wanghong, the young ‘internet celebrities’ that are so keen on plastic surgery – and a forthcoming Hong Kong IPO will help the company to rapidly open more clinics across China.

In Western countries cosmetic surgery is often the preserve of the middle-aged trying to hold onto their youth. In the US, three quarters of customers are over 35, but the opposite is true in China, where 96% of the people undergoing plastic surgery are 35 or under.

On the menu are procedures to create high cheekbones, sharpen jaw lines or reshape noses.

However, the most popular surgical operation is double-eyelid surgery, or blepharoplasty, as large numbers of Chinese people lack eyelid creases. The desired effect of the procedure is to create larger ‘panda-style’ eyes.

Yestar’s financials underline just how fast the sector is growing. Net profit has surged by an annual growth rate of 196% since 2015, totalling Rmb1.138 billion ($170.6 million) at the end of last year.

Frost & Sullivan estimates that the overall Chinese aesthetics market was worth Rmb192.5 billion in 2017 and will grow by 20% each year through to 2020.

Investors like the sector because it offers a play on rising incomes and the China consumption theme.

That said, the domestic media has been unpicking Yestar’s financials to highlight some of the problems facing the industry. Jiemian notes that there is a need for heavy spending on branding and marketing, for instance, which chewed up more than half of the company’s gross profit last year.

It also reports on the darker side of cosmetic surgery – what happens when things go wrong, or in cases when clients suffer unwanted publicity? Jiemian says Yestar has had to pay out Rmb2.6 million since 2015 to compensate customers whose image rights were infringed (although the company says it has tightened up its procedures to prevent staff using client photos in promotional material).

Yestar has also been involved in 12 disputes with customers over the same period. The most serious led to a Rmb530,000 payout to a client who suffered facial burns from laser surgery.

However, in its industry report Frost & Sullivan says that tighter regulations and industry consolidation should benefit larger players like Yestar, which will win more trade as smaller, unlicenced clinics are forced out of business.

The group currently has 15 medical institutes in 14 cities. Yestar is hoping to raise about $100 million and will be the second private sector cosmetics clinic to file for a flotation on the Hong Kong Stock Exchange. It will join Union Medical Healthcare, which listed in the city in 2016 and operates under the Dr Reborn brand.

One of China’s most well known beauty apps, SoYoung, is also said to be a considering a domestic IPO. It has 25 million customers across five countries in Asia, sharing advice and seeking consultations from the platform’s thousands of registered doctors. In December, SoYoung raised $61 million in series D funding from a group of private equity investors including Apax and CDH.

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