100 Million Investment of Daily Chemical Company LAF in Aesthetic Medicine Industry
- Chaileedo Press
- Jun 5, 2022
- 3 min read
Hawyu (HK) Limited, a wholly-owned subsidiary of Chinese personal care company LAF, agreed to subscribe for the newly issued common shares issued by Aesthetic Medical International, with a total amount of 100 million yuan (about $15million), which accounts for 23.2% of the total issued shares of it. The share subscription amount will help Aesthetic Medical International improve its liquidity and financial situation. Previously, Aesthetic Medical International was included in the pre-delisting list of Chinese concept stocks in the U.S. Securities and Exchange Commission (SEC).
Recently, Aesthetic Medical International, a Chinese medical beauty service provider, announced that LAF will subscribe for a total of 21.413 million new ordinary shares issued by Medical Beauty International through its wholly-owned subsidiary, with a total amount of 100 million yuan (about $ 15 million), equivalent to about 4.7 yuan (about $0.71) / share, the subscription shares will account for 23.2% of the total issued shares of Aesthetic Medical International.
Zhou Pengwu, Chairman and CEO of Aesthetic Medical International, said that the subscription amount of the shares will improve the current financial position of the company, enabling it to prepare in advance for further changes in the market in the future.
Founded in 2001, LAF is a traditional daily chemical company in China. It is mainly engaged in the research and development, production and sales of washing, skin care and other products. It owns brands such as Lafang and Yujie. In 2021, LAF achieved operating income of $165 million, a year-on-year increase of 11.91%; net profit attributable to shareholders of listed companies was $10.3642 million, down 40.98% year-on-year; non-net profit deducted was only $511,800, down 96% year-on-year.
In fact, the share subscription agreement between LAF and Aesthetic Medical International was signed last year. In May 2021, LAF and Aesthetic Medical International reached a fixed increase agreement of US$15.1 million to subscribe for 5.3294 million shares and obtain about 7% of the equity. It is worth noting that the fixed increase price at that time was 27.4% higher than the closing price of the previous trading day, and the cost per share was about 2.88 US dollars.
A year later, LAF increased the price again. Subscribing 21,413,200 shares of Aesthetic Medical International for 100 million yuan (about $0.15), the shareholding cost becomes 4.7 yuan (about $0.71). On June 2, Aesthetic Medical International closed at $1.770 overnight, with a total market value of $41.72 million. However, according to the LAF subscription ratio of 23.2%, the corresponding market value is only $9.679 million.
According to public information, Aesthetic Medical International Holding Group Co., Ltd. is a Chinese beauty medical service provider. Its main brand in the Chinese market is "Pengai Medical Aesthetic Hospital", which mainly serves Guangdong, Hong Kong, Macao and the Yangtze River Delta. It provides one-stop beauty services, including surgical beauty treatment, non-surgical beauty treatment, general medical services and other beauty services.
It is worth noting that Aesthetic Medical International has suffered losses for two consecutive years, and the shrinkage of the subscription price may be related to this. In 2021, the income of Aesthetic Medical International was $97 million, a decrease of 28.4% compared with $135 million in 2020; The net loss in 2021 was $100 million, which was 171.2% larger than the net loss of $37 million in 2020. Previously, Aesthetic Medical International was included in the pre-delisting list of Chinese concept stocks in the U.S. Securities and Exchange Commission (SEC).
Regarding the inclusion of Medical Beauty International on the SEC's pre-delisting list of Chinese concept stocks, some industry insiders believe that the pre-delisting list is different from China's ST stocks. It does not mean that the pre-delisting this year will be delisted next year. "There is a three-year waiting period for the pre-delisting list. If Medical Beauty International fails to meet the SEC review requirements for three consecutive years, a decision to be delisted will not be made until 2024. Before that, it will still be in the US stock market. However, the share price will fluctuate due to performance growth.”
However, the rationality of LAF's investment of 100 million yuan (about $0.15) to invest in such a medical aesthetic company has been questioned by the outside world, and it is believed that this is a very big burden for LAF with poor performance.
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