Everbright Securities released a research report stating that the acquisition of Si Yan Li is expected to directly enhance BEAUTYFARM MED's (02373) performance. The firm has raised its net profit forecasts for 2025-2027 to RMB 320 million, RMB 440 million, and RMB 490 million (up by 5%, 26%, and 21% respectively), with corresponding EPS of RMB 1.36, RMB 1.86, and RMB 2.09. The current P/E ratios stand at 20x, 14x, and 13x. As a leading player in China's lifestyle and medical beauty sectors, BEAUTYFARM MED demonstrates clear long-term growth prospects and strong commitment to shareholder returns, warranting a maintained "Buy" rating.

Key highlights from Everbright Securities include: 1. **Long-Term Shareholder Return Plan**: The company announced a plan to allocate up to HK$1.2 billion over the next three years to reward shareholders. This will be achieved through: - Annual dividends of no less than 50% of net profit. - Continued share buybacks. The substantial return plan underscores management’s confidence in future growth and reflects robust cash flow and operational strength.

2. **Strategic Acquisition of Si Yan Li**: In October, BEAUTYFARM MED acquired 100% of Si Yan Li for RMB 1.25 billion. Si Yan Li is China’s third-largest beauty service brand, with 163 premium beauty outlets and 19 medical aesthetic clinics across 48 major cities as of June 30, 2025. Over 90% of its revenue comes from Tier 1 and emerging Tier 1 cities. Post-acquisition: - ~60,000 active members from Si Yan Li will join BEAUTYFARM MED’s ecosystem, boosting its member base by 44%. - Market share in high-tier cities will leap, further solidifying its industry leadership.

3. **Dual Growth Drivers ("Organic + M&A")**: - **Organic**: The "dual beauty + dual wellness" business model strengthens its high-quality membership moat. - **M&A**: Following the successful acquisition of Nareal (China’s No. 2 brand) in 2024, Nareal’s adjusted net margin rose from 6.5% pre-acquisition to 10.4% in 1H2025. This demonstrates BEAUTYFARM MED’s integration capabilities. The firm expects similar efficiency gains from Si Yan Li, creating synergies between both brands.

**Risks**: Potential slower-than-expected traffic/ASP growth, delayed store expansions, medical incident risks, or M&A integration challenges.