Beauty Farm's 2025 Interim Results: A Case for Sustained Growth and Dividend Resilience in China's Beauty and Health Sector

The Chinese beauty and health sector is undergoing a transformative phase, driven by rising disposable incomes, shifting consumer preferences toward preventive care, and a growing emphasis on holistic wellness. Amid this backdrop, Beauty Farm Medical & Health Industry Inc. (HK:2373) has emerged as a standout performer, leveraging its dual-engine strategy and operational discipline to deliver robust financial results. The company's 2025 interim results, announced on August 26, 2025, underscore its ability to capitalize on these trends while maintaining a disciplined approach to shareholder returns. For investors seeking long-term value in a high-growth sector, Beauty Farm's trajectory offers compelling insights.

Financial Momentum: A Recipe for Sustained Growth

Beauty Farm's first-half 2025 results reflect a company in motion. Revenue surged by 28.2% year-over-year to RMB1.45 billion, driven by a 11.6% increase in client visits to direct stores and a 10.3% rise in active members. This growth was underpinned by the successful integration of Naturade, which expanded the company's store network to 409 locations by June 2025. The gross profit margin improved to 49.3%, a 2.3 percentage point increase from the prior year, highlighting enhanced cost management and pricing power.

Net profit for the period rose by 35.5% to RMB17 million, while non-HKFRS adjusted net profit grew by 37.8%. These figures outpace the sector's average growth rates and reflect Beauty Farm's ability to convert top-line expansion into bottom-line gains. The company's “dual-beauty + dual-wellness” model—combining aesthetic services with subhealth management—has proven particularly effective in capturing demand for premium, science-backed solutions.

Dividend Resilience: A Commitment to Shareholder Value

Beauty Farm's financial strength is matched by its disciplined approach to shareholder returns. The company has pledged to distribute no less than 50% of annual net profit as dividends over the next three fiscal years, a commitment that aligns with its long-term capital structure optimization goals. For 2025, the board is set to consider an interim dividend following the August 26 results announcement. Historical data reveals a steady increase in dividends per share, from €0.05 in 2022 to €0.06 in 2024, with a trailing twelve-month (TTM) yield of 1.62% as of December 2024.

The proposed 2025 interim dividend, while not yet finalized, is likely to reflect the company's strong cash flow generation. With a net profit of RMB17 million in H1 2025 and a full-year projection of RMB34 million (assuming similar performance in H2), Beauty Farm's payout ratio remains well within sustainable limits. This approach not only rewards shareholders but also reinforces investor confidence in the company's ability to balance reinvestment with returns.

Strategic Positioning: Navigating a Competitive Landscape

Beauty Farm's success is rooted in its strategic agility. The acquisition of Naturade in March 2024 exemplifies its M&A-driven growth strategy, which has expanded its footprint into the wellness segment—a market expected to grow at a 12% CAGR in China through 2030. The company's 17,200 active members, generating an average of RMB12,608 per visit, highlight its ability to monetize high-spending, loyal customers.

However, the sector is not without challenges. Competitors like medmix AG have faced headwinds in their beauty segments, with organic revenue declining by 17.7% in H1 2025 due to project delays and reduced commercial activity. Beauty Farm's resilience in this environment underscores its differentiated value proposition: a blend of premium services, technological innovation (e.g., AI-driven health diagnostics), and a vertically integrated supply chain.

Investment Implications: A Long-Term Play in a High-Growth Sector

For long-term investors, Beauty Farm presents a rare combination of growth and stability. Its 2025 interim results affirm its ability to scale operations while maintaining profitability, a critical factor in an industry prone to margin pressures. The company's dividend policy further enhances its appeal, offering a predictable income stream amid macroeconomic uncertainties.

Key risks include regulatory scrutiny in the health sector and potential saturation in the premium beauty market. However, Beauty Farm's focus on innovation—such as its recent foray into personalized wellness plans—and its disciplined capital allocation mitigate these concerns. The recent board reshuffle, with the appointment of seasoned professionals like Mr. Gao Jianming and Ms. Yi Lin, also signals a commitment to robust governance.

Conclusion: A Compelling Case for Resilience and Reward

Beauty Farm's 2025 interim results are more than a snapshot of financial performance; they are a testament to its strategic foresight and operational excellence. In a sector where consumer demand is evolving rapidly, the company's ability to adapt and innovate positions it as a leader. For investors, the combination of strong earnings growth, a resilient dividend policy, and a clear long-term vision makes Beauty Farm a compelling addition to a diversified portfolio. As the Chinese beauty and health sector continues to expand, Beauty Farm's disciplined approach to growth and shareholder returns offers a roadmap for sustained success.