Beauty Farm pretties up with major acquisition

The beauty services provider will buy rival Siyanli for 1.25 billion yuan, positioning it as an industry consolidator following a recent string of similar purchases

Key Takeaways:

• Beauty Farm will acquire Siyanli for $175 million, its second major acquisition in just over a year, giving it the top three brands in the premium beauty services sector
• Careful financial engineering means Beauty Farm will acquire Siyanli at a big discount, and that the acquisition will almost pay for itself

By Edith Terry

A little over three decades ago, China’s largest beauty services firm got its start as a single beauty salon offering facials in southern Hainan province, run at the time by the late wife of current Chairman Li Yang. Fast forward to the present, when Beauty Farm Medical and Health Industry Inc. (2373.HK) has blossomed into an empire with 734 stores in 20 of China’s largest cities, accounting for a commanding 40% of a Chinese beauty services market worth an estimated 485 billion yuan ($68 billion) this year.

That number includes the company’s latest acquisition, announced last week, when Beauty Farm signed a deal with North Asia-focused private equity giant MBK Partners to buy Shanghai Siyanli Industrial, China’s third largest beauty services provider.

Beauty Farm will pay for the deal with a combination of cash, shares and bank loans, giving the transaction a total value of 1.25 billion yuan ($175 million). Siyanli’s cash and cash equivalents of 357 million yuan should cover most of Beauty Farm’s cash costs for the purchase, and Siyanli’s operating cash flow that’s on track to reach about 300 million yuan this year should be enough to also cover annual interest payments on Beauty Farm’s bank loan for the deal.

Despite that savvy financing, Beauty Farm’s investors were less than impressed, perhaps because the deal will dilute their shares and give MBK 6.28% of their company. Beauty Farm’s shares fell the day of the pre-market announcement and continued to sag after that, losing about 14% of their value through Thursday this week.

Beauty Farm’s target market is high spending urban women, who have proven an exception to the trend of growing consumer caution in China’s post-Covid economy. Between 2021 and 2024, China’s medical aesthetics market expanded at average annual rate of 20%, the fastest growing segment in the consumer sector, according to Euromonitor.

Beauty Farm’s take on that trend is that “as emotional spending and self-rewarding consumption continue to gain momentum, the beauty and wellness industry has emerged as a trillion-yuan ‘golden sector’.”

From a strategic point of view, Siyanli will provide its 60,000 active members, boosting Beauty Farm’s customer base by 44%. The deal comes after Beauty Farm acquired Naturade Health Consulting in July last year. That deal, valued at 350 million yuan, or about a quarter of the latest acquisition, added 80 beauty and wellness service stores, six aesthetic medical clinics and two Chinese medicine outpatient clinics to the Beauty Farm portfolio.

Beauty Farm will get even more outlets from Siyanli, adding 163 lifestyle beauty stores and 19 aesthetic medical clinics across 48 cities nationwide. The new stores will raise Beauty Farm’s total to 734 from 552 pre-merger, creating a Chinese beauty titan.

Siyanli will also add to Beauty Farm’s top and bottom lines. MBK Partners has been a good steward as owner, turning Siyanli around since it first picked up a 23.53% stake in 2019. After losing money in 2022, the company became profitable in 2023 and 2024, as its revenue grew from 564.8 million yuan in 2022 to 848.5 million yuan in 2024.

The deal values Siyanli at a price to earnings (P/E) ratio of 14.8 times, which is roughly half of Beauty Farm’s own trailing ratio of 28, indicating Beauty Farm picked up the asset for a relative bargain.

Buying binge

Naturade and Siyanli are just the latest of over 30 acquisitions since 2014 by Beauty Farm, which says it is using “a market-tested, replicable integration playbook” in its aggressive M&A strategy. That indeed appears to be the case with Naturade, whose adjusted net margin increased to 10.4% in the first half of this year from 6.5% before the acquisition, Beauty Farm said in its latest midyear report, “demonstrating the effectiveness of the group’s empowerment model and its excellence in M&A integration capabilities.”

Beauty Farm appears to know what it’s doing, since its acquisitions have been largely complementary by focusing on different niches in the beauty business. Naturade is an updated traditional Chinese medicine brand, while Siyanli is a premium salon skincare brand, delivering skincare and beauty treatments to women in top-tier cities.

Beauty Farm’s brand portfolio is based on a ‘dual beauty’ business model, combining beauty and medical services. The company’s beauty and wellness services accounted for 55.2% of its 1.46 billion yuan in revenue in the first half of this year under its original Beauty Farm and Palaispa brands. Aesthetic medical services, under its CellCare brand, contributed 34.2% of revenue.

The remaining 10.6% of its revenue came from subhealth services, basically preventative and holistic medicine, under its Neology brand. That’s also the company’s fastest growing segment, with revenue more than doubling year-on-year in the first half of 2025. Neology’s first healthcare center was established in Shanghai in 2018, and it now has 12 such facilities, including its first anti-aging medical service clinic in Guangzhou, which opened in August. Its total number of active members by mid-year stood at 7,014, up 93.4% year-over-year.

The five analysts who follow Beauty Farm on Yahoo Finance expect the company to keep growing, which isn’t surprising given its acquisitive nature and emergence as China’s clear industry leader. What’s more, the company had 2 billion yuan in cash at the end of June, and was strongly cashflow positive, giving it plenty of resources for future acquisitions.

With a market cap of HK$7 billion ($982 million), Beauty Farm is almost twice the size of global beauty products giant Nu Skin (NUS.US). Beauty Farm’s P/E ratio of 24 also dwarfs Nu Skin’s 5.3, as investors bet on the company’s strong growth prospects and status as a consolidator in China’s beauty center market.

Beauty Farm’s scale also helps it keep customer acquisition costs in check. That’s hugely beneficial to the company in a fragmented Chinese market where 89% of around 1 million beauty salons are single-store operations reliant on walk-in customers, according to Meituan Research Institute. Beauty Farm keeps its customer acquisition expenses within 2% of revenue, well below the industry average, partly by marketing to the same customers across its different brands. In the traditional medical aesthetics business, firms can spend up to 30% to 50% of their budgets on customer acquisition.

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