Source of this article: Times Finance Author: Chen Zexuan
Image source: Picture Worm Creative
After resigning from the investment bank in the 80s, Xiang Hua, a post-80s Oxford scholar, focused on the home care industry, and spent seven years to make Santa Bella the head brand of China's confinement center.
Now, Santa Bella is going public.
RECENTLY, SAINT BELLA INC. ("SAINT BELLA"), THE HOLDING COMPANY OF HANGZHOU BEIKANG HEALTH TECHNOLOGY GROUP CO., LTD. (HEREINAFTER REFERRED TO AS "HANGZHOU BEIKANG"), SUBMITTED A LISTING APPLICATION TO THE HONG KONG STOCK EXCHANGE.
Xiang Hua started with the confinement center brand Santa Bella, and now he has created many brands that are the most well-known in Santa Bella, and even well-known actresses such as Qi Wei, Tang Yixin, Medina, and Li Ai are all customers of Santa Bella.
Santa Bella is positioned as ultra-high-end, mainly in first-tier cities and overseas markets. If a pregnant woman wants to spend a confinement in Santa Bella in the mainland, it will cost at least 168,800 yuan, and more than hundreds of thousands. Times Finance noticed that there is a significant price difference between ordinary confinement centers and Santa Bella. Among them, Guangzhou has the lowest common price range, ranging from 30,000 to 60,000 yuan; The most common price point in Shanghai is between 60,000 and 90,000 yuan.
The reason why he cut into the confinement center track is related to Xiang Hua's experience in investment banking. From July 2010 to June 2017, Xiang Hua worked in the Asia M&A & Corporate Finance Leasing and Asia Healthcare Group of UBS Hong Kong Branch, during which he accumulated experience in M&A and capital market transactions in various industries, especially in the field of healthcare services and medical devices.
Clearly, capital is interested in the entrepreneurial project that the young former investment bank director is doing. In the five years from 2018 to 2023, Hangzhou Beikang has completed 7 rounds of financing, with investors including Tencent, Gaorong Capital, Chinese Life, Shenqi Capital, Sun Hung Kai Company, Swire Properties and other well-known institutions.
With the IPO imminent, will Santa Bella be able to bring satisfactory returns to these star investors?
Aiming at the high-end market, the high-end confinement center will be opened overseas
According to the prospectus, in the whole year of 2023, SAINT BELLA will achieve revenue of nearly 560 million yuan, of which the revenue of the confinement center, as the largest business line, will be about 468 million yuan, accounting for 83.5% of the total revenue. AS OF DECEMBER 31, 2023, SAINT BELLA HAD 43 CONFINEMENT CENTERS, INCLUDING 18 SAINT BELLAS AND 25 PETIT BELLAS, AN INCREASE OF 7 COMPARED TO the same period IN 2022. It is worth mentioning that Bella Isla is a new brand that was only launched in January this year.
This year, SAINT BELLA is taking over the market at a faster pace. As of June 16, the number of confinement centres owned by SAINT BELLA increased by 16 to 59, including 21 Saint Bella, 10 Bella Isla and 28 Petit Bella.
According to the prospectus, Santa Bella is positioned as an ultra-high-end flagship brand, Bella Isla focuses on the high-end confinement center brand of mental health, and Bella Bella is a high-end confinement center brand.
As a result, they form differentiated pricing strategies. If a pregnant woman sits in Santa Bella in the mainland for a 28-day confinement, it needs to spend at least 168,800 yuan, and the maximum is as high as hundreds of thousands, which is equivalent to spending a Hermes platinum bag to sit for a confinement, while the price of Bella Isla starts at 98,800 yuan, and the price of Little Bella starts at 68,000 yuan.
THE PRICE OF SAINT BELLA CONFINEMENT CENTER IS SIGNIFICANTLY HIGHER THAN THAT OF ITS PEERS. Taking a small Bella in Shantou as an example, Dianping shows that the price range of the confinement package launched by Xiaobella is 66,600 yuan to 208,800 yuan, and the common price in the Shantou market is 30,000 yuan to 70,000 yuan, and the small bella is already the brand with the lowest fee in SAINT BELLA.
THIS PRICING MEANS THAT SAINT BELLA'S CUSTOMER BASE IS NOT IN THE SINKING MARKET. As of 16 June, SAINT BELLA has 30 months of sub-centers located in first-tier cities and new first-tier cities in the Mainland, including Beijing, Shanghai, Guangzhou, Shenzhen and Hangzhou; 24 in second-tier and high-energy cities, including Suzhou, Ningbo, Nanjing, Xiamen, Wuxi, Changsha, Zhuhai, Foshan, Haikou, Taiyuan, Chengdu, Chongqing and Shantou; The other 5 are located in Hong Kong, Singapore and the United States.
Why did Xiang Hua decide to take the high-end market as an incision at the moment of starting his business? The prospectus quoted Frost & Sullivan as saying that between 2018 and 2023, the market size of the confinement center industry in Chinese mainland has developed rapidly, with a compound annual growth rate of 22.7%, while the growth rate of the high-end market segment is higher than that of the mass market segment. The market size of the ultra-premium and premium segments is expected to grow at a CAGR of 31.5% and 29.9% from 2024 to 2030, respectively.
In an interview with "Hard Krypton" last year, Xiang Hua mentioned that the choice to cut into the market with a high-end luxury brand was once controversial, because "many people felt that the mid-range market was larger at that time", but after reviewing it, Xiang Hua thought that his choice was right, "Our perception at the time was that even if the audience was relatively narrow, as long as your high-end brand image and mind were established, you could go down and extend, that is, we later did the line of Little Bella."
Since its establishment, many of Xianghua's operations are aimed at establishing and strengthening the high-end brand image, such as cooperating with top hotels, with the help of the brand tonality of these hotels, to enhance the high-end positioning of Santa Bella in the hearts of users, and even in the later stage, Xianghua also turned the hotel brand into a shareholder through financing to form an exclusive cooperation.
ACCORDING TO THE PROSPECTUS, MOST OF SAINT BELLA'S CONFINEMENT CENTERS ARE LOCATED IN HIGH-END HOTELS, AND CUSTOMERS ARE ALLOWED TO STAY BY BOOKING HOTEL ROOMS. IN GUANGZHOU, SAINT BELLA OWNS TWO SAINT BELLA'S HOTELS: ROSEWOOD HOTELS IN ZHUJIANG NEW TOWN AND ORIENTAL MANHUA HOTELS IN TIYU XI ROAD BUSINESS DISTRICT. According to Dianping, on June 29, the room rate at Rosewood Hotel ranged from 1,955 yuan per night to 27,875 yuan per night, while the Oriental Mandarin Hotel was from 1,379 yuan per night to 4,612 yuan per night.
In fact, SAINT BELLA's voyage also serves a "high-end" purpose. IN OCTOBER 2023, SAINT BELLA OPENED ITS FIRST OVERSEAS SELF-OPERATED CENTER IN SINGAPORE AND ITS FIRST OVERSEAS MANAGEMENT CENTER IN THE GREATER LOS ANGELES AREA OF THE UNITED STATES IN MAY THIS YEAR.
A FEW DAYS BEFORE SAINT BELLA SUBMITTED ITS PROSPECTUS, CONSUMER WAVE RELEASED A SHARING ON THE THEME OF "HOW TO BE A HIGH-END BRAND IN THE MARKET". Xiang Hua said that the brand must go overseas, and it is a high-quality overseas market, "so that the international community also recognizes your high-end, which is very important, because many people may still think that overseas brands are more high-end, and when you go overseas as a Chinese brand and serve the global high-end consumer group, you will really establish the high-end awareness of the brand on a global scale."
"Every country has high-end resources, and after monopolizing these high-end resources, you can not only establish brand awareness, but also go back to the Chinese market, and then you will have no competitors", Xiang Hua continued to point out when sharing, if you want to build a truly high-end Chinese brand, you must be able to become popular overseas, and you can't always only do foreign brands in China, otherwise it will be difficult to create a high-end positioning.
The confinement center was made into a luxury product, and it was stood by 13 investment institutions
Xiang Hua is using the idea of making luxury goods to build a confinement center, and he refers to the practice of LVMH, the world's largest luxury goods company, hoping to make Santa Bella a "hot product". And in order to maintain a high-end image, Xiang Hua maintained restraint on the scale of San Bella.
Xiang Hua once mentioned that the company's goal is to reach the level of 10 billion, and one of the ways to achieve this goal is to win a wide reputation through Santa Bella's service to high-net-worth individuals, so as to attract more potential customers, "but potential customers may not only have the demand for high-end products, so we will also direct them to other strongly related categories."
SAINT BELLA DOES NOT POSITION ITSELF AS A CONFINEMENT CENTER COMPANY, BUT AS A GROUP OF HOME CARE BRANDS. According to the prospectus, SAINT BELLA operates three main business lines, namely confinement centers (including postpartum care services and postpartum recovery services), home care services and women's health functional foods.
Among them, SAINT BELLA launched home care services under the Yujia brand in July 2018, providing services that generally include childcare services, parenting guidance, child care and child development, and with the acquisition of Guanghetang Food in October 2021, SAINT BELLA completed the construction of the third business line of women's health functional food supply.
Last year, the confinement center achieved revenue of 468 million yuan, accounting for 83.5%; home care services were 45.309 million yuan, accounting for 8.1%; women's health functional food was 47.071 million yuan, accounting for 8.4%. It is worth mentioning that the total value of contracts signed by the confinement center last year was 640 million yuan, the total value of home care services was 64.192 million yuan, and the total value of women's health functional food was 70.954 million yuan.
SAINT BELLA also plans to expand the track to the high-end elderly care field, the prospectus mentions that the company plans to extend the lifetime value of customers by opening elderly care and selectively launching new services according to market demand, and has entered into a cooperation agreement with a subsidiary of Kinoshita Group, a leading Japanese elderly care service provider.
WHETHER SAINT BELLA SUCCEEDS IN ESTABLISHING A HIGH-END IMAGE OR NOT, AT LEAST IN THE CAPITAL MARKETS, IT HAS WON THE HEARTS OF INVESTORS.
In 2022, Xiang Hua recalled in an exclusive interview with Forbes that at the beginning of his business, he shouted with a loudspeaker when he went to the nursing school to set up a stall for recruitment, and was regarded as a liar by students who did not know the situation, and also experienced investors' doubts about his business model.
However, in the next five years from 2018 to 2023, Hangzhou Beikang, SAINT BELLA's main operating subsidiary, has completed 7 rounds of financing, with a total financing of 333 million yuan, and investors include 13 institutions including Tencent, Gaorong Capital, Chinese Life, Shenqi Capital, Tangzhu Capital, Zheshang Health Investment, C Capital, Sun Hung Kai Company, Swire Properties, Mirae Asset, etc.
Today, SAINT BELLA has surpassed the old listed leader Aidigong, which is the "first stock of confinement centers", regardless of the number of confinement centers or the scale of income. AS OF THE END OF LAST YEAR, SAINT BELLA HAD A TOTAL OF 43 CONFINEMENT CENTERS, AND 18 AT THE PALAZZO DE L'ETI; FOR THE WHOLE OF LAST YEAR, SAINT BELLA ACHIEVED REVENUE OF 556 MILLION YUAN, COMPARED TO 555 MILLION HONG KONG DOLLARS.
HOWEVER, SAINT BELLA DID NOT MAKE AS MUCH MONEY AS THE OUTSIDE WORLD IMAGINED. Throughout last year, affected by the expansion of the fair value of financial instruments issued to investors, SAINT BELLA continued to maintain a net loss, with a loss of nearly 239 million yuan, and after deducting the relevant impact, SAINT BELLA adjusted annual net profit of 20.772 million yuan, achieving a turnaround.
ON ISSUES RELATED TO THE COMPANY'S OPERATION, TIMES FINANCE SENT AN INTERVIEW OUTLINE TO SAINT BELLA, BUT THE RELEVANT PERSON DID NOT RESPOND ON THE GROUNDS THAT THE COMPANY WAS IN A QUIET PERIOD.