Beauty Farm Medical and Health Industry Inc. (2373.HK), a prominent beauty store operator, announced on Tuesday and Wednesday that its subsidiaries have subscribed to structured deposit products worth 100 million yuan ($14.3 million) and 50 million yuan from Industrial and Commercial Bank of China (ICBC) and China Merchants Bank, respectively.
The company sees this investment as an effective use of its idle funds, which will potentially enhance its return on capital. By engaging in wealth management products, Beauty Farm Medical aims to optimize its financial resources.
However, the significant investment in structured deposit products has raised some concerns among investors. Some worry that the company may not be allocating enough capital toward expanding its core beauty stores, which could affect future growth in its primary business segment.
Founded in 1993, Beauty Farm is one of China’s longest-established beauty chains. Initially focused on offering traditional beauty services, the company has recently expanded into medical aesthetics. In January of the previous year, Beauty Farm Medical was listed on the Hong Kong Stock Exchange. Despite steady revenue growth, the company experienced a decline in 2022 due to the pandemic. However, with the pandemic’s end, its business has rebounded strongly, with revenue increasing by 31% in 2023 and 13.6% in the first half of this year.
Despite concerns regarding the investment in wealth management products, Beauty Farm’s shares saw a modest increase on Wednesday, closing up by 0.2% at HK$16.26 by midday. The stock now trades near the upper end of its 52-week range, reflecting positive investor sentiment regarding the company’s financial performance and prospects.
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