Beauty of the Complete Package
True beauty is more than skin deep, and that is why Union Medical Healthcare (2138) is looking to preventive health care like DNA testing, pediatric vaccine and hair care, on top of its core women's beauty business, reveals founder Eddy Tang Chi-fai.
"We are positioning ourselves as a one-stop medical, health and beauty services provider. Besides organic growth, we have been looking at merger and acquisition opportunities," says the UMH chairman, executive director and chief executive, who is a former medical student.
Known for its aesthetic medical services under the Dr Reborn brand, the largest of its kind in Hong Kong in terms of revenue, the firm has also been running clinics for dental, chiropractic, dermatology, orthopedics, Chinese medicine and hair care, etc. It now has outlets at 46 locations and 53 registered practitioners.
"We have various medical disciplines that can be cross-sold to customers and have joint promotions with corporate clients."
To a large extent, the diversification was achieved through M&As, with UMH forging over a dozen deals since 2005. The latest involved hair-care centers, beauty-product franchises and fashion accessories brands.Tang says UMH will make investments and enhance the business of acquired companies to improve profitability.
For instance, he says, UMH expanded the treatments offered by a chiropractic center it acquired, after relocating it to its headquarters in Mong Kok, to include physiotherapy, sports injuries, scoliosis and custom-made orthotics.
Despite the array of medical services offered, he has no plans to open a hospital.
However, Tang says, tumor treatments can be considered. "For people in the final stages of cancer, they need to try precision medicine. DNA testing can be conducted for them to see which medicine suits them."
Genetic testing is also common for preventive health care, which uses a lot of advanced imaging technologies.
"There are over 20 advanced imaging clinics in Central, but they are scattered. They can be vertically integrated into our current business. "The new generation is health conscious and they value preventive measures."
Even hair loss can be prevented, he says. "Hair loss is due to a large extent to hormonal imbalance and hereditary problems and that can be diagnosed through blood tests." UMH has machines to help blood circulate better, enhancing hair growth, as well as medicines and hair transplants to help clients.
UMH has also gone into the relatively untapped man's beauty business. Pediatric vaccines are also under consideration. Over 80 percent of its about 16,200 clients are females.
Medical tourism has long been target for UMH, which covets high-end mainland customers. "Before our listing in 2016, mainland customers accounted for only 9-14 percent, but that figure reached 35.7 percent as of September and can easily hit 50 percent in the near future."
"Mainlanders trust Hong Kong brands especially for medical services. Besides, some medicines are not available in the mainland."
He stresses UMH services are different from those in Korea, which are generally more invasive and more like remodelling, while Taiwanese services are scattered.
UMH currently has three clinics in Shanghai and Guangzhou and will open one in Chongqing, plus eight beauty parlors.
Outlets in the mainland, Tang adds, can help brand building. He reveals it takes several million yuan to open an outlet, which takes around a year to break even and 1 to two years to see a profit. In Hong Kong, it would cost more than HK$20 million and three to four years to see a profit.
UMH is to open a new center in Tower 535 in Causeway Bay after spending about HK$60 million opening a multiservice flagship store for medical aesthetics in Langham Place in Mong Kok. It also has two centers in Central - one for spinal and another for dermatology.
Two units at Lippo Centre in Admiralty were acquired for HK$60 million but he has not revealed their targeted use, saying it can be an office or a boutique clinic as there aren't any competitors in the area.
Net profit surged 70.7 percent year on year to HK$125.5 million with contracted sales rising 46 percent to HK$651.1 million for the half-year to the end of September.
The profit margin is above 20 percent, which he says is generally much higher than both the beauty and medical sectors. This is because one would seldom see a doctor again in the near future after getting cured.
UMH's marketing expenses stand at below 10 percent of revenue, which is generally lower than its peers as the majority of its clients are repeat customers, while some new clients are attracted by word of mouth.
Responding to the negative image of the beauty industry, he says all medical services have risks and that special training is offered to staff, some of whom have taken the trouble to be licensed in their fields.
Recordings are taken during the sales process, customers can get a full refund within seven days of making a purchase, and there is a complaints-handling mechanism.
He adds UMH also has various ways to ensure customers can use the services such as an app reminding them to make bookings. Forfeited packages have dropped year on year from 27 percent of revenue to 7 percent as of September.