In recent years, the medical beauty industry has continued to thrive, with prominent companies like Giant Bio emerging in the field of beauty materials and dressings, while the downstream of the medical beauty sector has also seen new developments. Recently, the Hong Kong listed company Beauty Farm Group announced it will acquire 100% of the shares of Siyangli for 1.25 billion yuan, marking the largest merger in the beauty industry this year. Beauty Farm is the largest beauty service brand in the country, while Siyangli ranks as the third largest. Prior to this, Beauty Farm had already acquired industry second-place Nayrile. This acquisition implies that if successful, the top three beauty service brands will merge into one, significantly increasing Beauty Farm Group’s market share. However, the capital market's reaction has been lukewarm. Since announcing the acquisition before market opening on October 15, as of the market close on October 24, Beauty Farm Group's stock price declined six out of eight trading days with a total drop of 10.63%, bringing the latest market capitalization to 7.5 billion HKD. In this context, will Beauty Farm Group successfully acquire Siyangli and integrate it to further expand its industry-leading advantages? The Largest Beauty Service Brand, Merging Industry’s Second and Third In 1993, Wang Li opened the first Beauty Farm store in Hainan Province. At that time, numerous beauty salons dotted Hainan, and Beauty Farm carved out a unique path through German original skin care products and German professional training systems. Ten years after the establishment of the Beauty Farm brand, Wang Li's husband Li Yang joined the group. Graduating in 1987 from RWTH Aachen University with an Engineering degree, Li Yang entered a local state-owned enterprise in Hainan after graduation. After the passing of founder Wang Li in 2006, Li Yang took over the business. Over the next decade, Beauty Farm Group evolved into the largest beauty brand in the country, comprising four major brands: Beauty Farm, Beili Shi, Yan Yuan, and Xiuker, covering traditional beauty services, medical cosmetic services (including both surgical and non-surgical), sub-health assessment, and intervention services. On January 16, 2023, under Li Yang's leadership, Beauty Farm Group went public on the Hong Kong Stock Exchange, with a first-day closing market value of 6.837 billion HKD. Just over a year after its IPO, on March 24, 2024, Beauty Farm Group made a significant move by initiating the acquisition of Nayrile, the group’s largest competitor and the second largest beauty service brand. According to the announcement, Beauty Farm Group acquired 70% of Nayrile for 350 million yuan, with Nayrile estimated at approximately 517 million yuan. The acquisition includes 80 beauty and health service stores, 6 medical beauty clinics (one of which also runs sub-health medical services), and 2 traditional Chinese medicine clinics. In 2023, Nayrile reported an unverified revenue of 514 million yuan and a net profit of 33.4 million yuan. This isn't Beauty Farm Group’s first acquisition. Given the low concentration in the beauty industry, acquisition has been a vital strategy for salons to scale. According to prospectus data, from 2014 to June 30, 2022, Beauty Farm Group completed 20 industry acquisitions, including Beili Shi, one of its four major brands. After acquiring 70% of Nayrile, by the end of May this year, Beauty Farm Group announced an additional 20% acquisition of Nayrile for a total of 100 million yuan, raising its total stake to 90%. After aggregating a 90% stake in Nayrile, Beauty Farm Group has now turned its sights on the industry third-place brand Siyangli, known for its extensive presence in first-tier and new first-tier cities. On October 15, 2025, Beauty Farm Group announced it would pay a total of 1.25 billion yuan to acquire 100% of Siyangli, marking the largest acquisition in the company's history. The transaction will be settled with a combination of cash and shares, with Beauty Farm paying approximately 836 million yuan in cash while also issuing a total of 15.7981 million shares at an issue price of 28.71 HKD per share—a 19.67% discount from the closing price on the trading day prior to the announcement. If completed, shares held by the major shareholder of Siyangli, SYL Holding, would account for approximately 6.28% of Beauty Farm's total share capital. The announcement indicated that between July 1, 2024, and June 30, 2025, Siyangli's sales revenues would amount to 856 million yuan, with a net profit attributable to the parent company (excluding extraordinary items) of 72.675 million yuan. Should the deal proceed successfully, the top three beauty service brands will consolidate into one, greatly enhancing Beauty Farm Group's market share, particularly in first-tier and new first-tier city markets. In a conference call, the management of Beauty Farm Group projected revenues exceeding 4 billion yuan and an adjusted net profit surpassing 500 million yuan by 2026. However, the capital market response has not been enthusiastic. Since the announcement was made before the market opened on October 15, by October 24, the stock price had already accumulated a decline of 10.63% over eight trading days. Frequent Acquisitions Lead to Surging Goodwill, Market Competition Intensifies From the acquisition results of Nayrile, it’s evident that mergers are indeed the most direct method for Beauty Farm Group to achieve growth. Looking at 2024 data, Beauty Farm Group's primary business of beauty and health services saw revenues increase by 20.9% year-on-year to 1.443 billion yuan, a growth of 250 million yuan. The revenue from Nayrile's premium intelligent beauty services reached 162 million yuan, and Nayrile's contribution has also driven the growth of franchisees and other operations. In contrast, revenue from Beauty Farm Group's existing high-end beauty services only increased by 5.9% year-on-year in 2024. In 2024, the second-largest business, medical beauty services, generated revenue of 928 million yuan, reflecting a year-on-year growth of 9.1%. The third largest business, sub-health medical services, reported revenue of 201 million yuan, with a staggering year-on-year increase of 98.9%, although the scale remains relatively small. In the first half of 2025, Beauty Farm Group’s revenue was 1.459 billion yuan, an increase of 28.2% year-on-year, contributing an additional 321 million yuan. Nayrile contributed 277 million yuan of this revenue. Reporting indicated that Nayrile’s adjusted net margin improved from 6.5% before the acquisition to 10.4% after integration, indicating significant effects from the merger. Turning to Siyangli, the target of Beauty Farm's planned acquisition, in 2024, Siyangli achieved revenue of 850 million yuan and a net profit of 81 million yuan. As of June 30, 2025, Siyangli operated 163 lifestyle beauty stores across 48 cities nationwide (including 118 proprietary and 45 franchised outlets) and 19 medical beauty clinics. This acquisition is expected to significantly augment Beauty Farm Group's revenue and net profit scale. Nevertheless, acquisitions come with inherent risks alongside potential market expansion. Due to its business model, pre-registered customer funds have led to substantial contractual liabilities for Beauty Farm Group, which had approximately 1.4 billion yuan in contractual liabilities from 2021 to 2023, constituting over 60% of total liabilities and exceeding 55% of total assets. This enormous contractual liability resulted in a high leverage ratio of around 90% for Beauty Farm Group prior to going public. However, year 2023 saw a rapid decline in the asset-liability ratio to 74.74% boosted by equity increases from IPO financing. But after the acquisition of Nayrile, Beauty Farm Group's contractual liabilities climbed from around 1.4 billion yuan to about 2 billion yuan. The asset-liability ratio increased to 77.20% in 2024 and further rose to 78.45% in the first half of this year. If the acquisition of Siyangli goes through smoothly, considering the significant scale of the purchase, the asset-liability ratio of Beauty Farm Group may rise further, alongside a notable expansion in contractual liabilities—which will place higher demands on the group's asset management and liquidity risk control abilities. Additionally, this acquisition will lead to a notable increase in goodwill. Following the Nayrile acquisition, Beauty Farm Group's goodwill escalated from 218 million yuan to 654 million yuan. Should the acquisition of Siyangli finalize, with its net asset value standing at approximately 290 million yuan at the end of H1 this year, the group's goodwill is expected to increase substantially, potentially introducing significant developmental risks. More critically, the competition in the current beauty service industry is intensifying; while Beauty Farm Group consolidates its acquisitions, it also faces competitive pressures from other players. The traditional beauty service sector has low barriers to entry and intense competition. While the threshold for medical beauty services is comparatively higher, the number of companies entering this space is growing, including industry giants like Langzi Holdings, Yimei'er, and newcomer enterprises such as internet firms. For example, So Young, an internet medical beauty platform, originally relied on beauty salons as its financial supporters; however, in November 2024, So Young launched its own light medical beauty chain—SOYOUNG CLINIC—emerging as a competitor against enterprises like Beauty Farm. Media reports indicate that as of August 2025, the number of So Young clinics had reached 33, with an expected growth to 50 by the end of the year. In July this year, JD Health opened its first offline self-operated medical beauty clinic in Beijing Yizhuang. According to JD's platform, this clinic offers services such as skin whitening, wrinkle removal, facial slimming, light and electricity-based anti-aging, and collagen skin rejuvenation, categorizing it within light medical beauty services.