So-Young plastic surgery: wrinkle twinkle 

Looking pretty is big business in China. App So-Young International, which connects beauty seekers and surgeons, raised $179m listing in the US last week. The shares ended the week up 50 per cent over its IPO price, giving the company a value of $2bn. The Chinese nip and tuck market looks a good bet. 

Unlike many tech unicorns, So-Young is profitable. Net income was $8.2m on sales of $92m last year. Revenues have grown at a compound annual growth rate of more than 200 per cent over the past two years. Costs are low. Marketing and server fees take the lion’s share. 

The business model is simple. Two-thirds of revenue comes from providing ads on its platform. The rest comes from reservation services. So-Young gets a tenth of whatever the cosmetic surgeon makes when a booking is made through it. That could mean even bigger profits for investors.

True, the rising popularity of surgery among the young may cause problems. So-Young reckons that of more than 20m people that had plastic surgery in China last year, nearly a fifth were 19 or under. Chinese legislators have proposed limiting underaged plastic surgery unless medically required. The impact on fees of mounting competition is also a possible risk. 

The remaining market remains fast growing, however. Chinese people spent almost $20bn on aesthetic procedures last year. This is expected to more than double over the next few years. Capturing a share of those who travel abroad for surgery pushes that number still higher. 

With So-Young accounting for a third of all plastic surgery procedures booked by Chinese people online by sales, expect further growth. Shares are pricing in plenty of that potential, trading at a heady multiple of 250 times enterprise value to trailing ebitda (a cash earnings proxy). 

More time spent on social media means more obsessing over looking like Photoshopped selfies. As China’s middle class grows, more will look to make dreams a reality. The market is still so very young.

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