Global Healthcare Analyst

Tina Banerjee

Equity Bottom-Up

Hygeia Healthcare Group / Equity Bottom-Up

<ul>
<li>In 1H25, <a href="https://www.smartkarma.com/entities/hygeia-healthcare-group" target="_blank" data-smartkarma-citation="entities:28875:1" rel="noopener">Hygeia Healthcare Group (6078 HK)</a> reported revenue decline of 16% YoY to RMB 1,990 million mainly dragged by 18% YoY decrease in inpatient revenues.</li>
<li>Hygeia’s gross profit margin contracted 520bps YoY to 26.6%. Net profit decreased 36% on higher finance cost despite of income tax expenses being lower.</li>
<li>Incremental growth advantage from inorganic expansion slowly wanes out for Hygeia. Competitive pressure limits room for incremental price realization.</li>
</ul>


In 1H25, Hygeia Healthcare Group (6078 HK) reported revenue decline of 16% YoY to RMB 1,990 million mainly dragged by 18% YoY decrease in inpatient revenues.
Hygeia’s gross profit margin contracted 520bps YoY to 26.6%. Net profit decreased 36% on higher finance cost despite of income tax expenses being lower.
Incremental growth advantage from inorganic expansion slowly wanes out for Hygeia. Competitive pressure limits room for incremental price realization.


Hygeia Healthcare (6078 HK): Prolonged Winter? Or Is There Light Visible At the End of the Tunnel?

<ul>
<li>
<a href="https://www.smartkarma.com/entities/hygeia-healthcare-group" target="_blank" data-smartkarma-citation="entities:28875:1" rel="noopener">Hygeia Healthcare Group (6078 HK)</a> reported revenue growth of 9% YoY to RMB4,446 million, mainly driven by a 11% YoY growth in hospital business.</li>
<li>Hygeia’s gross profit margin contracted 170bps YoY to 29.9%. Net profit decreased 13% on higher finance cost despite of income tax expenses being lower.</li>
<li>Accelerated organic growth and strengthening of margins are crucial to boost valuation.</li>
</ul>



Hygeia Healthcare Group (6078 HK) reported revenue growth of 9% YoY to RMB4,446 million, mainly driven by a 11% YoY growth in hospital business.
Hygeia’s gross profit margin contracted 170bps YoY to 29.9%. Net profit decreased 13% on higher finance cost despite of income tax expenses being lower.
Accelerated organic growth and strengthening of margins are crucial to boost valuation.


Hygeia Healthcare Group (6078 HK): Slower Revenue Growth and Margin Deterioration Are Worrisome

<ul>
<li>In 1H24, <a href="https://www.smartkarma.com/entities/hygeia-healthcare-group" target="_blank" data-smartkarma-citation="entities:28875:1" rel="noopener">Hygeia Healthcare Group (6078 HK)</a> reported revenue growth of 35% YoY to RMB2,382 million, mainly driven by a 37% YoY growth in hospital business.</li>
<li>Hygeia’s gross profit margin contracted 60bps YoY to 31.8%. Lower government grant led to 230bps operating margin squeeze to 21.6%.</li>
<li>The share price of Hygeia Healthcare has gone down almost 56% in the last one year. Accelerated organic growth and strengthening of margins are crucial to boost valuation.</li>
</ul>


In 1H24, Hygeia Healthcare Group (6078 HK) reported revenue growth of 35% YoY to RMB2,382 million, mainly driven by a 37% YoY growth in hospital business.
Hygeia’s gross profit margin contracted 60bps YoY to 31.8%. Lower government grant led to 230bps operating margin squeeze to 21.6%.
The share price of Hygeia Healthcare has gone down almost 56% in the last one year. Accelerated organic growth and strengthening of margins are crucial to boost valuation.


Hygeia Healthcare Group (6078 HK): Growth and Margin Concerns Plague Inherent Valuation

Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

Cross Asset Strategy

<ul>
<li>Industrials and Consumer Staples Remain Top Overweights, Though Sentiment Fragile for Both.</li>
<li>Energy sector shows signs of a turnaround from long-term decline, whilst Financials remain unloved by China investors.</li>
<li>Real Estate allocations have hit record lows, with average holdings at just 2.93%, while Consumer Discretionary sector approaches all-time highs.</li>
</ul>


Industrials and Consumer Staples Remain Top Overweights, Though Sentiment Fragile for Both.
Energy sector shows signs of a turnaround from long-term decline, whilst Financials remain unloved by China investors.
Real Estate allocations have hit record lows, with average holdings at just 2.93%, while Consumer Discretionary sector approaches all-time highs.


HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Capital Markets

Puxiang Healthcare Holding / Equity Capital Markets

<ul>
<li>Hospital operation is an asset-heavy industry with large balance of fixed assets and intangible assets. So, there is a situation of expense “front-loading” and profit “back-loading” in Puxiang.</li>
<li>Puxiang’s single-digit net profit margin is unsatisfactory. Net profit CAGR is much lower than revenue CAGR. Considering VBP and DRGs/DIP, Puxiang’s future net profit performance is unsettling.</li>
<li>Due to concerns on profitability and future growth outlook, we think valuation of Puxiang should be lower than Topchoice, Aier, Hygeia, <a href="https://www.smartkarma.com/entities/jinxin-fertility-group-ltd" target="_blank" data-smartkarma-citation="entities:28003:1" rel="noopener">Jinxin</a>, but could be higher than <a href="https://www.smartkarma.com/entities/china-resources-medical-holdings" target="_blank" data-smartkarma-citation="entities:357:1" rel="noopener">China Resources Medical</a>
</li>
</ul>


Hospital operation is an asset-heavy industry with large balance of fixed assets and intangible assets. So, there is a situation of expense “front-loading” and profit “back-loading” in Puxiang.
Puxiang’s single-digit net profit margin is unsatisfactory. Net profit CAGR is much lower than revenue CAGR. Considering VBP and DRGs/DIP, Puxiang’s future net profit performance is unsettling.
Due to concerns on profitability and future growth outlook, we think valuation of Puxiang should be lower than Topchoice, Aier, Hygeia, Jinxin, but could be higher than China Resources Medical



Pre-IPO Puxiang Healthcare Holding - Weak Profitability Is the Major Concern

China

Hygeia is a China based oncology healthcare group.

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Hygeia Healthcare Group (6078 HK)

Hygeia Healthcare (6078 HK): Prolonged Winter? Or Is There Light Visible At the End of the Tunnel?

Hygeia Healthcare reports 16% revenue decline in 1H25, dragged by decrease in inpatient revenues. Growth advantage from inorganic expansion wanes....

Tina Banerjee