HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

Jinxin Fertility Group  / Equity Bottom-Up

<ul>
<li>IVF penetration rate in China is not high and the rate of improvement is very slow. With public hospitals accounting for over 90% market share, Jinxin’s growth space is limited.</li>
<li>Jinxin has extended its business scope to support the entire fertility and pregnancy lifecycle. But it could drag down the overall net profit margin,resulting in lower-than-expected performance in the end.</li>
<li>The breakthrough point is internationalization. If COVID-19 is under control and Jinxin continues to expand overseas markets successfully, it could change its valuation logic and open up upward potential.</li>
</ul>


IVF penetration rate in China is not high and the rate of improvement is very slow. With public hospitals accounting for over 90% market share, Jinxin’s growth space is limited.
Jinxin has extended its business scope to support the entire fertility and pregnancy lifecycle. But it could drag down the overall net profit margin,resulting in lower-than-expected performance in the end.
The breakthrough point is internationalization. If COVID-19 is under control and Jinxin continues to expand overseas markets successfully, it could change its valuation logic and open up upward potential.


Jinxin Fertility Co Ltd (1951.HK) - The Outlook Is Not Optimistic Even with Policy Support

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

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Global Equity Research Ltd

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Event-Driven

<ul>
<li>Including the A$0.12 permitted dividend (paid on 14 April), CapVest’s revised scheme offer is A$8.27 and the off-market takeover offer is A$8.22. The new offer addresses the capital return issue.</li>
<li>Despite today’s <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02509261_PS-2A1368239?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">interims orders</a> from the takeover panel, CapVest’s scheme transaction still has virtually no chance of getting up due to BGH's 19.99% stake.</li>
<li>BGH’s like-for-like off-market offer price of A$8.12 per share is 1.2% below CapVest’s off-market offer, suggesting that there is more life to this takeover tussle for <a href="https://www.smartkarma.com/entities/virtus-health-ltd" target="_blank" data-smartkarma-citation="entities:14776:1" rel="noopener">Virtus Health (VRT AU)</a>.</li>
</ul>


Including the A$0.12 permitted dividend (paid on 14 April), CapVest’s revised scheme offer is A$8.27 and the off-market takeover offer is A$8.22. The new offer addresses the capital return issue.
Despite today’s interims orders from the takeover panel, CapVest’s scheme transaction still has virtually no chance of getting up due to BGH's 19.99% stake.
BGH’s like-for-like off-market offer price of A$8.12 per share is 1.2% below CapVest’s off-market offer, suggesting that there is more life to this takeover tussle for Virtus Health (VRT AU).


CapVest Fights Back with Revised Offers for Virtus

<ul>
<li>BGH announced an unconditional off-market takeover offer at A$8.00 cash per share along with intention for on-market purchases equal to, below, or higher than the offer price.</li>
<li>CapVest’s scheme transaction while superior has virtually no chance of getting up. CapVest’s off-market transaction is less appealing due to the uncertain outcome of the ATO ruling.</li>
<li>The last close price of A$8.15 is higher than both BGH and CapVest’s off-market offers which suggest both would need to raise their bid.  </li>
</ul>


BGH announced an unconditional off-market takeover offer at A$8.00 cash per share along with intention for on-market purchases equal to, below, or higher than the offer price.
CapVest’s scheme transaction while superior has virtually no chance of getting up. CapVest’s off-market transaction is less appealing due to the uncertain outcome of the ATO ruling.
The last close price of A$8.15 is higher than both BGH and CapVest’s off-market offers which suggest both would need to raise their bid.  


BGH Returns with an A$8.00 Off-Market Takeover Bid for Virtus

<ul>
<li>CapVest’s binding offer is A$8.25 via a scheme or A$8.10 via an off-market takeover. The scheme offer is a 5.8% premium to its previous scheme offer of A$7.80 per share. </li>
<li>Rival bidder BGH lobbed a revised non-binding offer of A$8.10 per share after market close on 10 March. The Board will consider any further improved competing offer.  </li>
<li>BGH (19.99% stake) previously stated that it will vote against a CapVest scheme and will not accept any takeover offer. Another round of bidding is a possibility. </li>
</ul>


CapVest’s binding offer is A$8.25 via a scheme or A$8.10 via an off-market takeover. The scheme offer is a 5.8% premium to its previous scheme offer of A$7.80 per share. 
Rival bidder BGH lobbed a revised non-binding offer of A$8.10 per share after market close on 10 March. The Board will consider any further improved competing offer.  
BGH (19.99% stake) previously stated that it will vote against a CapVest scheme and will not accept any takeover offer. Another round of bidding is a possibility. 


CapVest Inches past BGH in a Heated Takeover Battle for Virtus

<ul>
<li>BGH’s revised scheme offer will pay $7.65 per <a href="https://www.smartkarma.com/entities/virtus-health-ltd" target="_blank" data-smartkarma-citation="entities:14776:1" rel="noopener">Virtus Health (VRT AU)</a> share, which is 0.7% and 2.0% higher than CapVest’s rival scheme (A$7.60) and off-market takeover offer (A$7.50), respectively.</li>
<li>BGH (19.99% stake) will vote against the CapVest scheme and will not accept any takeover offer from CapVest. Consequently, CapVest’s best option is an improved off-market takeover bid.</li>
<li>As CapVest's offer is marginally below BGH's revised offer, CapVest retains the potential to lob an improved offer, in our view.</li>
</ul>


BGH’s revised scheme offer will pay $7.65 per Virtus Health (VRT AU) share, which is 0.7% and 2.0% higher than CapVest’s rival scheme (A$7.60) and off-market takeover offer (A$7.50), respectively.
BGH (19.99% stake) will vote against the CapVest scheme and will not accept any takeover offer from CapVest. Consequently, CapVest’s best option is an improved off-market takeover bid.
As CapVest's offer is marginally below BGH's revised offer, CapVest retains the potential to lob an improved offer, in our view.


China

Jinxin Fertility Group Limited provides assisted reproductive services. The Company offers vitro fertilization services, embryo transfer services, management services, and other services. Jinxin Fertility Group also provides ancillary medical services.

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Jinxin Fertility Group (1951 HK)

Jinxin Fertility Co Ltd (1951.HK) - The Outlook Is Not Optimistic Even with Policy Support

Despite “Third Child Policy”, Jinxin's outlook is challenging due to low IVF penetration rate, dominance of public hospitals, low profit margin of...

Xinyao (Criss) Wang

CapVest Fights Back with Revised Offers for Virtus

Including the permitted dividend, CapVest’s revised scheme is A$8.27 and the off-market takeover is A$8.22. There is more life to this takeover...

Arun George

BGH Returns with an A$8.00 Off-Market Takeover Bid for Virtus

CapVest’s scheme offer while superior to BGH's off-market offer has virtually no chance of getting up. CapVest’s off-market offer is less appealing...

Arun George

CapVest Inches past BGH in a Heated Takeover Battle for Virtus

CapVest’s binding offer is A$8.25 via a scheme or A$8.10 via an off-market takeover. Rival bidder BGH lobbed an offer of A$8.10 on 10 March....

Arun George

BGH’s Revised Higher Offer for Virtus

BGH has returned with a revised offer of $7.65 per share, which is 7.7% higher than BGH’s original offer of A$7.10. CapVest’s (rival suitor) best...

Arun George

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