Equity Analyst, LightStream Research

Shifara Samsudeen, FCMA, CGMA

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Equity Bottom-Up

<p><a href="https://www.smartkarma.com/entities/m3-inc" target="_blank" data-smartkarma-citation="entities:13316:1" rel="noopener">M3 Inc (2413 JP)</a>  reported 1QFY03/2022 results on Wednesday which saw revenues growing 30.8% YoY while reported operating profit grew 38.2%YoY during the quarter (excl. the impact from stake disposal of <a href="https://www.smartkarma.com/entities/medlive-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:32985:1" rel="noopener">Medlive Technology (2192 HK)</a>). M3’s operating profits during 1QFY03/2022 benefitted from the IPO of Medlive Technology on Hong Kong Stock Exchange in July 2021 with a profit attribution of JPY9.1bn (19.6% of total revenues in 1Q and 36.9% of operating profits excl. Medlive IPO impact).</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/220/968/original/image_968611860161627537893439.png?1627537894" class="editor-image img-responsive" data-smartkarma-image-id="220968"></figure><p><em>Source: Company disclosures</em></p><p>The reported revenue was 3.8% higher than consensus estimates while reported operating profits beat consensus by a huge margin of about 50%.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/220/969/original/image_180657963171627537913658.png?1627537914" class="editor-image img-responsive" data-smartkarma-image-id="220969"></figure>

M3 Inc (2413 JP)  reported 1QFY03/2022 results on Wednesday which saw revenues growing 30.8% YoY while reported operating profit grew 38.2%YoY during the quarter (excl. the impact from stake disposal of Medlive Technology (2192 HK)). M3’s operating profits during 1QFY03/2022 benefitted from the IPO of Medlive Technology on Hong Kong Stock Exchange in July 2021 with a profit attribution of JPY9.1bn (19.6% of total revenues in 1Q and 36.9% of operating profits excl. Medlive IPO impact).Source: Company disclosuresThe reported revenue was 3.8% higher than consensus estimates while reported operating profits beat consensus by a huge margin of about 50%.

M3: Medlive IPO Helped OP Surge in 1Q; Expect Earnings Weakness to Come Through in 2H

Equity Capital Markets

Medlive Technology / Equity Capital Markets

<p><a href="https://www.smartkarma.com/entities/medlive-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:32985:1" rel="noopener">Medlive Technology (2192 HK)</a> operates the largest online professional physician platform in China based on registered physician users in 2020 (Source: Frost &amp; Sullivan). The company generates a majority of its revenues through offering digital marketing services to pharmaceuticals and healthcare companies in China.</p><p>Medlive priced its IPO at HK$27.2 per share, at the upper end of the IPO price range of HK$24.1-27.2 per share. At the above price, Medlive raised gross proceeds of HK$4.2bn (US$543m) at a market capitalisation of HK$18.8bn and a post-money enterprise value of HK$14.8bn.</p><p>In our previous insight, we discussed our forecasts and valuation and our DCF based valuation offered price per share of HK$33.05 per share, which is 21% higher than the company’s IPO price of HK$27.2 per share.</p>

Medlive Technology (2192 HK) operates the largest online professional physician platform in China based on registered physician users in 2020 (Source: Frost &amp; Sullivan). The company generates a majority of its revenues through offering digital marketing services to pharmaceuticals and healthcare companies in China.Medlive priced its IPO at HK$27.2 per share, at the upper end of the IPO price range of HK$24.1-27.2 per share. At the above price, Medlive raised gross proceeds of HK$4.2bn (US$543m) at a market capitalisation of HK$18.8bn and a post-money enterprise value of HK$14.8bn.In our previous insight, we discussed our forecasts and valuation and our DCF based valuation offered price per share of HK$33.05 per share, which is 21% higher than the company’s IPO price of HK$27.2 per share.

Medlive IPO: Thoughts on First Day Trading

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

<div><p><a href="https://www.smartkarma.com/entities/medlive-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:32985:1" rel="noopener">Medlive Technology (2192 HK)</a> is the largest online professional physician platform in China as measured by the number of registered physician users as of 31 December 2020, according to Frost &amp; Sullivan. Medlive derives most of its revenue from providing solutions that facilitate healthcare marketing to physicians. Medlive ranked first among physician platform-based digital healthcare marketing service providers in China as measured by revenue in 2020, with a 21.4% market share, according to Frost &amp; Sullivan. Medlive is a JV between <a href="https://www.smartkarma.com/entities/m3-inc" target="_blank" data-smartkarma-citation="entities:13316:1" rel="noopener">M3 Inc (2413 JP)</a> and Tiantian, each with 50% stakes.</p></div><div><p>Medlive will commence trading on Thursday, 15 July. Medlive priced its IPO at HK$27.20 and <a href="https://inews.hket.com/article/3006198/%E3%80%90%E6%96%B0%E8%82%A1IPO%E3%80%913%E9%9A%BB%E6%96%B0%E8%82%A1%E6%9A%97%E7%9B%A4%E3%80%80%E9%86%AB%E8%84%88%E9%80%9A2192%E5%8D%871%E6%88%90%E3%80%81%E4%B8%80%E6%89%8B%E5%B8%B3%E9%9D%A2%E8%B3%BA1350%E5%85%83?mtc=40001&amp;srkw=IPO%E6%9C%80%E5%BF%AB%E6%9C%80%E9%BD%8A" target="_blank" rel="noopener">closed 10% up at HK$29.90</a> in the Futu securities grey market. </p></div><div><p>In <a href="https://www.smartkarma.com/insights/medlive-technology-ipo-initiation-what-s-up-doc" target="_blank" data-smartkarma-citation="insights:53683" rel="noopener">Medlive Technology IPO Initiation: What's Up, Doc?</a>, we stated that Medlive believes that it can compete with several players for a slice of healthcare companies’ marketing budgets due to its large and engaged physician user base, which enables it to reach a wider group of physicians more efficiently and achieve a better return on marketing spending. Medlive has strong fundamentals due to fast-paced revenue growth, rising margin and strong cash generation. We concluded that the Medlive IPO is worth a look. In <a href="https://www.smartkarma.com/insights/medlive-technology-ipo-valuation-insights" target="_blank" data-smartkarma-citation="insights:53879" rel="noopener">Medlive Technology IPO: Valuation Insights</a>, we stated that we would participate in the IPO due to an attractive IPO price range and strong blue-chip cornerstone support.</p></div><div><div><div class="content-highlight"><p>Updating for the final IPO net raise, our base-case DCF derived price target of HK$32.17 per share. As DCF-based target prices are subject to a wide range of variability, we present a sensitivity table to help investors gauge where target prices could head. Our DCF sensitivity analysis shows that the grey market price is attractive.</p></div></div></div>

Medlive Technology (2192 HK) is the largest online professional physician platform in China as measured by the number of registered physician users as of 31 December 2020, according to Frost &amp; Sullivan. Medlive derives most of its revenue from providing solutions that facilitate healthcare marketing to physicians. Medlive ranked first among physician platform-based digital healthcare marketing service providers in China as measured by revenue in 2020, with a 21.4% market share, according to Frost &amp; Sullivan. Medlive is a JV between M3 Inc (2413 JP) and Tiantian, each with 50% stakes.Medlive will commence trading on Thursday, 15 July. Medlive priced its IPO at HK$27.20 and closed 10% up at HK$29.90 in the Futu securities grey market. In Medlive Technology IPO Initiation: What's Up, Doc?, we stated that Medlive believes that it can compete with several players for a slice of healthcare companies’ marketing budgets due to its large and engaged physician user base, which enables it to reach a wider group of physicians more efficiently and achieve a better return on marketing spending. Medlive has strong fundamentals due to fast-paced revenue growth, rising margin and strong cash generation. We concluded that the Medlive IPO is worth a look. In Medlive Technology IPO: Valuation Insights, we stated that we would participate in the IPO due to an attractive IPO price range and strong blue-chip cornerstone support.Updating for the final IPO net raise, our base-case DCF derived price target of HK$32.17 per share. As DCF-based target prices are subject to a wide range of variability, we present a sensitivity table to help investors gauge where target prices could head. Our DCF sensitivity analysis shows that the grey market price is attractive.

<p><a href="https://www.smartkarma.com/entities/medlive-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:32985:1" rel="noopener">Medlive Technology (2192 HK)</a>  has announced the terms for its Hong Kong IPO where it plans to issue 155.1m shares at an indicative price range of HK$24.1-27.2 per share. At the midpoint of the IPO price range of HK$25.65 per share, Medlive will raise net proceeds of HK$3.8bn (US$485.3m) at a market capitalisation of HK$17.7bn and a post-money enterprise value of HK$13.8bn.</p><table class="table table-striped"><tbody>
<tr><td colspan="2" style="width: 308.0pt;"><p style="text-align: center;"><strong>Medlive Technology IPO Details</strong></p></td></tr>
<tr>
<td style="width: 241.0pt;"><p>No. of Shares Issued</p></td>
<td style="width: 67.0pt;"><p style="text-align: right;">     155,096,000</p></td>
</tr>
<tr>
<td style="width: 241.0pt;"><p>Price per Share (HK$)</p></td>
<td style="width: 67.0pt;"><p style="text-align: right;">24.1-27.2</p></td>
</tr>
<tr>
<td style="width: 241.0pt;"><p>Offer as a % of Outstanding Shares</p></td>
<td style="width: 67.0pt;"><p style="text-align: right;">22.47%</p></td>
</tr>
<tr>
<td style="width: 241.0pt;"><p>Total Shares Outstanding (m)</p></td>
<td style="width: 67.0pt;"><p style="text-align: right;">690.2</p></td>
</tr>
<tr>
<td style="width: 241.0pt;"><p>Net Proceeds (HK$m)</p></td>
<td style="width: 67.0pt;"><p style="text-align: right;">3770.8</p></td>
</tr>
<tr>
<td style="width: 241.0pt;"><p>Market Capitalisation (HK$m)</p></td>
<td style="width: 67.0pt;"><p style="text-align: right;">            17,703.0</p></td>
</tr>
<tr>
<td style="width: 241.0pt;"><p>Enterprise Value (HK$m)</p></td>
<td style="width: 67.0pt;"><p style="text-align: right;">          13,755.41</p></td>
</tr>
</tbody></table><div style="text-align: left;" class="content-caption"><em>Source: Company disclosures, LSR (net proceeds, market cap and EV are at the midpoint of the IPO price range)</em></div><p>Medlive has entered into cornerstone investment agreements with several investors for an aggregate of HK$1.7bn (US$220m) which will account for approx. 43% of the offer shares at the midpoint of the IPO pricing. These cornerstone investors include Fidelity Management &amp; Research (FMR/US$40m), Fidelity Investments (FIL/US$40m), Tencent Mobility (US$40m), GIC (US$40m), Matthew Funds (US$20m), Springhill (US$20m) and OrbiMed Funds (US$20m).</p><p>Medlive plans to use approx. 40% of the net IPO proceeds on business expansion and user growth, approx. 30% of the proceeds on enhancing technological and R&amp;D capabilities and another 20% of the net proceeds on pursuing selected strategic investments or acquisition opportunities.</p>

Medlive Technology (2192 HK)  has announced the terms for its Hong Kong IPO where it plans to issue 155.1m shares at an indicative price range of HK$24.1-27.2 per share. At the midpoint of the IPO price range of HK$25.65 per share, Medlive will raise net proceeds of HK$3.8bn (US$485.3m) at a market capitalisation of HK$17.7bn and a post-money enterprise value of HK$13.8bn.
Medlive Technology IPO Details

No. of Shares Issued
     155,096,000


Price per Share (HK$)
24.1-27.2


Offer as a % of Outstanding Shares
22.47%


Total Shares Outstanding (m)
690.2


Net Proceeds (HK$m)
3770.8


Market Capitalisation (HK$m)
            17,703.0


Enterprise Value (HK$m)
          13,755.41

Source: Company disclosures, LSR (net proceeds, market cap and EV are at the midpoint of the IPO price range)Medlive has entered into cornerstone investment agreements with several investors for an aggregate of HK$1.7bn (US$220m) which will account for approx. 43% of the offer shares at the midpoint of the IPO pricing. These cornerstone investors include Fidelity Management &amp; Research (FMR/US$40m), Fidelity Investments (FIL/US$40m), Tencent Mobility (US$40m), GIC (US$40m), Matthew Funds (US$20m), Springhill (US$20m) and OrbiMed Funds (US$20m).Medlive plans to use approx. 40% of the net IPO proceeds on business expansion and user growth, approx. 30% of the proceeds on enhancing technological and R&amp;D capabilities and another 20% of the net proceeds on pursuing selected strategic investments or acquisition opportunities.

Medlive Technology IPO: Forecasts and Valuation

<div><p><a href="https://www.smartkarma.com/entities/medlive-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:32985:1" rel="noopener">Medlive Technology (2192 HK)</a> is the largest online professional physician platform in China as measured by the number of registered physician users as of 31 December 2020, according to Frost &amp; Sullivan. Medlive derives most of its revenue from providing solutions that facilitate healthcare marketing to physicians. Medlive ranked first among physician platform-based digital healthcare marketing service providers in China as measured by revenue in 2020, with a 21.4% market share, according to Frost &amp; Sullivan. Medlive is a JV between <a href="https://www.smartkarma.com/entities/m3-inc" target="_blank" data-smartkarma-citation="entities:13316:1" rel="noopener">M3 Inc (2413 JP)</a> and Tiantian, each with 50% stakes.</p></div><div><p>At the proposed IPO price range of HK$24.10-27.20 per share, Medlive will have a market cap of HK$16,633.2-18,772.8 ($2.1-2.4 billion). At the mid-point of the IPO price range, the total net proceeds are HK$3,770.8 million ($486 million). </p></div><div><p>Seven cornerstone investors will subscribe for $220 million of the offer shares (42.93% of the offer shares at the mid-point of the IPO price). The cornerstone investors include Fidelity Management &amp; Research, FIL Investment Management, <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a>, GIC, Matthews Funds, Qiming Venture Partners and OrbiMed Funds.</p></div><div><div>
<p>In <a href="https://www.smartkarma.com/insights/medlive-technology-ipo-initiation-what-s-up-doc" target="_blank" data-smartkarma-citation="insights:53683" rel="noopener">Medlive Technology IPO Initiation: What's Up, Doc?</a>, we stated that Medlive believes that it can compete with several players for a slice of healthcare companies’ marketing budgets due to its large and engaged physician user base, which enables it to reach a wider group of physicians more efficiently and achieve a better return on marketing spending. Medlive has strong fundamentals due to fast-paced revenue growth, rising margin and strong cash generation. We concluded that the Medlive IPO is worth a look. </p>
<div class="content-highlight">
<p>Arguably, the closest peer is Doximity (DOCS US), which listed on 24 June 2021. Doximity had a stonking debut with its shares trading currently 1.2x its IPO price, suggesting strong investor sentiment on the niche physician "social-networking" market monetised primarily through advertising.</p>
<p>Our base-case DCF valuation is HK$31.80 per share, which is 17% above the high-point of the IPO price range. Overall, we would participate in the IPO due to an attractive IPO price range and strong blue-chip cornerstone support.</p>
</div>
</div></div>

Medlive Technology (2192 HK) is the largest online professional physician platform in China as measured by the number of registered physician users as of 31 December 2020, according to Frost &amp; Sullivan. Medlive derives most of its revenue from providing solutions that facilitate healthcare marketing to physicians. Medlive ranked first among physician platform-based digital healthcare marketing service providers in China as measured by revenue in 2020, with a 21.4% market share, according to Frost &amp; Sullivan. Medlive is a JV between M3 Inc (2413 JP) and Tiantian, each with 50% stakes.At the proposed IPO price range of HK$24.10-27.20 per share, Medlive will have a market cap of HK$16,633.2-18,772.8 ($2.1-2.4 billion). At the mid-point of the IPO price range, the total net proceeds are HK$3,770.8 million ($486 million). Seven cornerstone investors will subscribe for $220 million of the offer shares (42.93% of the offer shares at the mid-point of the IPO price). The cornerstone investors include Fidelity Management &amp; Research, FIL Investment Management, Tencent (700 HK), GIC, Matthews Funds, Qiming Venture Partners and OrbiMed Funds.
In Medlive Technology IPO Initiation: What's Up, Doc?, we stated that Medlive believes that it can compete with several players for a slice of healthcare companies’ marketing budgets due to its large and engaged physician user base, which enables it to reach a wider group of physicians more efficiently and achieve a better return on marketing spending. Medlive has strong fundamentals due to fast-paced revenue growth, rising margin and strong cash generation. We concluded that the Medlive IPO is worth a look. 

Arguably, the closest peer is Doximity (DOCS US), which listed on 24 June 2021. Doximity had a stonking debut with its shares trading currently 1.2x its IPO price, suggesting strong investor sentiment on the niche physician "social-networking" market monetised primarily through advertising.
Our base-case DCF valuation is HK$31.80 per share, which is 17% above the high-point of the IPO price range. Overall, we would participate in the IPO due to an attractive IPO price range and strong blue-chip cornerstone support.



Medlive Technology IPO: Valuation Insights

Japan

M3, Inc. supplies medical information services for doctors through the Internet. The Company also supports marketing of pharmaceutical companies and medical equipment manufacturers.

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M3 Inc (2413 JP)

M3: Medlive IPO Helped OP Surge in 1Q; Expect Earnings Weakness to Come Through in 2H

M3’s operating profits during 1Q benefitted from the IPO of Medlive on HKEx with a profit attribution of JPY9.1bn (19.6% of revenues and 36.9% of...

Shifara Samsudeen, FCMA, CGMA

Medlive IPO: Thoughts on First Day Trading

Both our DCF-based valuation and relative valuation suggest that the company’s IPO is attractively priced and there is more room for share price to...

Shifara Samsudeen, FCMA, CGMA

Medlive Technology IPO: Trading Debut

Medlive will commence trading on 15 July. Medlive priced at HK$27.20 and closed 10% up at HK$29.90 in the Futu grey market. Our DCF sensitivity...

Arun George

Medlive Technology IPO: Forecasts and Valuation

Based on our forecasts, Medlive’s indicative IPO pricing is still attractive even if we assume a discount rate of 12.0% and a 0% terminal growth...

Shifara Samsudeen, FCMA, CGMA

Medlive Technology IPO: Valuation Insights

Our base-case DCF valuation is HK$31.80 per share. Overall, we would participate in the IPO due to an attractive price range and strong blue-chip...

Arun George

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