Research from Quam Securities, Quam Securities

Quam Securities Research

Research from Quam Securities

Quam Securities

Since its inception in 1986, Quam Securities Limited (Quam Securities) has grown to become one of the few mid-tier securities brokerages in Hong Kong with global execution capabilities for both private and institutional clients. It boasts a well-established network in Greater China including Taiwan and in major world markets through the Global Alliance Partners (GAP). Quam Securities is well-positioned not only to harness and drive business within the China Tonghai International Financial Limited but also between China and the world markets.

Equity Bottom-Up

Ping An Healthcare and Technology / Equity Bottom-Up

Ping An Healthcare and Technology (1833 HK)

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<li>Ping An Good Doctor ("PAGD") is still in the progress of its strategic shift, which should help improving profitability in the long term by synergizing between different business sectors as well as the operations of its parent Ping An group.</li>
<li>However, we believe it would take time for the company to adjust and reallocate resources, so the transformation will continue to hit short-term revenue.</li>
<li>We have reduced our FY23/FY24 revenue forecasts by 19.4%/19.1% and our TP by 17% to HK$20.47. </li>
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Ping An Good Doctor ("PAGD") is still in the progress of its strategic shift, which should help improving profitability in the long term by synergizing between different business sectors as well as the operations of its parent Ping An group.
However, we believe it would take time for the company to adjust and reallocate resources, so the transformation will continue to hit short-term revenue.
We have reduced our FY23/FY24 revenue forecasts by 19.4%/19.1% and our TP by 17% to HK$20.47. 






Ping An Good Doctor - Strategic Transformation Still in Progress

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Sipai Health Technology / Equity Bottom-Up

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<li>The sustainability/stability of Sipai’s performance and growth potential are worrying. Sipai doesn’t have a business with core competitiveness as its foundation, thus leading to potential problems in its business model.</li>
<li>It is useless to have fast revenue growth because Sipai’s profitability is very weak, which is actually closely related to its business characteristics. Sipai is far from being breakeven.</li>
<li>Sipai is overvalued. Such high valuation is not reasonable based on our analysis. We are conservative about Sipai's outlook and we think there are much better investment opportunities.</li>
</ul>


The sustainability/stability of Sipai’s performance and growth potential are worrying. Sipai doesn’t have a business with core competitiveness as its foundation, thus leading to potential problems in its business model.
It is useless to have fast revenue growth because Sipai’s profitability is very weak, which is actually closely related to its business characteristics. Sipai is far from being breakeven.
Sipai is overvalued. Such high valuation is not reasonable based on our analysis. We are conservative about Sipai's outlook and we think there are much better investment opportunities.


Sipai Health Technology (314.HK) - Unjustified Valuation and Problematic Business Model

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

<ul><li>Better-than-expected narrowing of net loss in 2022. PA Good Doctor (PAGD) reported 2022 revenue of RMB6,160mn, down by 16% YoY, and adjusted non-IFRS net loss of RMB848mn, narrowed by 40% YoY.</li><li>PAGD’s revenue slightly missed our forecast/ consensus by 2.8%/ 4.5%, respectively, while adjusted non-IFRS net loss beat our forecast/ consensus by 12.4%/ 20.3%, respectively, thanks to the continuous margin improvements and cost savings under its Strategy 2.0 Continuum.</li><li>In 2022, gross profit margin (GPM) increased by 4.1 ppts, mainly supported by the GPM improvement of 4.2 ppts from its health service segment. </li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

Better-than-expected narrowing of net loss in 2022. PA Good Doctor (PAGD) reported 2022 revenue of RMB6,160mn, down by 16% YoY, and adjusted non-IFRS net loss of RMB848mn, narrowed by 40% YoY.PAGD’s revenue slightly missed our forecast/ consensus by 2.8%/ 4.5%, respectively, while adjusted non-IFRS net loss beat our forecast/ consensus by 12.4%/ 20.3%, respectively, thanks to the continuous margin improvements and cost savings under its Strategy 2.0 Continuum.In 2022, gross profit margin (GPM) increased by 4.1 ppts, mainly supported by the GPM improvement of 4.2 ppts from its health service segment. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

PA Good Doctor (1833 HK) – Temporary pains in strategic transition

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<li>PAGD intends to switch from 2C model to 2B model and to reduce losses ASAP at the expense of revenue scale, so as to prove its profitability to the market. </li>
<li>B-End corporate customers with high quality and sufficient budget are limited. Once the growth of B-end corporate customers meets a bottleneck, its performance may face another decline.</li>
<li>Despite the improving financial performance in 2022, we still think that we need to further observe the effect of strategic transformation and future performance of PAGD before making judgments.</li>
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PAGD intends to switch from 2C model to 2B model and to reduce losses ASAP at the expense of revenue scale, so as to prove its profitability to the market. 
B-End corporate customers with high quality and sufficient budget are limited. Once the growth of B-end corporate customers meets a bottleneck, its performance may face another decline.
Despite the improving financial performance in 2022, we still think that we need to further observe the effect of strategic transformation and future performance of PAGD before making judgments.


Ping An Healthcare and Technology Company Limited (1833.HK)- To Turn Things Around or to Fail Again?

Equity Capital Markets

Jiangsu Fangzhou Chemical / Equity Capital Markets

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<li>Fangzhou initially launched online retail pharmacy to address the needs of chronic disease patients, and then expand to online chronic disease management. However,the investment logic of this business is problematic. </li>
<li>Due to the low willingness to pay/high acquisition cost of C-end patients, it is difficult to achieve large-scale profits. Developing To B business would be important for Fangzhou’s future development. </li>
<li>Either To B business or To C business, the key point is to accumulate/retain large physician resources, but Fangzhou hasn’t had “a panacea” in this regard.</li>
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Fangzhou initially launched online retail pharmacy to address the needs of chronic disease patients, and then expand to online chronic disease management. However,the investment logic of this business is problematic. 
Due to the low willingness to pay/high acquisition cost of C-end patients, it is difficult to achieve large-scale profits. Developing To B business would be important for Fangzhou’s future development. 
Either To B business or To C business, the key point is to accumulate/retain large physician resources, but Fangzhou hasn’t had “a panacea” in this regard.


Pre-IPO Fangzhou Group - The Business and the Concerns

China

Ping An Healthcare and Technology Company Limited operates an online healthcare services platform in China, offering online consultations, hospital referrals, health management, and wellness services. The company provides a range of services including online diagnosis and treatment, health check-ups, and drug delivery through its mobile platform. It was founded in 2014 and is headquartered in Shanghai, China.

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Ping An Healthcare and Technology (1833 HK)

Ping An Good Doctor - Strategic Transformation Still in Progress

We have reduced our FY23/FY24 revenue forecasts by 19.4%/19.1% and our TP by 17% to HK$20.47. As our new TP implies a potential upside of only 3%,...

Quam Securities

Sipai Health Technology (314.HK) - Unjustified Valuation and Problematic Business Model

The sustainability/stability of Sipai’s performance/growth potential is worrying. Weak profitability make Sipai hard to be breakeven.High valuation...

Xinyao (Criss) Wang

PA Good Doctor (1833 HK) – Temporary pains in strategic transition

Better-than-expected narrowing of net loss in 2022. PA Good Doctor (PAGD) reported 2022 revenue of RMB6,160mn, down by 16% YoY, and adjusted non...

CMB International

Ping An Healthcare and Technology Company Limited (1833.HK)- To Turn Things Around or to Fail Again?

PAGD's intention to improve profitability at the expense of revenue scale is obvious. Switching from 2C to 2B model is a double-edged sword....

Xinyao (Criss) Wang

Pre-IPO Fangzhou Group - The Business and the Concerns

The 2C model of online medical care is hard to achieve large-scale profit. 2B is a breakthrough point. But Fangzhou has no perfect solution to...

Xinyao (Criss) Wang

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