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

Global Healthcare Analyst

Tina Banerjee

Wuhan Dazhong Dental Medical / Equity Capital Markets

<ul>
<li>Wuhan Dazhong Dental Medical launched IPO aiming to raise up to HK$232 million (US$30 million). The company plans to sell 10.8 million shares at HK$20–HK$21.4 per share.</li>
<li>Wuhan Dazhong Dental Medical is a private dental services provider in Central China providing dental services under the direct chain model.</li>
<li>The IPO price is set at a premium (23%) to the price realized during Series B funding. Valuation looks attractive. But there are a few concerns to take into account.</li>
</ul>


Wuhan Dazhong Dental Medical launched IPO aiming to raise up to HK$232 million (US$30 million). The company plans to sell 10.8 million shares at HK$20–HK$21.4 per share.
Wuhan Dazhong Dental Medical is a private dental services provider in Central China providing dental services under the direct chain model.
The IPO price is set at a premium (23%) to the price realized during Series B funding. Valuation looks attractive. But there are a few concerns to take into account.


Wuhan Dazhong Dental Medical IPO: Shine Revival Will Take a Few Sessions

Bayzed Health Group / Equity Capital Markets

<ul>
<li>The positioning of Bayzed is just “a supplement to public hospitals system”, with limited scale and competitiveness, which is a point that investors may need to be aware of.</li>
<li>A big problem in the operation of Bayzed is the loss status/weak profitability. At current gross margin level, it would be difficult for Bayzed to deliver good returns for investors.</li>
<li>Valuation of Bayzed should be lower than Inkon Life Technology and Hygeia. The Pre-IPO valuation is not cheap, and the valuation upside potential may be limited considering weak profitability.  </li>
</ul>


The positioning of Bayzed is just “a supplement to public hospitals system”, with limited scale and competitiveness, which is a point that investors may need to be aware of.
A big problem in the operation of Bayzed is the loss status/weak profitability. At current gross margin level, it would be difficult for Bayzed to deliver good returns for investors.
Valuation of Bayzed should be lower than Inkon Life Technology and Hygeia. The Pre-IPO valuation is not cheap, and the valuation upside potential may be limited considering weak profitability.  


Pre-IPO Bayzed Health Group (PHIP Updates) - Some Points Worth the Attention

BenQ BM Holding Cayman Corp. / Equity Capital Markets

<ul>
<li>The expansion space of BenQ is severely limited as the market has been saturated in Jiangsu Province. Due to DRG, future revenue/net profit growth would continue to be under pressure. </li>
<li>Low profit margin of general hospitals is a common problem in this industry due to pain points of business model.It’s difficult to achieve improvement.Investors need to be aware of this.</li>
<li>BenQ’s valuation should be lower than Hygeia due to weaker profitability, smaller revenue scale, lower growth outlook.Post-money valuation before IPO of US$375 million (or about RMB2.7 billion) is already expensive</li>
</ul>


The expansion space of BenQ is severely limited as the market has been saturated in Jiangsu Province. Due to DRG, future revenue/net profit growth would continue to be under pressure. 
Low profit margin of general hospitals is a common problem in this industry due to pain points of business model.It’s difficult to achieve improvement.Investors need to be aware of this.
BenQ’s valuation should be lower than Hygeia due to weaker profitability, smaller revenue scale, lower growth outlook.Post-money valuation before IPO of US$375 million (or about RMB2.7 billion) is already expensive


Pre-IPO BenQ BM Holding (PHIP Updates) - Some Points Worth the Attention

<ul>
<li>Since HUGE ranks in the first tier among domestic brands, the import substitution would be the main logic to continue driving the performance growth based on its strong cost effectiveness.</li>
<li>If HUGE wants to achieve success in non-advantageous areas in the future, reducing price to compete for more market share could be an essential means. VBP is also a challenge.</li>
<li>Comparable companies include <a href="https://www.smartkarma.com/entities/shandong-sinocera-functional-material-a" target="_blank" data-smartkarma-citation="entities:6865:1" rel="noopener">Sinocera Functional Material</a>, <a href="https://www.smartkarma.com/entities/yantai-zhenghai-bio-tech-co-ltd" target="_blank" data-smartkarma-citation="entities:29760:1" rel="noopener">Yantai Zhenghai Bio-Tech</a>, Angelalign, <a href="https://www.smartkarma.com/entities/modern-dental-group-ltd" target="_blank" data-smartkarma-citation="entities:21020:1" rel="noopener">Modern Dental Group</a>, <a href="https://www.smartkarma.com/entities/topchoice-medical-corporation" target="_blank" data-smartkarma-citation="entities:1102:1" rel="noopener">Topchoice Medical</a>. We think valuation of HUGE could be higher than peers due to higher profitability.</li>
</ul>


Since HUGE ranks in the first tier among domestic brands, the import substitution would be the main logic to continue driving the performance growth based on its strong cost effectiveness.
If HUGE wants to achieve success in non-advantageous areas in the future, reducing price to compete for more market share could be an essential means. VBP is also a challenge.
Comparable companies include Sinocera Functional Material, Yantai Zhenghai Bio-Tech, Angelalign, Modern Dental Group, Topchoice Medical. We think valuation of HUGE could be higher than peers due to higher profitability.


Pre-IPO Huge Dental Limited - The Business and the Concerns Behind

China

Topchoice Medical Investment Corporation provides dental and oral health care services.

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Topchoice Medical (600763 CH)

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

Hospital operation is asset-heavy industry.Puxiang's net profit CAGR is lower than revenue CAGR,with unsatisfactory net profit margin and...

Xinyao (Criss) Wang

Wuhan Dazhong Dental Medical IPO: Shine Revival Will Take a Few Sessions

Wuhan Dazhong Dental launched IPO aiming to raise $30M. The company plans to sell 10.8M shares at HK$20–21.4 per share. Share subscriptions will...

Tina Banerjee

Pre-IPO Bayzed Health Group (PHIP Updates) - Some Points Worth the Attention

The positioning of Bayzed is just “a supplement to public hospital system”, with limited competitiveness.Due to weak profitability, it's hard to...

Xinyao (Criss) Wang

Pre-IPO BenQ BM Holding (PHIP Updates) - Some Points Worth the Attention

BenQ faces limited growth in Jiangsu Province due to market saturation. Low profit margin/ pain points of business model pose challenges.Valuation...

Xinyao (Criss) Wang

Pre-IPO Huge Dental Limited - The Business and the Concerns Behind

Import substitution and cost effectiveness drive HUGE's performance growth, but competing in non-advantageous areas may require price reduction...

Xinyao (Criss) Wang

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

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

Hospital operation is asset-heavy industry.Puxiang's net profit CAGR is lower than revenue CAGR,with unsatisfactory net profit margin and...

Xinyao (Criss) Wang

Wuhan Dazhong Dental Medical IPO: Shine Revival Will Take a Few Sessions

Wuhan Dazhong Dental launched IPO aiming to raise $30M. The company plans to sell 10.8M shares at HK$20–21.4 per share. Share subscriptions will...

Tina Banerjee

Pre-IPO Bayzed Health Group (PHIP Updates) - Some Points Worth the Attention

The positioning of Bayzed is just “a supplement to public hospital system”, with limited competitiveness.Due to weak profitability, it's hard to...

Xinyao (Criss) Wang

Pre-IPO BenQ BM Holding (PHIP Updates) - Some Points Worth the Attention

​BenQ faces limited growth in Jiangsu Province due to market saturation. Low profit margin/ pain points of business model pose challenges.Valuation...

Xinyao (Criss) Wang

Pre-IPO Huge Dental Limited - The Business and the Concerns Behind

​Import substitution and cost effectiveness drive HUGE's performance growth, but competing in non-advantageous areas may require price reduction...

Xinyao (Criss) Wang

BenQ faces limited growth in Jiangsu Province due to market saturation. Low profit margin/ pain points of business model pose challenges.Valuation...

Import substitution and cost effectiveness drive HUGE's performance growth, but competing in non-advantageous areas may require price reduction...