HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Capital Markets

Wuhan Dazhong Dental Medical / Equity Capital Markets

<ul>
<li>In other to attract and retain high-quality dentists, dental services providers need to pay higher salaries than public hospitals, which inevitably drives up manpower costs and drag down profit margin.</li>
<li>Regulatory pricing controls and centralized procurement policies on dental implants and orthodontic materials will affect the pricing of Dazhong’s dental services, thus put pressure on its future revenue growth.</li>
<li>The future valuation performance largely depends on if Dazhong is able to expand out of Central China and achieve nationwide coverage. However, so far, no successful cases have emerged.</li>
</ul>


In other to attract and retain high-quality dentists, dental services providers need to pay higher salaries than public hospitals, which inevitably drives up manpower costs and drag down profit margin.
Regulatory pricing controls and centralized procurement policies on dental implants and orthodontic materials will affect the pricing of Dazhong’s dental services, thus put pressure on its future revenue growth.
The future valuation performance largely depends on if Dazhong is able to expand out of Central China and achieve nationwide coverage. However, so far, no successful cases have emerged.


Pre-IPO Wuhan Dazhong Dental Medical - Valuation Performance May Disappoint Investors

Thematic (Sector/Industry)

<ul>
<li>China healthcare can be mainly divided into the following segments: pharmaceuticals, medical devices, medical services, To B Supply Chain. Investment logic and business characteristics in these fields are completely different.</li>
<li>“High standardization+low dependence on doctors” help pharmaceuticals gain a more favorable commercial value than medical devices in distribution process. Profit margin/cross-regional expansion capability of medical services have always been questioned.</li>
<li>The business characteristics of “To B supply chain” indicate strong cyclical characteristics due to supply rigidity and demand fluctuations, which are easily affected by changes in demand trends.</li>
</ul>


China healthcare can be mainly divided into the following segments: pharmaceuticals, medical devices, medical services, To B Supply Chain. Investment logic and business characteristics in these fields are completely different.
“High standardization+low dependence on doctors” help pharmaceuticals gain a more favorable commercial value than medical devices in distribution process. Profit margin/cross-regional expansion capability of medical services have always been questioned.
The business characteristics of “To B supply chain” indicate strong cyclical characteristics due to supply rigidity and demand fluctuations, which are easily affected by changes in demand trends.


The “Game Rule” of China Healthcare - Pharmaceuticals Vs Medical Devices Vs Medical Services

Distinct Healthcare Holdings / Equity Capital Markets

<ul>
<li>Due to industry characteristics, it would be difficult for Distinct Healthcare to scale up. The Company is more of “a supplementary role” in the entire medical service system in China.</li>
<li>Profit margin is not satisfactory and cost side is also difficult to reduce. Even if Distinct Healthcare successfully turns losses into profits, it’s hard to generate good returns for investors.</li>
<li>Post-Money valuation was US$510 million after Series E financing. For a company that would encounter bottlenecks in both revenue and profit growth, it would be difficult to achieve high valuation.</li>
</ul>


Due to industry characteristics, it would be difficult for Distinct Healthcare to scale up. The Company is more of “a supplementary role” in the entire medical service system in China.
Profit margin is not satisfactory and cost side is also difficult to reduce. Even if Distinct Healthcare successfully turns losses into profits, it’s hard to generate good returns for investors.
Post-Money valuation was US$510 million after Series E financing. For a company that would encounter bottlenecks in both revenue and profit growth, it would be difficult to achieve high valuation.


Pre-IPO Distinct Healthcare Holdings-  Hard to Deliver the Expected Returns Due to Growth Bottleneck

Equity Bottom-Up

Shanghai Junshi Biosciences  / Equity Bottom-Up

<ul>
<li>For all licensing cooperation with MNCs, we recommend that investors wait to see what MNCs' next move is before deciding whether the cooperation is really promising.</li>
<li>Topchoice showed good business growth in 24Q2. Our biggest concern for Topchoice is that the unit price per customer may further decrease in the future, thereby affecting revenue/profit growth.</li>
<li>Junshi’s sales growth picked up in 24Q1, but concerns on Junshi persist. We don't think Junshi is undervalued and its valuation should be lower than that of peers.</li>
</ul>


For all licensing cooperation with MNCs, we recommend that investors wait to see what MNCs' next move is before deciding whether the cooperation is really promising.
Topchoice showed good business growth in 24Q2. Our biggest concern for Topchoice is that the unit price per customer may further decrease in the future, thereby affecting revenue/profit growth.
Junshi’s sales growth picked up in 24Q1, but concerns on Junshi persist. We don't think Junshi is undervalued and its valuation should be lower than that of peers.


China Healthcare Weekly (July.7) - MNCs' Next Move In Licensing Deals, Topchoice, Junshi's Trouble

<ul>
<li>We summarized some important opportunities and trends that we think would emerge in the pharmaceutical industry in the future.</li>
<li>Considering the current unfavorable financing situation of Biotech in the domestic primary market, we anticipate that there would be significant discounts in the sale of equity in the future.</li>
<li>Topchoice has not yet out of trouble. Most of its business diversification could end in failure. It is difficult to support high valuation only by one hospital and one region.</li>
</ul>


We summarized some important opportunities and trends that we think would emerge in the pharmaceutical industry in the future.
Considering the current unfavorable financing situation of Biotech in the domestic primary market, we anticipate that there would be significant discounts in the sale of equity in the future.
Topchoice has not yet out of trouble. Most of its business diversification could end in failure. It is difficult to support high valuation only by one hospital and one region.


China Healthcare Weekly (Dec.8) - Important Trends in Pharma, Big Discount Sale of Equity, Topchoice

China

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

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Topchoice Medical (600763 CH)

Pre-IPO Wuhan Dazhong Dental Medical - Valuation Performance May Disappoint Investors

To attract top dentists, dental service providers have to pay higher salaries, impacting profit margins. VBP will affect revenue growth for...

Xinyao (Criss) Wang

The “Game Rule” of China Healthcare - Pharmaceuticals Vs Medical Devices Vs Medical Services

China healthcare has distinct segments with different investment logic/characteristics.The pecking order is drugs>medical device>medical...

Xinyao (Criss) Wang

Pre-IPO Distinct Healthcare Holdings- Hard to Deliver the Expected Returns Due to Growth Bottleneck

Distinct Healthcare faces challenges in scaling up due to industry characteristics and may not generate good returns for investors despite turning...

Xinyao (Criss) Wang

China Healthcare Weekly (July.7) - MNCs' Next Move In Licensing Deals, Topchoice, Junshi's Trouble

Investors should wait to see MNCs' next move before deciding on licensing deals. Topchoice's growth is positive but unit price per customer may...

Xinyao (Criss) Wang

China Healthcare Weekly (Dec.8) - Important Trends in Pharma, Big Discount Sale of Equity, Topchoice

We analyzed some important opportunities/trends to emerge in pharmaceutical industry. There would be significant discounts in the sale of equity in...

Xinyao (Criss) Wang

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Pre-IPO Wuhan Dazhong Dental Medical - Valuation Performance May Disappoint Investors

​To attract top dentists, dental service providers have to pay higher salaries, impacting profit margins. VBP will affect revenue growth for...

Xinyao (Criss) Wang

The “Game Rule” of China Healthcare - Pharmaceuticals Vs Medical Devices Vs Medical Services

​China healthcare has distinct segments with different investment logic/characteristics.The pecking order is drugs>medical device>medical...

Xinyao (Criss) Wang

Pre-IPO Distinct Healthcare Holdings- Hard to Deliver the Expected Returns Due to Growth Bottleneck

​Distinct Healthcare faces challenges in scaling up due to industry characteristics and may not generate good returns for investors despite turning...

Xinyao (Criss) Wang

China Healthcare Weekly (July.7) - MNCs' Next Move In Licensing Deals, Topchoice, Junshi's Trouble

​Investors should wait to see MNCs' next move before deciding on licensing deals. Topchoice's growth is positive but unit price per customer may...

Xinyao (Criss) Wang

China Healthcare Weekly (Dec.8) - Important Trends in Pharma, Big Discount Sale of Equity, Topchoice

We analyzed some important opportunities/trends to emerge in pharmaceutical industry. There would be significant discounts in the sale of equity in...

Xinyao (Criss) Wang

To attract top dentists, dental service providers have to pay higher salaries, impacting profit margins. VBP will affect revenue growth for...

China healthcare has distinct segments with different investment logic/characteristics.The pecking order is drugs>medical device>medical...

Distinct Healthcare faces challenges in scaling up due to industry characteristics and may not generate good returns for investors despite turning...

Investors should wait to see MNCs' next move before deciding on licensing deals. Topchoice's growth is positive but unit price per customer may...