HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Capital Markets

Xiamen Yan Palace Bioengineering / Equity Capital Markets

<ul>
<li>From 2020 to 2022, Yan Palace has spent RMB831 million on advertising and promotion, while total net profit of the Company during the same period was only about RMB500 million.</li>
<li>OneNest is the main product with the highest gross margin, which is driven by price increase strategy.However, raising price may not work. Revenue growth in 2023H2/2024 could further slow down.</li>
<li>The question is are investors really satisfied with such low-margin business for a company with strong consumption attributes? Valuation of Yan Palace should be lower than <a href="https://www.smartkarma.com/entities/dong-e-e-jiaoco-ltd-a" target="_blank" data-smartkarma-citation="entities:8470:1" rel="noopener">Dong E E Jiao</a>.</li>
</ul>


From 2020 to 2022, Yan Palace has spent RMB831 million on advertising and promotion, while total net profit of the Company during the same period was only about RMB500 million.
OneNest is the main product with the highest gross margin, which is driven by price increase strategy.However, raising price may not work. Revenue growth in 2023H2/2024 could further slow down.
The question is are investors really satisfied with such low-margin business for a company with strong consumption attributes? Valuation of Yan Palace should be lower than Dong E E Jiao.


Pre-IPO Xiamen Yan Palace Bioengineering (PHIP Updates) - Some Points Worth the Attention

<ul>
<li>Although Yan Palace prioritizes R&amp;D capabilities in prospectus, its revenue growth and business model are mainly relied on large investment in marketing/promotion.The root cause is the efficacy problem of EBN.</li>
<li>Whether Yan Palace's future performance growth can be sustained is a question mark if marketing/promotion cannot drive growth anymore. Net profit margin is low. EBN is not a profitable business.</li>
<li>Yan Palace's products do not have core competitiveness or high moat. Compliance risks are also worth being vigilant about. The valuation of Yan Palace should be lower than <a href="https://www.smartkarma.com/entities/giant-biogene-holding-co-ltd" target="_blank" data-smartkarma-citation="entities:35950:1" rel="noopener">Giant Biogene</a>.</li>
</ul>


Although Yan Palace prioritizes R&amp;D capabilities in prospectus, its revenue growth and business model are mainly relied on large investment in marketing/promotion.The root cause is the efficacy problem of EBN.
Whether Yan Palace's future performance growth can be sustained is a question mark if marketing/promotion cannot drive growth anymore. Net profit margin is low. EBN is not a profitable business.
Yan Palace's products do not have core competitiveness or high moat. Compliance risks are also worth being vigilant about. The valuation of Yan Palace should be lower than Giant Biogene.


Pre-IPO Xiamen Yan Palace Bioengineering - Concerns About Profitability and Growth Sustainability

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

JD.com Inc (ADR) / Equity Capital Markets

<ul>
<li>Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.</li>
<li>In the IPO space, <a href="https://www.smartkarma.com/entities/tryt-inc" target="_blank" data-smartkarma-citation="entities:39870:1" rel="noopener">Tryt Inc (9164 JP)</a> launched its Japan IPO, while we also looked at <a href="https://www.smartkarma.com/entities/big-c-supercenter-pcl" target="_blank" data-smartkarma-citation="entities:16801:1" rel="noopener">Big C Supercenter (BIGC TB)</a>'s past performance. </li>
<li>On the placement front, in India the market hitting all-time highs appears to have driven a flurry of blocks.</li>
</ul>


Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
In the IPO space, Tryt Inc (9164 JP) launched its Japan IPO, while we also looked at Big C Supercenter (BIGC TB)'s past performance. 
On the placement front, in India the market hitting all-time highs appears to have driven a flurry of blocks.


ECM Weekly (25th June 2023) - Tryt, Shiyue Daotian, Keep, SML, HDFC, Shriram, Tata Tech, Doosan, J&T

APAC IPOs & Placements, Aequitas Research

Clarence Chu

APAC IPOs & Placements

<ul>
<li>
<a href="https://www.smartkarma.com/entities/keep-inc" target="_blank" data-smartkarma-citation="entities:35947:1" rel="noopener">Keep Inc (KEEP HK)</a> is looking to raise around US$100m in its upcoming Hong Kong IPO.</li>
<li>Keep is an online fitness platform, offering online fitness content, smart fitness devices and fitness products.</li>
<li>In this note, we discuss the updates since our last note.</li>
</ul>



Keep Inc (KEEP HK) is looking to raise around US$100m in its upcoming Hong Kong IPO.
Keep is an online fitness platform, offering online fitness content, smart fitness devices and fitness products.
In this note, we discuss the updates since our last note.


Keep Pre-IPO - Updates Since Our Last Note - Losses Have Been the Only Constant

<ul>
<li>
<a href="https://www.smartkarma.com/entities/xiamen-yan-palace-bioengineering" target="_blank" data-smartkarma-citation="entities:39867:1" rel="noopener">Xiamen Yan Palace Bioengineering (1951686D CH)</a> is looking to raise around US$200m in its upcoming Hong Kong IPO. The deal will be run by CICC and GF Securities.</li>
<li>Xiamen Yan Palace Bioengineering focuses on the development, production and marketing of high-quality modern edible bird’s nest (EBN) products.</li>
<li>According to Frost &amp; Sullivan (F&amp;S), the firm is the largest EBN product company globally in terms of retail value between 2020-2022, with a market share of 4.1%.</li>
</ul>



Xiamen Yan Palace Bioengineering (1951686D CH) is looking to raise around US$200m in its upcoming Hong Kong IPO. The deal will be run by CICC and GF Securities.
Xiamen Yan Palace Bioengineering focuses on the development, production and marketing of high-quality modern edible bird’s nest (EBN) products.
According to Frost &amp; Sullivan (F&amp;S), the firm is the largest EBN product company globally in terms of retail value between 2020-2022, with a market share of 4.1%.


Xiamen Yan Palace Bioengineering Pre-IPO Tearsheet

China

Xiamen Yan Palace Bioengineering Co. Ltd. manufactures and distributes food supplements. The Company produces freshly stewed bird's nest, dry bird's nest, and other products. Xiamen Yan Palace Bioengineering conducts businesses in China.

Xiamen Yan Palace Bioengineering (XIAMEN HK)

Xiamen Yan Palace Bioengineering (XIAMEN HK)

Pre-IPO Xiamen Yan Palace Bioengineering (PHIP Updates) - Some Points Worth the Attention

As Yan palace's revenue growth further declines, effectiveness of marketing activities has already decrease. Huge selling expenses erode profit...

Xinyao (Criss) Wang

Pre-IPO Xiamen Yan Palace Bioengineering - Concerns About Profitability and Growth Sustainability

Since the efficacy/actual value of EBN is questionable, marketing/promotion alone cannot drive future performance growth.Yan Palace's profit model...

Xinyao (Criss) Wang

ECM Weekly (25th June 2023) - Tryt, Shiyue Daotian, Keep, SML, HDFC, Shriram, Tata Tech, Doosan, J&T

Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.

Sumeet Singh

Keep Pre-IPO - Updates Since Our Last Note - Losses Have Been the Only Constant

Keep Inc (KEEP HK) is looking to raise around US$100m in its upcoming Hong Kong IPO. In this note, we discuss the updates since our last note.

Clarence Chu

Xiamen Yan Palace Bioengineering Pre-IPO Tearsheet

Xiamen Yan Palace Bioengineering (1951686D CH) is looking to raise around US$200m in its upcoming Hong Kong IPO. The deal will be run by CICC and...

Clarence Chu