HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Thematic (Sector/Industry)

<ul>
<li>The rapid spread of monkeypox to different groups of people in different countries has alarmed scientists, governments and health officers, but monkeypox virus is relatively mild in severity and infectivity.</li>
<li>China will bear the pressure of imported cases. But due to China’s zero-covid policy and long-term emergency reserve of smallpox vaccine, there's no need to panic at the current stage.</li>
<li>There're investment opportunities, but it’s difficult for related companies to replicate the growth story of COVID-19 products. The market's reaction to monkeypox is overdone. Investors are recommended to be rational.  </li>
</ul>


The rapid spread of monkeypox to different groups of people in different countries has alarmed scientists, governments and health officers, but monkeypox virus is relatively mild in severity and infectivity.
China will bear the pressure of imported cases. But due to China’s zero-covid policy and long-term emergency reserve of smallpox vaccine, there's no need to panic at the current stage.
There're investment opportunities, but it’s difficult for related companies to replicate the growth story of COVID-19 products. The market's reaction to monkeypox is overdone. Investors are recommended to be rational.  


<ul>
<li>DRGs will become the main form of medical insurance payment, which will bring huge impact on all parties (hospitals, physicians, patients, companies) and fundamentally change the existing medical environment.</li>
<li>DRGs would force hospitals/doctors to cure patients within specified time and amount of cost, which would promote the improvement of technology with differentiated innovation that truly drives clinical benefits.</li>
<li>Overall, investors are advised to pay attention to related opportunities but also prepare for the potential risks in advance.</li>
</ul>


DRGs will become the main form of medical insurance payment, which will bring huge impact on all parties (hospitals, physicians, patients, companies) and fundamentally change the existing medical environment.
DRGs would force hospitals/doctors to cure patients within specified time and amount of cost, which would promote the improvement of technology with differentiated innovation that truly drives clinical benefits.
Overall, investors are advised to pay attention to related opportunities but also prepare for the potential risks in advance.


The Impact of DRGs Policy on China Medical System

Equity Capital Markets

ADICON Holdings Limited / Equity Capital Markets

<ul>
<li>The revenue generated from COVID-19 business would not be sustainable in the long term. The lower price of COVID-19 tests, DRGs, centralized procurement and fierce competition would drag down margins.</li>
<li>ADICON hasn’t established enough advantage and moat to secure its leading position and could be overtaken by competitors.The weak R&amp;D makes ADICON difficult to gain an edge in esoteric tests.</li>
<li>Considering the fierce competition, lower margins, the decline of COVID-19 business revenue, and poor liquidity and IPO market sentiment in HKEX, the PE could be below 10.</li>
</ul>


The revenue generated from COVID-19 business would not be sustainable in the long term. The lower price of COVID-19 tests, DRGs, centralized procurement and fierce competition would drag down margins.
ADICON hasn’t established enough advantage and moat to secure its leading position and could be overtaken by competitors.The weak R&amp;D makes ADICON difficult to gain an edge in esoteric tests.
Considering the fierce competition, lower margins, the decline of COVID-19 business revenue, and poor liquidity and IPO market sentiment in HKEX, the PE could be below 10.


Pre-IPO ADICON Holdings Limited - Uncertain Growth and Outlook in Post-COVID Era

<p>After more than 20 years of development in China, independent clinical laboratory (ICL) has achieved rapid growth, especially during the COVID-19. After <a href="https://www.smartkarma.com/entities/guangzhou-kingmed-diagnostics" target="_blank" data-smartkarma-citation="entities:30257:1" rel="noopener">Guangzhou Kingmed Diagnostics (603882 CH)</a> and <a href="https://www.smartkarma.com/entities/zhejiang-dian-diagnostics-a" target="_blank" data-smartkarma-citation="entities:19115:1" rel="noopener">Zhejiang Dian Diagnostics A (300244 CH) </a>got listed, the third-ranking ICL service provider in China, <a href="https://www.smartkarma.com/entities/adicon-holdings-limited" target="_blank" data-smartkarma-citation="entities:33786:1" rel="noopener">ADICON Holdings Limited (ADI HK)</a>, is also preparing to go public. On June 30, 2021, ADICON submitted its prospectus to the HKEX for listing on the main board. This insight mainly analyzed the industry characteristics, the business, and the concerns of the Company.</p>

After more than 20 years of development in China, independent clinical laboratory (ICL) has achieved rapid growth, especially during the COVID-19. After Guangzhou Kingmed Diagnostics (603882 CH) and Zhejiang Dian Diagnostics A (300244 CH) got listed, the third-ranking ICL service provider in China, ADICON Holdings Limited (ADI HK), is also preparing to go public. On June 30, 2021, ADICON submitted its prospectus to the HKEX for listing on the main board. This insight mainly analyzed the industry characteristics, the business, and the concerns of the Company.

Pre-IPO ADICON Holdings Ltd - Insights on Industry, Business and Concerns

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.

Kindstar Globalgene Technology / Equity Capital Markets

<div><p><a href="https://www.smartkarma.com/entities/kindstar-globalgene-technology-inc" target="_blank" data-smartkarma-citation="entities:32175:1" rel="noopener">Kindstar Globalgene Technology (9960 HK)</a> is a leading independent esoteric clinical testing service provider in China. Kindstar provides full-spectrum testing services primarily to hospitals in various speciality areas, including hematology, genetic diseases and rare diseases, infectious diseases, oncology, neurology and maternity-related diseases. In 2020, Kindstar had a 4.1% revenue market share of the total esoteric testing market in China, according to Frost &amp; Sullivan. </p></div><div><p>At the proposed IPO price range of HK$8.60-9.78 per share, Kindstar will have a market cap of HK$7,788.3-8,857.0 ($1.0-1.1 billion). At the mid-point of the IPO price range, the total net proceeds are HK$1,931.1 million ($250 million). </p></div><div><p>Seven cornerstone investors will subscribe for $140 million of the offer shares (52.2% of the offer shares at the mid-point of the IPO price). The cornerstone investors include BlackRock, CPE, Snow Lake Capital, Carmignac Funds, Natixis Investment Managers, Athos Capital and IvyRock Asset Management.</p></div><div><div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/kindstar-globalgene-ipo-initiation-testing-testing" target="_blank" data-smartkarma-citation="insights:53731" rel="noopener">Kindstar Globalgene IPO Initiation: Testing, Testing</a>, we stated that the business has successfully overcome the negative impact of the COVID-19 pandemic, with most of its segments displaying either a return to growth or lower revenue declines in 4Q20 in comparison to 9M20. In combination, with solid operating leverage and cash generation, we think that the Kindstar IPO is worth a look. Overall, we would participate in the IPO due to an attractive IPO price range.</p></div></div></div>

Kindstar Globalgene Technology (9960 HK) is a leading independent esoteric clinical testing service provider in China. Kindstar provides full-spectrum testing services primarily to hospitals in various speciality areas, including hematology, genetic diseases and rare diseases, infectious diseases, oncology, neurology and maternity-related diseases. In 2020, Kindstar had a 4.1% revenue market share of the total esoteric testing market in China, according to Frost &amp; Sullivan. At the proposed IPO price range of HK$8.60-9.78 per share, Kindstar will have a market cap of HK$7,788.3-8,857.0 ($1.0-1.1 billion). At the mid-point of the IPO price range, the total net proceeds are HK$1,931.1 million ($250 million). Seven cornerstone investors will subscribe for $140 million of the offer shares (52.2% of the offer shares at the mid-point of the IPO price). The cornerstone investors include BlackRock, CPE, Snow Lake Capital, Carmignac Funds, Natixis Investment Managers, Athos Capital and IvyRock Asset Management.In Kindstar Globalgene IPO Initiation: Testing, Testing, we stated that the business has successfully overcome the negative impact of the COVID-19 pandemic, with most of its segments displaying either a return to growth or lower revenue declines in 4Q20 in comparison to 9M20. In combination, with solid operating leverage and cash generation, we think that the Kindstar IPO is worth a look. Overall, we would participate in the IPO due to an attractive IPO price range.

Kindstar Globalgene IPO: Valuation Insights

China

Zhejiang Dian Diagnostics Co., Ltd. provides medical diagnostic solutions, as an outsourcer, to various general hospitals, specialized hospitals, community health service centers (stations), township (county) hospitals, medical centers,  disease prevention and control centers.

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Zhejiang Dian Diagnostics A (300244 CH)

Monkeypox and Its Impact on China

Monkeypox's rapid spread raises concerns. China bears the pressure of imported cases, but it’s difficult to replicate the growth story of COVID-19...

Xinyao (Criss) Wang

The Impact of DRGs Policy on China Medical System

An important remaining piece of China healthcare reform is DRGs, which will fundamentally change the existing medical environment. Investors need...

Xinyao (Criss) Wang

Pre-IPO ADICON Holdings Limited - Uncertain Growth and Outlook in Post-COVID Era

The unsustainable COVID-19 related revenue will put pressure on ADICON's performance in post-COVID era. It's difficult to make breakthrough due to...

Xinyao (Criss) Wang

Pre-IPO ADICON Holdings Ltd - Insights on Industry, Business and Concerns

This insight mainly analyzed ADICON in terms of the ICL industry characteristics in China, the business model of ADICON, the comparison with peers,...

Xinyao (Criss) Wang

Kindstar Globalgene IPO: Valuation Insights

At the mid-point of the IPO price range, the total net proceeds are HK$1,931.1 million ($250 million). Overall, we would participate in the IPO due...

Arun George

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