In today’s briefing:
- Remgro/Mediclinic: Healthier Offer
- Pre-IPO Lepu Medical Technology – Lepu Is in a Difficult Position and Turning It Around Takes Time
Remgro/Mediclinic: Healthier Offer
- After four prospective offers from a Remgro-led consortium, Mediclinic’s Board is to recommend the latest one: 504p/share in cash, cum dividend. The PUSU deadline has been extended until 5 August.
- The offer values Mediclinic at c. 10x EV/Fwd EBITDA, both above the median of comparables and the failed offer for Spire. At 35% premium, it seems reasonable, but not overly generous.
- After four proposals, I doubt the consortium will increase its offer, and investors will be happy to part with the cash. Gross spread is 3.92%. Long MDC LN.
Pre-IPO Lepu Medical Technology – Lepu Is in a Difficult Position and Turning It Around Takes Time
- Lepu suffered from the negative impact of VBP on drug/medical consumables, and its share price has yet to recover. We are not optimistic about the outlook of the traditional businesses.
- Lepu’s expansion mainly relies on continuous M&A. Whether these diversified businesses will produce synergies and how much performance they will contribute need to be tested by time and the market.
- Excessive epitaxial expansion may not be a long-term solution. Lepu needs to focus more on endogenous growth and R&D,which is good for sustainable long-term growth. Such business transformation takes time.
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