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HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

<ul>
<li>Although Pine Care’s revenue kept growing in recent years, its net loss widened, with declining profitability. Single customer risk, high debt and cash flow pressure are also hidden dangers.</li>
<li>The elderly care service is characterized by high investment, long payback period, high risk, low profit margin/rate of return, strong public welfare attributes, etc. So, Pine Care’s outlook is challenging.</li>
<li>We recommend investors to view Chinachem’s acquisition of Pine Care rationally, unless Pine Care could demonstrate some positive signals in Mainland business, which is the key for future valuation expansion.  </li>
</ul>


Although Pine Care’s revenue kept growing in recent years, its net loss widened, with declining profitability. Single customer risk, high debt and cash flow pressure are also hidden dangers.
The elderly care service is characterized by high investment, long payback period, high risk, low profit margin/rate of return, strong public welfare attributes, etc. So, Pine Care’s outlook is challenging.
We recommend investors to view Chinachem’s acquisition of Pine Care rationally, unless Pine Care could demonstrate some positive signals in Mainland business, which is the key for future valuation expansion.  


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