Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

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.

Equity Capital Markets

Chaoju Eye Care Holdings / Equity Capital Markets

Chaoju Eye Care Holdings Limited is a leading ophthalmic medical service provider based in Northern China. The company is looking to raise up to USD 200m to list in Hong Kong.In previous note, we discuss that Chaoju is an eye specialist hospital with a geographical focus in the Northern region in China. The company started in 1988 as an ophthalmic clinic and currently operates 17 hospitals with a total GFA of 87,146 sqm as of January 2021. The company recorded revenue growth of 13% p.a. between FY18 and FY19. Having said that, around 60% of the total revenue came from three hospitals, namely Baotou Hospital, Hohhot Hospital, and Chifeng Hospital. The company plans to open 11 new hospitals in Inner Mongolia, Zhejiang, and Jiangsu in the next three years, representing a 9% GFA CAGR. Another notable driver for the company is a higher mix of consumer ophthalmic services, which have a higher gross margin than other segments. We are of the view that the company doesn't have strong backing from investors. Its growth prospects in terms of hospital expansion are only moderate despite a strong momentum in the ophthalmic sector in China. In this note, we compare the company with industry leader Aier Eye Hospital. We also assess the company's preliminary valuation.<h2>Our previous coverage on Chaoju Eye Care</h2><ul><li><a href="https://www.smartkarma.com/insights/chaoju-eye-care-pre-ipo-growth-prospect-far-from-being-impressive" target="_blank" rel="noopener">Chaoju Eye Care (朝聚眼科) Pre-IPO: Growth Prospect Far from Being Impressive</a></li></ul>

Chaoju Eye Care Holdings Limited is a leading ophthalmic medical service provider based in Northern China. The company is looking to raise up to USD 200m to list in Hong Kong.In previous note, we discuss that Chaoju is an eye specialist hospital with a geographical focus in the Northern region in China. The company started in 1988 as an ophthalmic clinic and currently operates 17 hospitals with a total GFA of 87,146 sqm as of January 2021. The company recorded revenue growth of 13% p.a. between FY18 and FY19. Having said that, around 60% of the total revenue came from three hospitals, namely Baotou Hospital, Hohhot Hospital, and Chifeng Hospital. The company plans to open 11 new hospitals in Inner Mongolia, Zhejiang, and Jiangsu in the next three years, representing a 9% GFA CAGR. Another notable driver for the company is a higher mix of consumer ophthalmic services, which have a higher gross margin than other segments. We are of the view that the company doesn't have strong backing from investors. Its growth prospects in terms of hospital expansion are only moderate despite a strong momentum in the ophthalmic sector in China. In this note, we compare the company with industry leader Aier Eye Hospital. We also assess the company's preliminary valuation.Our previous coverage on Chaoju Eye CareChaoju Eye Care (朝聚眼科) Pre-IPO: Growth Prospect Far from Being Impressive

Chaoju Eye Care (朝聚眼科) Pre-IPO: How Does It Fare Against Industry Leader

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

On January 4th, 2021, <a href="https://www.smartkarma.com/entities/chaoju-eye-care-holdings-limited" target="_blank" data-smartkarma-citation="entities:31119:1" rel="noopener">Chaoju Eye Care Holdings (CEC HK)</a> filed a prospectus with the Hong Kong Stock Exchange for listing on the Main Board. The Company's history could be traced back to the time when Zhang Xinghuan, the father of Chaoju's  founder, began his practice as a traditional Chinese medicine practitioner and then established a Chinese medicine clinic in 1921. Following in the footsteps of his father, Zhang Chaoju, as a pioneer of modern ophthalmology in Inner Mongolia and an entrepreneur in the field of ophthalmology services in China, founded a clinic that provided ophthalmology services in Baotou City, Inner Mongolia in 1988. Since then, Chaoju Eye Care has established an extensive network of ophthalmic hospitals and optical centers in North China. Regardless of the long history and professional background, how about this Company? The following mainly analyzed both the strengths and concerns for Chaoju.

On January 4th, 2021, Chaoju Eye Care Holdings (CEC HK) filed a prospectus with the Hong Kong Stock Exchange for listing on the Main Board. The Company's history could be traced back to the time when Zhang Xinghuan, the father of Chaoju's  founder, began his practice as a traditional Chinese medicine practitioner and then established a Chinese medicine clinic in 1921. Following in the footsteps of his father, Zhang Chaoju, as a pioneer of modern ophthalmology in Inner Mongolia and an entrepreneur in the field of ophthalmology services in China, founded a clinic that provided ophthalmology services in Baotou City, Inner Mongolia in 1988. Since then, Chaoju Eye Care has established an extensive network of ophthalmic hospitals and optical centers in North China. Regardless of the long history and professional background, how about this Company? The following mainly analyzed both the strengths and concerns for Chaoju.

Pre-IPO Chaoju Eye Care Holdings - Here Are the Strength and the Concerns

Equity Bottom-Up

Aier Eye Hospital Group / Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/aier-eye-hospital-group-co-ltd" target="_blank" data-smartkarma-citation="entities:1103:1" rel="noopener">Aier Eye Hospital Group (300015 CH) </a>released its third quarter report in 2020. The Q1-Q3 accumulated revenue was RMB8.565 billion, with a YoY growth rate of 10.78%. Net income attributed to shareholders in the first three quarters was RMB1.546 billion, up 25.6% YoY. Net income after deducting non-recurring gains and losses were RMB1.581 billion, up 27.99% YoY. Q3 single quarter revenue was RMB4.402 billion, up 47.55% YoY. Net income attributed to shareholders reached RMB870 million, up 62.34% YoY. Q3’s single quarter net income after deducting non-recurring gains and losses was RMB1.002 billion, up 85.49% YoY. Q3 performance was above expectations and demonstrated strong recovery from COVID-19.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/177/087/original/image_15095593861607389807321.png?1607389809" class="editor-image img-responsive" data-smartkarma-image-id="177087"></figure>Source: WIND

Aier Eye Hospital Group (300015 CH) released its third quarter report in 2020. The Q1-Q3 accumulated revenue was RMB8.565 billion, with a YoY growth rate of 10.78%. Net income attributed to shareholders in the first three quarters was RMB1.546 billion, up 25.6% YoY. Net income after deducting non-recurring gains and losses were RMB1.581 billion, up 27.99% YoY. Q3 single quarter revenue was RMB4.402 billion, up 47.55% YoY. Net income attributed to shareholders reached RMB870 million, up 62.34% YoY. Q3’s single quarter net income after deducting non-recurring gains and losses was RMB1.002 billion, up 85.49% YoY. Q3 performance was above expectations and demonstrated strong recovery from COVID-19.Source: WIND

Aier Eye Hospital(300015.CH) - The Largest Ophthalmic Chain in China with Promising Growth Potential

Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

Cross Asset Strategy

Last month saw China allocations hit record levels across Asia Ex-Japan, Emerging Market and Global active long-only funds.  The average China weight in Asia Ex-Japan funds stands at a record 50.96%, in active GEM funds a record 37.63% and in active Global funds an all-time high of 5.33%However, these increases have come at the expense of greater concentration.  Among Global managers, the top 10 largest China stock holdings now account for 62% of total China allocations, among GEM and Asia Ex-Japan funds just under 50% - an all-time high across all 3 investor groups. Dedicated China managers, however, are more diversified.  In this analysis, we look at the differences between dedicated China funds and their regional peers.  We find that Asia, GEM and Global managers are more concentrated in the Consumer Discretionary and Communication Services sectors, whereas dedicated China managers are more diversified across Technology, Industrials and Health Care stocks.  Regional funds are also underinvested in China A-Shares compared to dedicated China managers, who are running significant overweights vs the MSCI China benchmark.We identify the next generation of Chinese stocks outside of the big index names by following the lead of dedicated managers in the region.  We provide a list of 40 stocks, identified as 'Next Generation' stocks due to their widespread investment in dedicated China funds, but that are currently underowned by Asia Ex-Japan, GEM and Global investors.The list is headed by <a href="https://www.smartkarma.com/entities/jiangsu-hengrui-medicine-co-ltd" target="_blank" data-smartkarma-citation="entities:14128:1" rel="noopener">Jiangsu Hengrui Medicine (600276 CH)</a>, one of the standout domestic holdings within the Health Care sector, followed by <a href="https://www.smartkarma.com/entities/china-tourism-group-duty-free-corp-ltd" target="_blank" data-smartkarma-citation="entities:12278:1" rel="noopener">China Tourism Group Duty Free Corp Ltd (601888 CH)</a> and <a href="https://www.smartkarma.com/entities/luxshare-precision-industry-co-ltd" target="_blank" data-smartkarma-citation="entities:12310:1" rel="noopener">Luxshare Precision Industry (002475 CH)</a> .Analysis taken from our Global, GEM, Asia Ex-Japan and China fund universes.  Global:  386 Active Funds, combined AUM $750bn                                                                                        GEM:  242 Active Funds, combined AUM $370bn                                                                                          Asia Ex-Japan: 98 Active Funds, combined AUM $70bn                                                                              China:  119 Active Funds, combined AUM $50bn

Last month saw China allocations hit record levels across Asia Ex-Japan, Emerging Market and Global active long-only funds.  The average China weight in Asia Ex-Japan funds stands at a record 50.96%, in active GEM funds a record 37.63% and in active Global funds an all-time high of 5.33%However, these increases have come at the expense of greater concentration.  Among Global managers, the top 10 largest China stock holdings now account for 62% of total China allocations, among GEM and Asia Ex-Japan funds just under 50% - an all-time high across all 3 investor groups. Dedicated China managers, however, are more diversified.  In this analysis, we look at the differences between dedicated China funds and their regional peers.  We find that Asia, GEM and Global managers are more concentrated in the Consumer Discretionary and Communication Services sectors, whereas dedicated China managers are more diversified across Technology, Industrials and Health Care stocks.  Regional funds are also underinvested in China A-Shares compared to dedicated China managers, who are running significant overweights vs the MSCI China benchmark.We identify the next generation of Chinese stocks outside of the big index names by following the lead of dedicated managers in the region.  We provide a list of 40 stocks, identified as 'Next Generation' stocks due to their widespread investment in dedicated China funds, but that are currently underowned by Asia Ex-Japan, GEM and Global investors.The list is headed by Jiangsu Hengrui Medicine (600276 CH), one of the standout domestic holdings within the Health Care sector, followed by China Tourism Group Duty Free Corp Ltd (601888 CH) and Luxshare Precision Industry (002475 CH) .Analysis taken from our Global, GEM, Asia Ex-Japan and China fund universes.  Global:  386 Active Funds, combined AUM $750bn                                                                                        GEM:  242 Active Funds, combined AUM $370bn                                                                                          Asia Ex-Japan: 98 Active Funds, combined AUM $70bn                                                                              China:  119 Active Funds, combined AUM $50bn

China's Next Generation:  Diversifying Away from Tencent and Alibaba.

Thematic (Sector/Industry)

Throughout the year 2020, the COVID-19 had certain negative impact on the economy. The pharmaceutical industry has the attributes of relatively rigid demand and countercyclical, and some medical products and services were benefited from the epidemic. Therefore, in 2020/1H, the pharmaceutical industry outperformed the market significantly. As the epidemic in China has been effectively under control and the resumption of work and production has been comprehensively promoted, domestic investment hotspots have been frequently switched, and the pharmaceutical sector has undergone periodic adjustments. Besides, in 2020/2H, the advance of new volume-based purchasing policy in the field of drugs and high-value medical consumables also negatively impact the performance of healthcare sector. However, the development and potential of the China healthcare industry is still very promising, and there will be good investment opportunities in the future.

Throughout the year 2020, the COVID-19 had certain negative impact on the economy. The pharmaceutical industry has the attributes of relatively rigid demand and countercyclical, and some medical products and services were benefited from the epidemic. Therefore, in 2020/1H, the pharmaceutical industry outperformed the market significantly. As the epidemic in China has been effectively under control and the resumption of work and production has been comprehensively promoted, domestic investment hotspots have been frequently switched, and the pharmaceutical sector has undergone periodic adjustments. Besides, in 2020/2H, the advance of new volume-based purchasing policy in the field of drugs and high-value medical consumables also negatively impact the performance of healthcare sector. However, the development and potential of the China healthcare industry is still very promising, and there will be good investment opportunities in the future. 

2021 High Conviction - Investment Opportunities in China Healthcare Industry

China

Shanghai Pharmaceuticals Holding Co., Ltd. manufactures, retails, and wholesales a variety of pharmaceuticals including biopharmaceuticals, chemical and Chinese traditional medicines, and healthcare products. The Company also invests in new medicine development and provides related services.

Shanghai Pharmaceuticals Holding (2607 HK)

Sinopharm Group Co Ltd is a pharmacy distribution company. The Company also owns several pharmacy enterprise groups in different industries such as logistics, retail stores, pharmaceutical manufacturing, and chemical testing.

Huadong Medicine Co., Ltd. wholesales and retails medicines, pharmaceutical preparations, biological products, and medical instruments.  Through its subsidiaries, the Company also manufactures antibiotic medicines and biochemical products.

WuXi Biologics (Cayman) Inc. is a leading open-access R&D capability and technology platform company serving the pharmaceutical, biotechnology, and medical device industries, with operations in China, U.S., and Iceland.  We provide a broad and integrated portfolio of laboratory and manufacturing services throughout the drug and medical device R&D process.  Our services are designed to help our global partners in shortening the cycle and lowering the cost of drug and medical device R&D through cost-effective and efficient solutions. 

Guangzhou Baiyunshan Pharmaceutical Holdings Co., Ltd. manufactures and sells Chinese patent medicine. The Company also wholesales, retails, imports, and exports Western and Chinese pharmaceutical products and various medical apparatus.

Guangzhou Baiyunshan Pharmaceu (600332 CH)

China National Medicines Corp. Ltd. wholesales and retails chemical material medicines, western medicine preparations, biochemical medicines, biological products, and Chinese traditional medicines.  Through its subsidiaries, the Company also manufactures pharmaceuticals including injections, capsules, tablets, and other related products under the CNCM brand name.

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

Tibet Rhodiola Pharmaceutical Holding Co. develops, manufactures, and markets Tibet medicines.  The Company's products include Rhodiola capsules, Rhodiola pellets, and other related medicines.

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.

Shenzhen Neptunus Bioengineering Co., Ltd. develops, manufactures, and markets biochemical pharmaceuticals, biological products, traditional Chinese medicines, and healthcare products.  Through its subsidiaries, the Company also manufactures food.

Bangkok Dusit Medical Services Public Company Limited operates Bangkok General Hospital. The Hospital specializes in cardiovascular, lung, neurological, eye and genitourinary cancer, as well as physical therapy and medical imaging.

Apollo Hospitals Enterprise Limited owns and operates hospitals in India.  The Company also runs a 24-hour pharmacy network via over 120 outlets across India. Apollo Hospitals also runs clinics and offer managed care and family health plans. The Company has a variety of locations in Chennai, Hyderabad, Delhi, Dubai, Vizag, Bilaspur and Chengannur.

Molina Healthcare Inc. is a managed care organization.  The Company arranges for the delivery of health care services to persons eligible for Medicaid and other programs for low-income families and individuals.  Molina Healthcare has health plans in California, Washington, Utah, and Michigan, as well as primary care clinics located in Northern and Southern California.

Universal Health Services, Inc. is a healthcare management company. The Company operates acute care hospitals, behavioral health centers, and surgery centers. Universal provides services such as general surgery, internal medicine, radiology, and pediatric services throughout the United States and Puerto Rico.

Quest Diagnostics Incorporated provides diagnostic testing, information, and services.  The Company operates a national network of full-service laboratories, rapid response laboratories, and patient service centers.  Quest Diagnostics provides esoteric testing, routine medical testing, drugs of abuse testing, and non-hospital-based anatomicpathology testing.

Laboratory Corporation of America Holdings is a clinical laboratory company that offers clinical laboratory tests used by the medical profession in routine testing, patient diagnosis, and in the monitoring and treatment of disease. The Company develops specialty testing operations, such as oncology testing, HIV genotyping and phenotyping, diagnostic genetics and clinical trials.

Laboratory Corporation of America Holdings (LH US)

Laboratory Corporation of America Holdings

Encompass Health Corporation provides inpatient rehabilitative healthcare services.  The Company operates inpatient rehabilitation hospitals, outpatient and rehabilitation satellites, and home health agencies. Encompass Health provides treatment on both an inpatient and outpatient basis.

Sonic Healthcare Limited is a medical diagnostics company with operations in Australia, New Zealand, and Europe.  The Company provides a comprehensive range of pathology and diagnostic imaging services to medical practitioners, hospitals and their patients along with providing administrative services and facilities to medical practitioners.

Tenet Healthcare Corporation, through its subsidiaries, owns or operates general hospitals and related health care facilities serving communities in the United States.  The Company operates rehabilitation hospitals, specialty hospitals, long-term care facilities, psychiatric facilities, and medical office buildings near its general hospitals, as well as ancillary health care businesses.

Fresenius Medical Care AG & Co. KGaA offers kidney dialysis services and manufactures and distributes equipment and products used in the treatment of dialysis patients. The Company also offers clinical laboratory testing and diagnostic testing services and provides home infusion, respiratory therapy, ultrasound, and echo-cardiography. Fresenius operates worldwide.

Aier Eye Hospital Group Co., Ltd provides ophthalmological services.  The Company's services include ophthalmological diagnosis and treatments.

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

Aier Eye Hospital Group (300015 CH)

Chaoju Eye Care (朝聚眼科) Pre-IPO: How Does It Fare Against Industry Leader

We compare Chaoju Eye Care with industry leader Aier Eye Hospital (A-share). We also assess the company's preliminary valuation.

Ke Yan, CFA, FRM

Pre-IPO Chaoju Eye Care Holdings - Here Are the Strength and the Concerns

This article analyzed Chaoju Eye Care in terms of both the strength (market position, financial position) and the concerns (risk of future...

Xinyao (Criss) Wang

Aier Eye Hospital(300015.CH) - The Largest Ophthalmic Chain in China with Promising Growth Potential

This article analyzed China's largest ophthalmic chain Aier Eye Hospital in terms of market potential, development mode, financial position and...

Xinyao (Criss) Wang

China's Next Generation: Diversifying Away from Tencent and Alibaba.

China exposure is becoming more concentrated in a small number of large cap stocks. We identify the next generation of China stocks by analyzing...

Steven Holden

2021 High Conviction - Investment Opportunities in China Healthcare Industry

This article reviewed the performance of China healthcare industry in 2020 and analyzed good investment opportunities (innovative drugs, CRO/CDMO,...

Xinyao (Criss) Wang

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)