APAC IPOs & Placements, Aequitas Research

Clarence Chu

APAC 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.

Equity Capital Markets

New Ruipeng Pet Group / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/new-ruipeng-pet-group-inc" target="_blank" data-smartkarma-citation="entities:36735:1" rel="noopener">New Ruipeng Pet Group (RPET US)</a> is looking to raise at least US$100m in its upcoming US IPO.</li>
<li>New Ruipeng Pet Group (Ruipeng) is a pet services platform, primarily offering pet care services, supply chain services and local services, covering the entire lifecycle of pets. </li>
<li>In our previous notes, we have looked at the company’s past performance. In this note, we undertake a peer comparison.</li>
</ul>



New Ruipeng Pet Group (RPET US) is looking to raise at least US$100m in its upcoming US IPO.
New Ruipeng Pet Group (Ruipeng) is a pet services platform, primarily offering pet care services, supply chain services and local services, covering the entire lifecycle of pets. 
In our previous notes, we have looked at the company’s past performance. In this note, we undertake a peer comparison.


New Ruipeng Pet Group Pre-IPO Peer Comparison - Largest Domestic Player, but Smallest Margins

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

Aier Eye Hospital Group / Equity Bottom-Up

<ul>
<li>Aier launched new hospital acquisition plan. Obviously, Aier hopes to maintain high growth through M&amp;A funds. However, considering its national market layout,Aier is in the final stages of aggressive M&amp;As.</li>
<li>Based on our data, Aier’s endogenous growth is actually very weak. Once external M&amp;As fail to drive high growth, Aier’s overall performance growth would decline significantly. Aier is grossly overvalued.</li>
<li>We expect decreasing birth rate after COVID-19. Due to the fundamental changes in the population structure, the valuation system of all assets would be destroyed - The long logic doesn't exist.</li>
</ul>


Aier launched new hospital acquisition plan. Obviously, Aier hopes to maintain high growth through M&amp;A funds. However, considering its national market layout,Aier is in the final stages of aggressive M&amp;As.
Based on our data, Aier’s endogenous growth is actually very weak. Once external M&amp;As fail to drive high growth, Aier’s overall performance growth would decline significantly. Aier is grossly overvalued.
We expect decreasing birth rate after COVID-19. Due to the fundamental changes in the population structure, the valuation system of all assets would be destroyed - The long logic doesn't exist.


Aier Eye Hospital Group (300015.CH) - The Truth Behind the Mirage

Thematic (Sector/Industry)

<ul>
<li>China issued the “Outline of the Strategic Plan for Expanding Domestic Demand (2022-2035)”, where some statements are different from those in the  "14th Five-year Plan" and the 20th National Congress report.</li>
<li>We analyzed our interpretation and speculated the “wind direction” behind the difference in statements, so as to identify some possible changes in China healthcare industry in 2023.</li>
<li>
<em> The Outline</em> is not only in line with the adjustment of COVID policies,but also highly relevant to the major contradictions/changes in internal and external situations. Investors need to follow the trend.  </li>
</ul>


China issued the “Outline of the Strategic Plan for Expanding Domestic Demand (2022-2035)”, where some statements are different from those in the  "14th Five-year Plan" and the 20th National Congress report.
We analyzed our interpretation and speculated the “wind direction” behind the difference in statements, so as to identify some possible changes in China healthcare industry in 2023.

 The Outline is not only in line with the adjustment of COVID policies,but also highly relevant to the major contradictions/changes in internal and external situations. Investors need to follow the trend.  


Identify New Directions of China Healthcare in 2023 – Major Changes In Highest Level Policy Document

HK/China Equity Long-Short

Osbert Tang, CFA

<ul>
<li>With the recent rally in the equity markets in Hong Kong and China, we think the asset play investment thesis for <a href="https://www.smartkarma.com/entities/china-dongxiang-group-co" target="_blank" data-smartkarma-citation="entities:1068:1" rel="noopener">China Dongxiang Group Co (3818 HK)</a> has revived.  </li>
<li>We estimate its investment portfolio value may have increased by HK$2bn since end-Sep, yet market capitalisation only rose HK$500m, suggesting still significant 77% discount. </li>
<li>Encouraging recent developments at <a href="https://www.smartkarma.com/entities/alibaba-group" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group (9988 HK)</a> and Ant Financial, which both are its holdings, are positive. The reduction is losses for sportswear business is an added driver. </li>
</ul>


With the recent rally in the equity markets in Hong Kong and China, we think the asset play investment thesis for China Dongxiang Group Co (3818 HK) has revived.  
We estimate its investment portfolio value may have increased by HK$2bn since end-Sep, yet market capitalisation only rose HK$500m, suggesting still significant 77% discount. 
Encouraging recent developments at Alibaba Group (9988 HK) and Ant Financial, which both are its holdings, are positive. The reduction is losses for sportswear business is an added driver. 


China Dongxiang (3818 HK): Extremely Deep Discount to Cash and Investments

Hygeia Healthcare Group / Equity Capital Markets

<ul>
<li>The government has changed its tone and started to encourage social capital to run hospitals, indicating that the previous concerns about the policy risk on Hygeia has been relieved.</li>
<li>At this stage, Hygeia has more investment value, greater expansion space and higher market demand than <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</a>. Meanwhile, the Company performs better in trans provincial expansion than Topchoice. </li>
<li>Due to large investment/“heavy asset” model, Hygeia would continue to face capital pressure. Its expansion pace may not be as fast as expected if it hopes to control expansion quality. </li>
</ul>


The government has changed its tone and started to encourage social capital to run hospitals, indicating that the previous concerns about the policy risk on Hygeia has been relieved.
At this stage, Hygeia has more investment value, greater expansion space and higher market demand than Aier Eye Hospital. Meanwhile, the Company performs better in trans provincial expansion than Topchoice. 
Due to large investment/“heavy asset” model, Hygeia would continue to face capital pressure. Its expansion pace may not be as fast as expected if it hopes to control expansion quality. 


Hygeia Healthcare Placement (6078.HK)- The Prospect Is More Certain After the Policy Risk Is Removed

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.

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Aier Eye Hospital Group (300015 CH)

New Ruipeng Pet Group Pre-IPO Peer Comparison - Largest Domestic Player, but Smallest Margins

New Ruipeng Pet Group (RPET US) is looking to raise at least US$100m in its upcoming US IPO. In this note, we undertake a peer comparison.

Clarence Chu