Equity L/S Analyst | Forensic Accounting | India, Yellowstone Equity

Ankit Agrawal, CFA

Equity L/S Analyst | Forensic Accounting | India

Equity Bottom-Up

Metropolis Healthcare Limited / Equity Bottom-Up

<p><a href="https://www.smartkarma.com/entities/metropolis-health-services-limited" target="_blank" data-smartkarma-citation="entities:27829:1" rel="noopener">Metropolis Health Services Limited (METROHL IN)</a> is relatively a younger player in the Indian Diagnostics industry compared to competitors like <a href="https://www.smartkarma.com/entities/dr-lal-pathlabs-ltd" target="_blank" data-smartkarma-citation="entities:26927:1" rel="noopener">Dr Lal PathLabs Ltd (DLPL IN)</a> and <a href="https://www.smartkarma.com/entities/thyrocare-technologies-ltd" target="_blank" data-smartkarma-citation="entities:22694:1" rel="noopener">Thyrocare Technologies (THYROCAR IN)</a>, in terms of pan-India ambitions. However, despite its late entrance, Metropolis has scaled its business quite rapidly through strategic acquisitions and organic growth.</p>
<h3>Insight Flow</h3>
<ul>
<li>Investment Thesis</li>
<li>Risks &amp; Mitigating Factors</li>
<li>Valuation</li>
<li>Conclusion</li>
</ul>

Metropolis Health Services Limited (METROHL IN) is relatively a younger player in the Indian Diagnostics industry compared to competitors like Dr Lal PathLabs Ltd (DLPL IN) and Thyrocare Technologies (THYROCAR IN), in terms of pan-India ambitions. However, despite its late entrance, Metropolis has scaled its business quite rapidly through strategic acquisitions and organic growth.
Insight Flow

Investment Thesis
Risks &amp; Mitigating Factors
Valuation
Conclusion


Metropolis Labs: A New Leader Is in the Making

Thyrocare Technologies / Equity Bottom-Up

<p><a href="https://www.smartkarma.com/entities/thyrocare-technologies-ltd" target="_blank" data-smartkarma-citation="entities:22694:1" rel="noopener">Thyrocare Technologies (THYROCAR IN)</a> has come a long way in the Indian diagnostics industry. In many ways, it has been a pioneer of the space especially in certain niches like the Wellness segment and in leveraging hub and spoke model with the pioneering of test samples logistics through air transportation.</p>
<p>In its around 25 years of existence, it has charted new paths. The first couple of decades saw strong growth. Over the past 5 years, the growth profile has been decelerating. The space has become increasingly competitive and listed players like <a href="https://www.smartkarma.com/entities/dr-lal-pathlabs-ltd" target="_blank" data-smartkarma-citation="entities:26927:1" rel="noopener">Dr Lal PathLabs Ltd (DLPL IN)</a> and <a href="https://www.smartkarma.com/entities/metropolis-health-services-limited" target="_blank" data-smartkarma-citation="entities:27829:1" rel="noopener">Metropolis Health Services Limited (METROHL IN)</a> have been expanding aggressively. Each player has been penetrating into each other's geographies and product niches, limiting differentiation among them.</p>
<p>Thyrocare seems to be adjusting its strategy in response to competition. It has been on an expansion spree in terms of its labs presence and exclusive franchisees. After being fixated on achieving scale with minimal centralized labs, Thyrocare seems to be shifting to a more broader and deeper distribution strategy. It seems to have realized that providing the best quality service may not be achievable with just a handful of centralized labs.</p>
<p>While this shift in strategy seems prudent and bulls would argue that Thyrocare is taking the next leap, the bears would argue that Thyrocare is late to the game and in its desperation to catch up to the competition, it may lose its USP of being the lowest cost producer. Should you be bullish or bearish on Thyrocare? Read on to find out.</p>

Thyrocare Technologies (THYROCAR IN) has come a long way in the Indian diagnostics industry. In many ways, it has been a pioneer of the space especially in certain niches like the Wellness segment and in leveraging hub and spoke model with the pioneering of test samples logistics through air transportation.
In its around 25 years of existence, it has charted new paths. The first couple of decades saw strong growth. Over the past 5 years, the growth profile has been decelerating. The space has become increasingly competitive and listed players like Dr Lal PathLabs Ltd (DLPL IN) and Metropolis Health Services Limited (METROHL IN) have been expanding aggressively. Each player has been penetrating into each other's geographies and product niches, limiting differentiation among them.
Thyrocare seems to be adjusting its strategy in response to competition. It has been on an expansion spree in terms of its labs presence and exclusive franchisees. After being fixated on achieving scale with minimal centralized labs, Thyrocare seems to be shifting to a more broader and deeper distribution strategy. It seems to have realized that providing the best quality service may not be achievable with just a handful of centralized labs.
While this shift in strategy seems prudent and bulls would argue that Thyrocare is taking the next leap, the bears would argue that Thyrocare is late to the game and in its desperation to catch up to the competition, it may lose its USP of being the lowest cost producer. Should you be bullish or bearish on Thyrocare? Read on to find out.

Thyrocare: Taking the Next Leap or Late to the Game?

Founder

Kemp Dolliver, CFA

Cherrystone Hill Research

<p>Johor Corp, <a href="https://www.smartkarma.com/entities/kpj-healthcare-berhad" target="_blank" data-smartkarma-citation="entities:877:1" rel="noopener">KPJ Healthcare (KPJ MK)</a> 's controlling shareholder, is taking concrete steps to increase the returns on its investment in the company. First, there are a new board of directors and CEO who are placing more emphasis on capital efficiency. Second, Bloomberg reports that Johor Corp is evaluating strategic options, most likely in the form of a minority investment or other transaction that would preserve its controlling stake, as opposed to an outright sale. Either way, the increased focus on returns should drive a re-rating of the shares' EV/EBITDA multiple from 10-12x currently to ~15x.</p>

Johor Corp, KPJ Healthcare (KPJ MK) 's controlling shareholder, is taking concrete steps to increase the returns on its investment in the company. First, there are a new board of directors and CEO who are placing more emphasis on capital efficiency. Second, Bloomberg reports that Johor Corp is evaluating strategic options, most likely in the form of a minority investment or other transaction that would preserve its controlling stake, as opposed to an outright sale. Either way, the increased focus on returns should drive a re-rating of the shares' EV/EBITDA multiple from 10-12x currently to ~15x.

KPJ Healthcare: Re-Energizing the Share Price

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, 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

Apollo Hospitals Enterprise / Equity Capital Markets

<div>
<p><a href="https://www.smartkarma.com/entities/apollo-hospitals-enterprise" target="_blank" data-smartkarma-citation="entities:880:1" rel="noopener">Apollo Hospitals Enterprise (APHS IN)</a> plans to raise around US$140m via a QIP which was launched last night.</p>
<p>I have covered various aspects of the deal in my earlier note,  <a href="https://www.smartkarma.com/insights/apollo-hospital-placement-qip-early-look-this-time-it-s-different" target="_blank" rel="noopener">Apollo Hospital Placement/​QIP Early Look - This Time It’s Different</a>.</p>
</div>
<div>
<p>In this insight, I'll run the deal through our ECM framework and talk about recent updates.</p>
</div>


Apollo Hospitals Enterprise (APHS IN) plans to raise around US$140m via a QIP which was launched last night.
I have covered various aspects of the deal in my earlier note,  Apollo Hospital Placement/​QIP Early Look - This Time It’s Different.


In this insight, I'll run the deal through our ECM framework and talk about recent updates.


Apollo Hospital Placement/​​QIP - Well Flagged Deal with Well Planned Use of Proceeds

<p><a href="https://www.smartkarma.com/entities/apollo-hospitals-enterprise" target="_blank" data-smartkarma-citation="entities:880:1" rel="noopener">Apollo Hospitals Enterprise (APHS IN)</a> plans to raise around US$200m via a QIP/preferential offering in Jan/Feb 2021. </p><p>The stock has a good long term track record, however, past placements haven't done too well. Although, this one might be different.</p><p>In this insight, I'll take an early look at the deal.</p>

Apollo Hospitals Enterprise (APHS IN) plans to raise around US$200m via a QIP/preferential offering in Jan/Feb 2021. The stock has a good long term track record, however, past placements haven't done too well. Although, this one might be different.In this insight, I'll take an early look at the deal.

Apollo Hospital Placement/QIP Early Look - This Time It's Different

India

Dr. Lal PathLabs Limited operates clinical laboratories. The Company offers medical diagnostic, cardiology, radiology, pathology and imaging, health checkup, blood test, and customer care services. Dr. Lal PathLabs conducts its business in India.

Narayana Hrudayalaya Limited operates a network of hospitals. The Company offers cardiac surgery, cardiology, diabetes and endocrinology, gastroenterology, general surgery, neuroscience, facial surgery, nephrology, obstetrics and gynecology, orthopedics, oncology, pediatrics, transplant, and urology services. Narayana Hrudayalaya serves patients worldwide.

Aster DM Healthcare Limited provides health care services. The Company offers cardiology, cardiac and spine surgery, oncology, orthopedics, neurology and urology, oncology, gastroenterology and hepatology services. Aster DM Healthcare serves patients worldwide.

Kovai Medical Center and Hospital offers treatment for coronary bypass surgeries, coronary angioplasty, stent implantation, laproscopic and vascular surgeries, hip and knee replacements, kidney transplants and complex neurosurgeries.

Thyrocare Technologies Limited provides healthcare testing services. The Company offers fasting blood sugar, cancer, cardiovascular disorders, diabetes, and thyroid testing services. Thyrocare Technologies conducts its business worldwide.

Shalby Limited operates a chain of mutli-speicialty hospitals. The Hospital offers healthcare services to patients in various areas of specialization such as orthopaedics, complex joint replacements, cardiology, neurology, oncology, hair transplants, general surgery, trauma, and pathology. Shalby serves patients worldwide.

Indraprastha Medical Corporation Limited is a super specialty hospital commissioned in December 1995 in collaboration with the New Delhi administration. The hospital houses over 50 medical specialties including multi-organ transplants, non-invasive neuro-surgeries and day care procedures.

Indraprastha Medical Corporation (IPMC IN)

Dr. Agarwal's Eye Hospital Limited provides a wide range of eye care solutions.

Poly Medicure Limited manufactures disposable healthcare products. The Company offers a wide range of products for infusion therapy, anesthesia, urology, gastroenterology, blood management, surgery and drainage, and catheters.

PTL Enterprises Limited lease its plant to Apollo Tyres Ltd. The Company's plant manufactures and produces tires for automobiles, commercial vehicles, and other specialty automotives. PTL Enterprise also has interests in the healthcare business through various private companies under the Artemis name.

Bumrungrad Hospital Public Company Limited, through its subsidiaries,  owns and operates the Bumrungrad Hospital. Located in Bangkok, the Hospital has capacity of international standard medical care with 554 beds for inpatients and approximately 125 clinic examination suites that can serve up to 3,000 outpatients daily.

LHC Group Inc. provides post-acute healthcare services primarily to Medicare beneficiaries in rural markets in the southern United States. The company provides home-based services through home nursing agencies and hospices and facility-based services through long-term acute care hospitals and  outpatient rehabilitation clinics.

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.

RadNet, Inc. owns and operates outpatient diagnostic imaging centers.  The Company's centers are located throughout California.

Amedisys, Inc. is a multi-regional provider of alternate-site health care services.  The Company offers home health care nursing, home infusion therapy, and ambulatory surgery centers.  Amedisys operates offices within a network of subsidiaries in the southern and southeastern United States.

MEDIPAL HOLDINGS CORPORATION manufactures and sells medical tools and equipment, nursing equipment, and wholesales pharmaceuticals.

Select Medical Holdings Corporation is an operator of specialty hospitals and outpatient rehabilitation clinics. The Company provides medical rehabilitation services on a contract basis at nursing homes, hospitals, assisted living and senior care centers, schools and work sites.

Option Care Health, Inc. provides infusion and home care management solutions. The Company offers products, services, and condition-specific clinical management programs for gastrointestinal abnormalities, infectious diseases, cancer, organ and blood cell transplants, bleeding disorders, and heart failures. Option Care Health serves patients in the United States.

CorVel Corporation provides managed care services in the workers' compensation, accident and health, and auto insurance markets across the United States.  The Company provides services to employers, government entities, insurance companies, and third party administrators.  CorVel provides a network of preferred providers, as well as case management, bill review, and other services.

Celesio AG wholesales and retails pharmaceuticals to customers in Europe.  The Company wholesales pharmaceuticals, operates retail pharmacies, and provides logistics and transportation services for pharmaceuticals at local, national and European level.

Fortis Healthcare Ltd. is a health care provider.  The Company operates multi- specialty hospitals, a boutique-style hospital, and various satellite and heart command centers.

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Fortis Healthcare (FORH IN)

Metropolis Labs: A New Leader Is in the Making

Metropolis has got its strategy right by focusing on quality and brand. It is also showing healthy growth aggression. With time, we would not be...

Ankit Agrawal, CFA

Thyrocare: Taking the Next Leap or Late to the Game?

Thyrocare seems to be following competition and shifting its strategy towards more decentralization vs its original strategy of heavy...

Ankit Agrawal, CFA

Apollo Hospital Placement/QIP - Well Flagged Deal with Well Planned Use of Proceeds

Apollo Hospitals Enterprise plans to raise around US$140m via a QIP which was launched last night. I have covered various aspects of the deal in my...

Sumeet Singh

Apollo Hospital Placement/QIP Early Look - This Time It's Different

Apollo Hospitals Enterprise (APHS IN) plans to raise around US$200m via a QIP in 1Q21. Past placements haven't done too well. Although, this one...

Sumeet Singh

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Metropolis Labs: A New Leader Is in the Making

Metropolis has got its strategy right by focusing on quality and brand. It is also showing healthy growth aggression. With time, we would not be...

Ankit Agrawal, CFA

Thyrocare: Taking the Next Leap or Late to the Game?

Thyrocare seems to be following competition and shifting its strategy towards more decentralization vs its original strategy of heavy...

Ankit Agrawal, CFA

KPJ Healthcare: Re-Energizing the Share Price

KPJ Healthcare's controlling shareholder is taking steps to drive a re-rating by placing more emphasis on capital efficiency and evaluating some...

Kemp Dolliver, CFA

Apollo Hospital Placement/​​QIP - Well Flagged Deal with Well Planned Use of Proceeds

Apollo Hospitals Enterprise plans to raise around US$140m via a QIP which was launched last night. I have covered various aspects of the deal in my...

Sumeet Singh

Apollo Hospital Placement/QIP Early Look - This Time It's Different

Apollo Hospitals Enterprise (APHS IN) plans to raise around US$200m via a QIP in 1Q21. Past placements haven't done too well. Although, this one...

Sumeet Singh

Apollo Hospital Placement/QIP - Well Flagged Deal with Well Planned Use of Proceeds