HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Capital Markets

In recent years, the national policy has provided great support for the development of private healthcare providers. Meanwhile, due to the consumption upgrade, residents have raised their requirements on the level of traditional Chinese medicine (TCM), leading to a growing demand for middle and high-end services from providers. Therefore, some private healthcare providers have developed rapidly by taking advantage of the large market demand and favorable policy support, and are heading for IPO. On June 10, <a href="https://www.smartkarma.com/entities/gushengtang-cayman-ltd" target="_blank" data-smartkarma-citation="entities:33503:1" rel="noopener">Gushengtang (GUS HK), </a>a leading neo-TCM healthcare provider, formally submitted its application for listing on the main board of the HKEX. This insight mainly analyzed the industry characteristics, the business and the concerns of the Company.

In recent years, the national policy has provided great support for the development of private healthcare providers. Meanwhile, due to the consumption upgrade, residents have raised their requirements on the level of traditional Chinese medicine (TCM), leading to a growing demand for middle and high-end services from providers. Therefore, some private healthcare providers have developed rapidly by taking advantage of the large market demand and favorable policy support, and are heading for IPO. On June 10, Gushengtang (GUS HK), a leading neo-TCM healthcare provider, formally submitted its application for listing on the main board of the HKEX. This insight mainly analyzed the industry characteristics, the business and the concerns of the Company.

Pre-IPO Gushengtang - Optimistic About Future Development

Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Equity Bottom-Up

The bloodbath in Hong Kong and H-shares in the first week of July 2021 was mainly caused by the perceived worsening corporate governance to invest in Chinese companies as the Chinese regulator has gone more draconian on the new listing of the Chinese companies, especially for tech companies.  This will inevitably put downward pressure on the share prices of the tech companies but it will increase trading volume in the HK exchange, on the short term basis at least. In the long term, <a href="https://www.smartkarma.com/entities/hong-kong-exchanges-clearing" target="_blank" data-smartkarma-citation="entities:490:1" rel="noopener">HKEX (388 HK)</a> may be the only Exchange approved by the Chinese government for Chinese companies to raise money from foreign investors. Maintain Buy.

The bloodbath in Hong Kong and H-shares in the first week of July 2021 was mainly caused by the perceived worsening corporate governance to invest in Chinese companies as the Chinese regulator has gone more draconian on the new listing of the Chinese companies, especially for tech companies.  This will inevitably put downward pressure on the share prices of the tech companies but it will increase trading volume in the HK exchange, on the short term basis at least. In the long term, HKEX (388 HK) may be the only Exchange approved by the Chinese government for Chinese companies to raise money from foreign investors. Maintain Buy. 

HK Exchange (388): Beneficiary of HK Tech Crack Down

Chengdu Quanyuantang Pharmacy Chain / Equity Capital Markets

Since the beginning of 2021, the boom of pharmaceutical e-commerce seems to be continuing. Some leading online pharmacies/retail pharmacies are heading for IPOs. On June 9th, 2021, the leading omni-channel smart retail pharmacy <a href="https://www.smartkarma.com/entities/chengdu-quanyuantang-pharmacy-chain-joint-stock-co-ltd" target="_blank" data-smartkarma-citation="entities:33478:1" rel="noopener">Chengdu Quanyuantang Pharmacy Chain (QPC HK)</a> submitted the listing application to the HKEX. As a representative of the innovative retail pharmacy in recent years, Quanyuantang held its ground under the "stress test" in the pandemic this year. Also because Quanyuantang is among the first batch of market participants launching online retail pharmacies in China, the news of its IPO caught the market's attention. So, how about this Company? This insight mainly analyzed the industry characteristics, the business, and the concerns of Quanyuantang.

Since the beginning of 2021, the boom of pharmaceutical e-commerce seems to be continuing. Some leading online pharmacies/retail pharmacies are heading for IPOs. On June 9th, 2021, the leading omni-channel smart retail pharmacy Chengdu Quanyuantang Pharmacy Chain (QPC HK) submitted the listing application to the HKEX. As a representative of the innovative retail pharmacy in recent years, Quanyuantang held its ground under the "stress test" in the pandemic this year. Also because Quanyuantang is among the first batch of market participants launching online retail pharmacies in China, the news of its IPO caught the market's attention. So, how about this Company? This insight mainly analyzed the industry characteristics, the business, and the concerns of Quanyuantang. 

Pre-IPO Quanyuantang Pharmacy Chain - Can Quanyuantang Find Its Own Place in the Fierce Competition?

Neusoft Xikang Healthcare Technology Co Ltd / Equity Capital Markets

Neusoft Xikang Healthcare Technology Co Ltd

On the last day of May, <a href="https://www.smartkarma.com/entities/neusoft-medical-systems-co-ltd" target="_blank" data-smartkarma-citation="entities:33446:1" rel="noopener">Neusoft Medical Systems (NMS HK)</a> and <a href="https://www.smartkarma.com/entities/neusoft-xikang-holdings" target="_blank" data-smartkarma-citation="entities:33447:1" rel="noopener">Neusoft Xikang Holdings (NXH HK)</a> submitted their prospectuses to the HKEX at the same time. Actually, the "Neusoft faction" already has two listed companies in A-share and HKEX respectively, namely <a href="https://www.smartkarma.com/entities/neusoft-corp-a" target="_blank" data-smartkarma-citation="entities:6854:1" rel="noopener">Neusoft Corp A (600718 CH)</a> and <a href="https://www.smartkarma.com/entities/neusoft-education-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:29234:1" rel="noopener">Neusoft Education Technology Co. Ltd (9616 HK)</a>, with the market value of RMB12 billion and HK$4 billion respectively by the end of July.6, 2021. If Neusoft Medical and <a href="https://www.smartkarma.com/entities/neusoft-xikang-holdings" target="_blank" data-smartkarma-citation="entities:33447:1" rel="noopener">Neusoft Xikang</a> are successfully listed, there will be four public companies in "Neusoft faction". Behind the active capital operation, how about Neusoft Xikang? This insight mainly analyzed the business model and the concerns of the Company.

On the last day of May, Neusoft Medical Systems (NMS HK) and Neusoft Xikang Holdings (NXH HK) submitted their prospectuses to the HKEX at the same time. Actually, the "Neusoft faction" already has two listed companies in A-share and HKEX respectively, namely Neusoft Corp A (600718 CH) and Neusoft Education Technology Co. Ltd (9616 HK), with the market value of RMB12 billion and HK$4 billion respectively by the end of July.6, 2021. If Neusoft Medical and Neusoft Xikang are successfully listed, there will be four public companies in "Neusoft faction". Behind the active capital operation, how about Neusoft Xikang? This insight mainly analyzed the business model and the concerns of the Company.

Pre-IPO Neusoft Xikang Holdings - The Business Model and the Concerns

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

<a href="https://www.cmlviz.com/stocks/LDOC" target="_blank" rel="noopener">LinkDoc Technology</a> plans to offer 10.8 million ADS shares priced at between $17.50 And $19.50 per ADS. If the underwriters exercise their option, there will be 12.45 million shares of ADS. At the high end of the IPO price range, the company will raise $243 million, which is lower than the $500 million that was expected to be raised as mentioned in the media in the past several weeks. This is a reflection of the volatile Chinese IPO environment in 2021.<a href="https://www.cmlviz.com/stocks/LDOC/news/b/2021/07/01/linkdoc-technology-ltd-sees-u-s-ipo-of-10-8-mln-adss-expected-to-be-priced-between-17-50-and-19-50-per-ads---filing" target="_blank" rel="noopener">Alibaba Health</a>, Lake Bleu Prime Healthcare Master Fund, and UBS Asset Management have indicated to buy about $25 million each of ADS in this IPO at the IPO price. <div class="content-highlight">
Our base case valuation of LinkDoc Technology suggests an implied market cap of $2.0 billion or $22.3 per share. At the mid point of the IPO price range ($18.5), our base case valuation suggests a 20% upside. Given the moderate upside, we have a Positive rating on this IPO.
Our base case valuation is based on 7.0x EV/S using our estimated sales of 1,827 million RMB. Our base case valuation multiple of 7.0x EV/S is based on a 20% discount to the comps' average EV/S multiple in 2022. We used a 20% discount to the comps' average valuation multiple mainly due to lower expected sales and lower operating margins for LinkDoc versus the comps.
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LinkDoc Technology plans to offer 10.8 million ADS shares priced at between $17.50 And $19.50 per ADS. If the underwriters exercise their option, there will be 12.45 million shares of ADS. At the high end of the IPO price range, the company will raise $243 million, which is lower than the $500 million that was expected to be raised as mentioned in the media in the past several weeks. This is a reflection of the volatile Chinese IPO environment in 2021.Alibaba Health, Lake Bleu Prime Healthcare Master Fund, and UBS Asset Management have indicated to buy about $25 million each of ADS in this IPO at the IPO price. 
Our base case valuation of LinkDoc Technology suggests an implied market cap of $2.0 billion or $22.3 per share. At the mid point of the IPO price range ($18.5), our base case valuation suggests a 20% upside. Given the moderate upside, we have a Positive rating on this IPO.
Our base case valuation is based on 7.0x EV/S using our estimated sales of 1,827 million RMB. Our base case valuation multiple of 7.0x EV/S is based on a 20% discount to the comps' average EV/S multiple in 2022. We used a 20% discount to the comps' average valuation multiple mainly due to lower expected sales and lower operating margins for LinkDoc versus the comps.


LinkDoc Technology IPO Valuation Analysis

China

Alibaba Health Information Technology Limited is an integrated healthcare information and content service provider. The Company uses product identification, authentication, and tracking system data for its healthcare information.

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Alibaba Health Information Tec (241 HK)

Pre-IPO Gushengtang - Optimistic About Future Development

This article mainly analyzed Gushengtang in terms of the industry characteristics, the business model, the comparison with peers, the potential...

Xinyao (Criss) Wang

HK Exchange (388): Beneficiary of HK Tech Crack Down

HKEX (388 HK) may be the only Exchange approved by the Chinese government for Chinese companies to raise money from foreign investors. Maintain Buy

Henry Soediarko

Pre-IPO Quanyuantang Pharmacy Chain - Can Quanyuantang Find Its Own Place in the Fierce Competition?

This article mainly analyzed Quanyuantang in terms of the industry characteristics, the business, the comparison with peers, the concerns and the...

Xinyao (Criss) Wang

Pre-IPO Neusoft Xikang Holdings - The Business Model and the Concerns

This article mainly analyzed Neusoft Xikang in terms of the business model, the financial position, and the related concerns.

Xinyao (Criss) Wang

LinkDoc Technology IPO Valuation Analysis

Our base case valuation of LinkDoc Technology suggests an implied market cap of $2.0 billion or $22.3 per share, which represents 20% upside from...

Douglas Kim

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