HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Capital Markets

Neusoft Xikang Healthcare Technology Co Ltd / Equity Capital Markets

Neusoft Xikang Healthcare Technology Co Ltd

<ul>
<li>Either from business model or investment logic, the key is to increase the revenue proportion of cloud hospital platform services. However, many restrictions have led to difficulties in nationwide expansion.</li>
<li>Overreliance on government projects and public hospitals makes it difficult to generate high profits. Xikang may continue to suffer loss in the future, and its profitability is worrying. </li>
<li>Based on our analysis, it could be difficult for Xikang to achieve good valuation performance in the future. we think its valuation should be lower than that of ClouDr.</li>
</ul>


Either from business model or investment logic, the key is to increase the revenue proportion of cloud hospital platform services. However, many restrictions have led to difficulties in nationwide expansion.
Overreliance on government projects and public hospitals makes it difficult to generate high profits. Xikang may continue to suffer loss in the future, and its profitability is worrying. 
Based on our analysis, it could be difficult for Xikang to achieve good valuation performance in the future. we think its valuation should be lower than that of ClouDr.


Pre-IPO Neusoft Xikang (PHIP Updates) - Business Expansion and Profitability Remain in Doubt

Equity Bottom-Up

<ul>
<li>When we discovered that JD Health's growth could face a downturn crisis, we hope to find a suitable substitute. ClouDr has such potential due to its good performance/reasonable business model.</li>
<li>The current anti-corruption campaign could bring new opportunities to ClouDr, who can rely on “hospital first” strategy to take the upper hand, but it should be based on some prerequisites.</li>
<li>ClouDr’s business is expected to keep strong growth momentum in 2023. The Company is expected to achieve breakeven in 2024. Investors could see good stock price performance at that time.</li>
</ul>


When we discovered that JD Health's growth could face a downturn crisis, we hope to find a suitable substitute. ClouDr has such potential due to its good performance/reasonable business model.
The current anti-corruption campaign could bring new opportunities to ClouDr, who can rely on “hospital first” strategy to take the upper hand, but it should be based on some prerequisites.
ClouDr’s business is expected to keep strong growth momentum in 2023. The Company is expected to achieve breakeven in 2024. Investors could see good stock price performance at that time.


ClouDr Group (9955.HK) 23H1 - Turning Losses into Profits Is Within Reach

<ul>
<li>HealthyWay cannot rely on drug/product sales to achieve rapid expansion of revenue scale because it hasn't huge user base accumulated on e-commerce platforms like Taobao/JD.com, leading to different business model.</li>
<li>Relying on Baidu's search engine to guide traffic could be worthless, because B-end users would not pay for the traffic that cannot provide added value.HealthyWay hasn't a strong cornerstone business. </li>
<li>HealthyWay’s valuation should be lower than that of ClouDr. Due to the lack of imagination space in business model, it would to some extent suppress the valuation growth of HealthyWay.</li>
</ul>


HealthyWay cannot rely on drug/product sales to achieve rapid expansion of revenue scale because it hasn't huge user base accumulated on e-commerce platforms like Taobao/JD.com, leading to different business model.
Relying on Baidu's search engine to guide traffic could be worthless, because B-end users would not pay for the traffic that cannot provide added value.HealthyWay hasn't a strong cornerstone business. 
HealthyWay’s valuation should be lower than that of ClouDr. Due to the lack of imagination space in business model, it would to some extent suppress the valuation growth of HealthyWay.


Pre-IPO HealthyWay - The Business Model Lacks Core Competitiveness

<ul>
<li>The cloud hospital platform services serve as “the entry point” of <a href="https://www.smartkarma.com/entities/neusoft-xikang-healthcare-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:33447:1" rel="noopener">Neusoft Xikang</a>’s overall solutions, but the restrictions imposed by cities would affect the scalability of business.</li>
<li>The variety of 2B objects and the diversity of medical scenarios covered would be conducive to the transformation to 2C business, resulting in stronger user stickiness and more monetization opportunities.</li>
<li>Xikang’s 2B business is weaker than ClouDr. Financial performance would finally reflect the effectiveness and rationality of business model. Xikang’s valuation should be lower than ClouDr and Ping An Good Doctor.</li>
</ul>


The cloud hospital platform services serve as “the entry point” of Neusoft Xikang’s overall solutions, but the restrictions imposed by cities would affect the scalability of business.
The variety of 2B objects and the diversity of medical scenarios covered would be conducive to the transformation to 2C business, resulting in stronger user stickiness and more monetization opportunities.
Xikang’s 2B business is weaker than ClouDr. Financial performance would finally reflect the effectiveness and rationality of business model. Xikang’s valuation should be lower than ClouDr and Ping An Good Doctor.


Pre IPO Neusoft Xikang Healthcare Technology - Some Points Worth the Attention

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.

Quantitative Analysis

<ul>
<li>After one month from the March batch of Hong Kong Connect inclusion, we provide an analysis on the stock inclusion for 24 stocks. </li>
<li>We analysed the inclusion by performance post announcement, performance post inclusion, inflows and analyst coverage.</li>
<li>This time we observe outperformance when inclusion took place but not between announcement and inclusion. Southbound trade account for a significant portion of the trading volumes, still.</li>
</ul>


After one month from the March batch of Hong Kong Connect inclusion, we provide an analysis on the stock inclusion for 24 stocks. 
We analysed the inclusion by performance post announcement, performance post inclusion, inflows and analyst coverage.
This time we observe outperformance when inclusion took place but not between announcement and inclusion. Southbound trade account for a significant portion of the trading volumes, still.


HK Connect: Mar '22 Inclusion Post-Event Analysis

China

ClouDr Group Limited offers medical services. The Company provides in hospital solutions development, pharmacy solutions development, individual chronic condition management, and other services. ClouDr Group provides its services throughout Hong Kong.

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ClouDr Group (9955 HK)

Pre-IPO Neusoft Xikang (PHIP Updates) - Business Expansion and Profitability Remain in Doubt

Restrictions imposed by cities would affect the scalability of business. Xikang may suffer long-term loss due to unproven profit model. It's...

Xinyao (Criss) Wang