HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Capital Markets

Concord Healthcare Group / Equity Capital Markets

<ul>
<li>Concord’s financial performance seems improving on the surface,but a closer look reveals that the sudden explosive revenue increase in 2021 was mainly due to an acquisition, with potential risks behind.</li>
<li>We've doubts about Concord's endogenous growth capability. If Concord’s hospitals cannot make a profit, then any further expansion is just a beautiful story and cannot bring expected returns to investors. </li>
<li>Concord conducted a total of four rounds of financing, with a valuation of approximately RMB7.2 billion. However, based on our analysis, its valuation could be lower than peers.</li>
</ul>


Concord’s financial performance seems improving on the surface,but a closer look reveals that the sudden explosive revenue increase in 2021 was mainly due to an acquisition, with potential risks behind.
We've doubts about Concord's endogenous growth capability. If Concord’s hospitals cannot make a profit, then any further expansion is just a beautiful story and cannot bring expected returns to investors. 
Concord conducted a total of four rounds of financing, with a valuation of approximately RMB7.2 billion. However, based on our analysis, its valuation could be lower than peers.


Pre-IPO Concord Healthcare Group (PHIP Updates) - Some Points Worth the Attention

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

<ul>
<li>We see 37 potential adds (including plenty of new listings) and 25 potential deletes (on market cap and liquidity) for the Hang Seng Composite Index in September.</li>
<li>We expect 32 stocks to be added to Southbound Stock Connect following the rebalance while 24 stocks could be deleted from the trading link and become Sell-only.</li>
<li>There are stocks that have a very high percentage of holdings via Stock Connect and there could be some unwinding prior to the stocks becoming Sell-only.</li>
</ul>


We see 37 potential adds (including plenty of new listings) and 25 potential deletes (on market cap and liquidity) for the Hang Seng Composite Index in September.
We expect 32 stocks to be added to Southbound Stock Connect following the rebalance while 24 stocks could be deleted from the trading link and become Sell-only.
There are stocks that have a very high percentage of holdings via Stock Connect and there could be some unwinding prior to the stocks becoming Sell-only.


HSCI Index Rebalance Preview and Stock Connect: Potential Changes in September

<ul>
<li>
<a href="https://www.smartkarma.com/entities/concord-healthcare-group" target="_blank" data-smartkarma-citation="entities:36005:1" rel="noopener">Concord Healthcare Group (CHG HK)</a>’s hospital business is not strong enough to contribute strong performance consistently, leading to unsatisfactory profit margin considering its weak hospital operation and management capability.</li>
<li>The network business could face some legal risks based on our analysis. In the context of anti-corruption campaign in China healthcare, Concord's business and patients flow could be affected.</li>
<li>Together with potential policy risks such as DRGs/centralized procurement, we tend to be conservative about Concord’s outlook. In terms of valuation, Concord’s valuation should be lower than Inkon Life Technology.</li>
</ul>



Concord Healthcare Group (CHG HK)’s hospital business is not strong enough to contribute strong performance consistently, leading to unsatisfactory profit margin considering its weak hospital operation and management capability.
The network business could face some legal risks based on our analysis. In the context of anti-corruption campaign in China healthcare, Concord's business and patients flow could be affected.
Together with potential policy risks such as DRGs/centralized procurement, we tend to be conservative about Concord’s outlook. In terms of valuation, Concord’s valuation should be lower than Inkon Life Technology.


Pre-IPO Concord Healthcare Group - Business Challenges Are Greater than Expected

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.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/concord-healthcare-group" target="_blank" data-smartkarma-citation="entities:36005:1" rel="noopener">Concord Healthcare Group (CHG HK)</a> is looking to raise at least US$100m in its upcoming Hong Kong IPO.</li>
<li>Concord Healthcare (Concord) is an oncology health platform in China researching and implementing advanced oncology diagnostic and treatment technologies.</li>
<li>As per Frost and Sullivan (F&amp;S), in 2021, Concord was the market leader among private oncology healthcare groups in China, as measured by cancer treatment empowerment service revenue.</li>
</ul>



Concord Healthcare Group (CHG HK) is looking to raise at least US$100m in its upcoming Hong Kong IPO.
Concord Healthcare (Concord) is an oncology health platform in China researching and implementing advanced oncology diagnostic and treatment technologies.
As per Frost and Sullivan (F&amp;S), in 2021, Concord was the market leader among private oncology healthcare groups in China, as measured by cancer treatment empowerment service revenue.


Global Healthcare Analyst

Tina Banerjee

<ul>
<li>
<a href="https://www.smartkarma.com/entities/concord-healthcare-group" target="_blank" data-smartkarma-citation="entities:36005:1" rel="noopener">Concord Healthcare Group (CHG HK)</a>, the second largest private oncology healthcare company in China, has submitted application proof for an IPO on the HK Stock Exchange in May 2022.  </li>
<li>The company has an accumulated loss of RMB1.7 billion during the last three years, with current net debt-to-capital ratio of 170.1%. Its finance cost account for 92.5% of total revenue.</li>
<li>Concord has a cash balance of just RMB136 million, which makes it hard to grab the growth opportunities in China’s capital-intensive oncology healthcare services segment.</li>
</ul>



Concord Healthcare Group (CHG HK), the second largest private oncology healthcare company in China, has submitted application proof for an IPO on the HK Stock Exchange in May 2022.  
The company has an accumulated loss of RMB1.7 billion during the last three years, with current net debt-to-capital ratio of 170.1%. Its finance cost account for 92.5% of total revenue.
Concord has a cash balance of just RMB136 million, which makes it hard to grab the growth opportunities in China’s capital-intensive oncology healthcare services segment.


Concord Healthcare Group (CHG HK) Pre-IPO: Accumulated Loss and Cash Burn Cloud Growth Prospects

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Concord Healthcare Group (CHG HK)

Pre-IPO Concord Healthcare Group (PHIP Updates) - Some Points Worth the Attention

An acquisition stimulated the growth of Concord and brought its revenue scale to a new level. But concerns on endogenous growth capability and...

Xinyao (Criss) Wang

HSCI Index Rebalance Preview and Stock Connect: Potential Changes in September

There could be nearly 80 adds/deletes for the HSCI in September. That will trigger changes to the Southbound Stock Connect list and increase flows...

Brian Freitas

Pre-IPO Concord Healthcare Group - Business Challenges Are Greater than Expected

Concord’s profit margin is unsatisfactory due to inadequate operational management capability. Its future growth outlook is uncertain.The Company...

Xinyao (Criss) Wang

Concord Healthcare Pre-IPO Tearsheet

Concord Healthcare Group (CHG HK) is looking to raise at least US$100m in its upcoming Hong Kong IPO. The firm is an oncology health platform in...

Clarence Chu

Concord Healthcare Group (CHG HK) Pre-IPO: Accumulated Loss and Cash Burn Cloud Growth Prospects

Concord, a leading private oncology healthcare player in China, intends to list shares in Hong Kong. This loss making and cash burning company do...

Tina Banerjee

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