HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

Jinxin Fertility Group  / Equity Bottom-Up

<ul>
<li>IVF penetration rate in China is not high and the rate of improvement is very slow. With public hospitals accounting for over 90% market share, Jinxin’s growth space is limited.</li>
<li>Jinxin has extended its business scope to support the entire fertility and pregnancy lifecycle. But it could drag down the overall net profit margin,resulting in lower-than-expected performance in the end.</li>
<li>The breakthrough point is internationalization. If COVID-19 is under control and Jinxin continues to expand overseas markets successfully, it could change its valuation logic and open up upward potential.</li>
</ul>


IVF penetration rate in China is not high and the rate of improvement is very slow. With public hospitals accounting for over 90% market share, Jinxin’s growth space is limited.
Jinxin has extended its business scope to support the entire fertility and pregnancy lifecycle. But it could drag down the overall net profit margin,resulting in lower-than-expected performance in the end.
The breakthrough point is internationalization. If COVID-19 is under control and Jinxin continues to expand overseas markets successfully, it could change its valuation logic and open up upward potential.


Jinxin Fertility Co Ltd (1951.HK) - The Outlook Is Not Optimistic Even with Policy Support

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

<ul>
<li>Including the A$0.12 permitted dividend (paid on 14 April), CapVest’s revised scheme offer is A$8.27 and the off-market takeover offer is A$8.22. The new offer addresses the capital return issue.</li>
<li>Despite today’s <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02509261_PS-2A1368239?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">interims orders</a> from the takeover panel, CapVest’s scheme transaction still has virtually no chance of getting up due to BGH's 19.99% stake.</li>
<li>BGH’s like-for-like off-market offer price of A$8.12 per share is 1.2% below CapVest’s off-market offer, suggesting that there is more life to this takeover tussle for <a href="https://www.smartkarma.com/entities/virtus-health-ltd" target="_blank" data-smartkarma-citation="entities:14776:1" rel="noopener">Virtus Health (VRT AU)</a>.</li>
</ul>


Including the A$0.12 permitted dividend (paid on 14 April), CapVest’s revised scheme offer is A$8.27 and the off-market takeover offer is A$8.22. The new offer addresses the capital return issue.
Despite today’s interims orders from the takeover panel, CapVest’s scheme transaction still has virtually no chance of getting up due to BGH's 19.99% stake.
BGH’s like-for-like off-market offer price of A$8.12 per share is 1.2% below CapVest’s off-market offer, suggesting that there is more life to this takeover tussle for Virtus Health (VRT AU).


CapVest Fights Back with Revised Offers for Virtus

<ul>
<li>BGH announced an unconditional off-market takeover offer at A$8.00 cash per share along with intention for on-market purchases equal to, below, or higher than the offer price.</li>
<li>CapVest’s scheme transaction while superior has virtually no chance of getting up. CapVest’s off-market transaction is less appealing due to the uncertain outcome of the ATO ruling.</li>
<li>The last close price of A$8.15 is higher than both BGH and CapVest’s off-market offers which suggest both would need to raise their bid.  </li>
</ul>


BGH announced an unconditional off-market takeover offer at A$8.00 cash per share along with intention for on-market purchases equal to, below, or higher than the offer price.
CapVest’s scheme transaction while superior has virtually no chance of getting up. CapVest’s off-market transaction is less appealing due to the uncertain outcome of the ATO ruling.
The last close price of A$8.15 is higher than both BGH and CapVest’s off-market offers which suggest both would need to raise their bid.  


BGH Returns with an A$8.00 Off-Market Takeover Bid for Virtus

<ul>
<li>CapVest’s binding offer is A$8.25 via a scheme or A$8.10 via an off-market takeover. The scheme offer is a 5.8% premium to its previous scheme offer of A$7.80 per share. </li>
<li>Rival bidder BGH lobbed a revised non-binding offer of A$8.10 per share after market close on 10 March. The Board will consider any further improved competing offer.  </li>
<li>BGH (19.99% stake) previously stated that it will vote against a CapVest scheme and will not accept any takeover offer. Another round of bidding is a possibility. </li>
</ul>


CapVest’s binding offer is A$8.25 via a scheme or A$8.10 via an off-market takeover. The scheme offer is a 5.8% premium to its previous scheme offer of A$7.80 per share. 
Rival bidder BGH lobbed a revised non-binding offer of A$8.10 per share after market close on 10 March. The Board will consider any further improved competing offer.  
BGH (19.99% stake) previously stated that it will vote against a CapVest scheme and will not accept any takeover offer. Another round of bidding is a possibility. 


CapVest Inches past BGH in a Heated Takeover Battle for Virtus

<ul>
<li>BGH’s revised scheme offer will pay $7.65 per <a href="https://www.smartkarma.com/entities/virtus-health-ltd" target="_blank" data-smartkarma-citation="entities:14776:1" rel="noopener">Virtus Health (VRT AU)</a> share, which is 0.7% and 2.0% higher than CapVest’s rival scheme (A$7.60) and off-market takeover offer (A$7.50), respectively.</li>
<li>BGH (19.99% stake) will vote against the CapVest scheme and will not accept any takeover offer from CapVest. Consequently, CapVest’s best option is an improved off-market takeover bid.</li>
<li>As CapVest's offer is marginally below BGH's revised offer, CapVest retains the potential to lob an improved offer, in our view.</li>
</ul>


BGH’s revised scheme offer will pay $7.65 per Virtus Health (VRT AU) share, which is 0.7% and 2.0% higher than CapVest’s rival scheme (A$7.60) and off-market takeover offer (A$7.50), respectively.
BGH (19.99% stake) will vote against the CapVest scheme and will not accept any takeover offer from CapVest. Consequently, CapVest’s best option is an improved off-market takeover bid.
As CapVest's offer is marginally below BGH's revised offer, CapVest retains the potential to lob an improved offer, in our view.


China

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.

Searainbow Holding Corp., produces chemical fibers and other textile products. The company, through its subsidiaries, also provides medical e-commerce and on-line games.

Nanjing Pharmaceutical Co. Ltd. distributes a broad range of drugs. The Company also manufactures medicines,medical apparatus, chemical reagents, and glassware.

Guangxi Liuzhou Pharmaceutical Co. Ltd. manufactures pharmaceuticals. The Company researches, develops, produces, processes, and distributes capsules, granules, tablets, pills, plasters, and raw material 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.

China Resources Medical Holdings Company Limited operates hospitals and clinics. The Company offers clinical treatment, healthcare management, public sanitary, and other medical health services. China Resources Medical Holdings also operates supply chain management, financing, real estate development, consumption, and other businesses.

Cachet Pharmaceutical Co., Ltd manages pharmaceutical services, wholesale and retail businesses.  The Company also operates the logistics services related to pharmacy.

Zhejiang Zhenyuan Co., Ltd. wholesales and retails traditional Chinese medicines, Chinese medicine materials, chemical preparations, and healthcare products.  Through its subsidiaries, the Company also manufactures pharmaceuticals.

Shandong Realcan Pharmaceutical Company Limited is a pharmaceutical direct seller. The Company's main business is distributing drugs to high-end medical market, basic health care market and commercial distribution.

Shandong Realcan Pharmaceutical (002589 CH)

China Pioneer Pharma Holdings Ltd is a marketing, promotion and channel management service provider dedicated to imported pharmaceutical products and medical devices in China.

Regis Healthcare Limited is a treatment program that offers Family Therapy, Clinical Psychology, Education and Occupational Therapy.

Chularat Hospital PCL owns medical centers and hospitals. The Company operates a variety of centers specializing in treatments such as hand surgery, open heart surgery, and strokes as well as providing emergency services and patient care. Chularat Hospital serves the medial industry throughout Thailand.

BML, INC. operates medical laboratories and develops software for clinical testing.  The Company conducts clinical testing in a variety of fields, including endocrine, blood and blood plasma, protein, biochemical, virus, immune systems, and bacteria.  BML conducts testing primarily  for hospitals and medical institutions.

Vibhavadi Medical Center Public Company Limited owns and operates the Vibhavadi Hospital. Located in Bangkok, the Hospital provides full range of medical services.

H.U. Group Holdings Inc. provides health care testing services. The Company provides contract clinical testing and clinical laboratory drug services for cancer, malignant tumor, hypothyroidism, diabetes, and infectious diseases. H.U. Group Holdings also conducts sterilization related business.

Rhoen-Klinikum AG operates general, rehabilitation, and emergency health care facilities which offer inpatient and outpatient medical care to various communities in Germany.  These clinics and hospitals offer cardiological, surgical, psychiatric, neurological and neurosurgical, orthopedic, addiction treatment, and physical therapy services.

CVS Group PLC provides animal veterinary and related services. The Company sells animal medicines and a range of pet products directly to consumers. CVS Group operates throughout the United Kingdom.

Netcare Limited is a South African hospital promotion and management company that owns and operates a number of private hospitals and clinics.

Life Healthcare Group Holdings Ltd operates healthcare facilities in South Africa.  The Company operates acute care hospitals, long-term care facilities, physical and cognitive rehabilitation services for disabling injuries, and on-site occupational and primary healthcare services.

Selcuk Ecza Deposu Ticaret ve Sanayi A.S. distributes pharmaceutical products.

Selcuk Ecza Deposu Ticaret ve Sanayi A.S. (SELEC TI)

Selcuk Ecza Deposu Ticaret ve Sanayi A.S.

Jinxin Fertility Group Limited provides assisted reproductive services. The Company offers vitro fertilization services, embryo transfer services, management services, and other services. Jinxin Fertility Group also provides ancillary medical services.

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Jinxin Fertility Group (1951 HK)

Jinxin Fertility Co Ltd (1951.HK) - The Outlook Is Not Optimistic Even with Policy Support

Despite “Third Child Policy”, Jinxin's outlook is challenging due to low IVF penetration rate, dominance of public hospitals, low profit margin of...

Xinyao (Criss) Wang

CapVest Fights Back with Revised Offers for Virtus

Including the permitted dividend, CapVest’s revised scheme is A$8.27 and the off-market takeover is A$8.22. There is more life to this takeover...

Arun George

BGH Returns with an A$8.00 Off-Market Takeover Bid for Virtus

CapVest’s scheme offer while superior to BGH's off-market offer has virtually no chance of getting up. CapVest’s off-market offer is less appealing...

Arun George

CapVest Inches past BGH in a Heated Takeover Battle for Virtus

CapVest’s binding offer is A$8.25 via a scheme or A$8.10 via an off-market takeover. Rival bidder BGH lobbed an offer of A$8.10 on 10 March....

Arun George

BGH’s Revised Higher Offer for Virtus

BGH has returned with a revised offer of $7.65 per share, which is 7.7% higher than BGH’s original offer of A$7.10. CapVest’s (rival suitor) best...

Arun George

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