In today’s briefing:
- Fangzhou Pre-IPO – The Negatives – Hard to Shake off Loss-Making Tendencies
- Apollo Hospitals Enterprise (APHS IN): Q3 Profit Drops; Hospital Business Remains the Brightest Spot
- Pharmaron Beijing Co Ltd (3759.HK/300759.CH) – Start to Enter a Vicious Circle
- Pre-IPO Fangzhou Group – The Business and the Concerns
Fangzhou Pre-IPO – The Negatives – Hard to Shake off Loss-Making Tendencies
- Fangzhou Group (FANGZHOU HK) is looking to raise about US$300m in its upcoming Hong Kong IPO.
- Fangzhou (FZ) is an online chronic disease management (CDM) service provider in China.
- In this note, we will talk about the not-so-positive aspects of the deal.
Apollo Hospitals Enterprise (APHS IN): Q3 Profit Drops; Hospital Business Remains the Brightest Spot
- Apollo Hospitals Enterprise (APHS IN) recorded 19% revenue growth in Q3. The largest segment, healthcare services, which contributed 51% of total revenue, grew 10%. However, net profit dropped 33%.
- The company’s bottom line bled mainly due to high operating cost of the digital healthcare services platform, Apollo 24/7. Excluding operating cost of Apollo 24/7 EBITDA would have grown 10%.
- The company believes that it is at the peak burn rate for Apollo 24/7 operating cost this quarter and expects losses to moderate from here on.
Pharmaron Beijing Co Ltd (3759.HK/300759.CH) – Start to Enter a Vicious Circle
- Pharmaron’s disappointing 2022 performance is just a start.Its business layout has always been “one step behind”. CGT cannot become the main cornerstone business supporting valuation growth for the next stage.
- The overall environment of CXO is different from that of the past. Even if Pharmaron finally achieves end-to-end integration,whether the prosperity of CXO industry still exists is a question mark.
- Pharmaron may have entered a vicious circle, so that it is very challenging to generate the expected results no matter which direction the Company tries to break through.
Pre-IPO Fangzhou Group – The Business and the Concerns
- Fangzhou initially launched online retail pharmacy to address the needs of chronic disease patients, and then expand to online chronic disease management. However,the investment logic of this business is problematic.
- Due to the low willingness to pay/high acquisition cost of C-end patients, it is difficult to achieve large-scale profits. Developing To B business would be important for Fangzhou’s future development.
- Either To B business or To C business, the key point is to accumulate/retain large physician resources, but Fangzhou hasn’t had “a panacea” in this regard.
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