Financial intelligence for Asia's healthcare markets
 
 
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11/07/2018

“Our greatest concern is the impact from an escalation of the trade conflict into a vicious cycle of tit-for-tat measures between major economies,” said Chan Chun Sing, Singapore’s minister for trade and industry, in parliament earlier this week. He was absolutely right. Last night US president Donald Trump said that a 10% tariff on US$200 billion of Chinese products would be imposed as soon as September. It comes only a few days after both countries slapped US$34 billion tariffs on each other’s goods. “Trump reloads the tariff bazooka,” was how DBS Group described it in a note to clients this morning. Asian markets sold off from the open. The Shanghai Composite was down 1.9% while the Hang Seng gave up 1.6%. The Nikkei wasn’t far behind – it fell 1.4% – while the SGX and the ASX were off by 1% and 0.6%. If traders aren't already on holiday, expect them to head for the beaches now.
 
HealthInvestor Asia’s focus this week has been on Top Glove Corporation. The world’s largest rubber glove manufacturer has started proceedings against Adventa Capital and two directors for up to M$714.9 million (US$177 million) over what it calls “a conspiracy” to defraud Top Glove over its M$1.4 billion acquisition of Aspion in November last year. We have the details. Analysts have mostly cut their ratings and target prices. UOB Kay Hian maintains its “sell” with a lower target price of M$7.80; Raymond Choo, analyst at Kenanga, said: “We came back from Top Glove’s analysts briefing feeling less optimistic about the short-to-medium prospects in Aspion as irregularities discovered could prove a temporary setback with the profit guarantees at risk of not materialising”. He reiterates his “underperform” rating with a lower target price of M$8.20. DBS Research maintains its “fully valued” rating and target price of M$8.66, while PublicInvest Research analyst Chua Yi Jing is bearish. “Though the stock plunged 24.5% yesterday [Monday], we maintain our “trading sell” call as we think that the stock performance will remain weak given the uncertainties and downside risks of the legal issue i.e risk of impairment, long drawn litigation process and lawsuit fees,” she said. The target price was also cut to M$9.65. Even the reliably bullish Maybank Kim Eng downgrades the group to “hold” though it maintains its price target of M$12.90. On Monday, Top Glove shares crashed as much as 30% at one point and both prop trading and short selling had to be suspended. The stock traded more soberly yesterday, clawing back 7.8%, but today its shares were last seen down almost 3% at M$9.61. There has also been a knock-on effect for Adventa Capital-owed medical services company Adventa. It has been forced to abandon plans to raise M$80.2 million in an AmInvestment Bank-led complex rights issue.
 
Shares in China Isotope & Radiation, which manufactures diagnostic and therapeutic radiopharmaceuticals products, fell 6.9% on their debut on Friday. It priced its HK$1.7 billion (US$220 million) IPO on the Hong Kong Stock Exchange at HK$21.60 per share. It sold 80 million shares above the middle of the indicative range of HK$17.80 to HK$24.20 per share. This represents 25% of the share capital. Sole sponsor is CICC and joint global coordinator along with CLSA. They are also joint bookrunners with ABC International. Its shares remain under water and were last seen down 1.2% at HK$21.05.
 
Beijing-based oncology big data company LinkDoc Technology has raised US$150.7 million Series D funding from sovereign wealth fund China Investment Corporation. Founded in 2014, LinkDoc collects and standardises healthcare data of more than 3,000 diseases and then provides data to healthcare regulators, researchers, insurers and pharmaceutical companies.
 
Hangzhou-based Biopharmaceutical company Adlai Nortye Biopharma has raised US$53 million Series B funding led by YuanMing Capital. Matrix Partners China, DT Capital Partners and Yahui Precision Medicine Fund also participated.
 
Sisram Medical, a Israeli subsidiary of Shanghai Fosun Pharmaceutical, and which manufactures medical aesthetics devices, has laid out its vision to become a global medtech leader, leveraging its solid funding channels, strong r&d capabilities and comprehensive portfolio of products.
 
Kenanga Research has a look at Nova Wellness Group which is to raise M$44.9 million in an IPO on the Bursa Malaysia’s ACE board. It is selling 81.7 million shares at M$0.55 per share. Kenanga is principal adviser, sponsor, underwriter and placement agent. “We like Nova Wellness for superior margins, which are head and shoulders above its peers, and new capacity expansion to boost earnings. Our indicative target price is M$0.60 based on 15x FY19E EPS,” it said. Less surprisingly, PublicInvest Research is also positive on the group’s “thick profit margin” and has it at a fair value of M$0.62. It lists on 20 July.
 
It has been a long process, but according to reports in The Mint newspaper, IHH Healthcare, Asia’s largest healthcare company, is likely to acquire a 51% stake in Fortis Healthcare, the country’s second largest private hospital chain, for up to US$786.4 million. It reports that IHH Healthcare will first buy around 25% through a mix of direct acquisition and preferential allotment, and then make an open offer to buy at least an additional 26%. It is also likely to acquire RHT Health Trust, the first business trust listed on the Singapore stock exchange with a portfolio comprising healthcare assets in India, separately. Shares in RHT dipped as low as 3.9% yesterday before closing down 2.6%. Today they lost another 1.3% to S$0.74 (US$0.55)
 
Singapore government investment company Temasek Holdings has taken a US$50 million stake in Asia Healthcare Holdings (AHH), an operating and investment platform founded by TPG Capital.
 
Adelaide-headquartered health informatics company Alcidion Corporation has signed a five-year deal worth more than A$4.75 million (US$3.5 million) with ACT Health to deploy an electronic patient journey board solution, that fully integrates its Miya Flow, Patientrack and Smartpage software components.
 
In other legal news, private specialist healthcare provider Singapore Medical Group has agreed a settlement with the owners of Eastlife Private and Maxglobe Private. The case has been settled “with no liability on the part of the company and its subsidiaries,” SMG said.

Posted on: 11/07/2018 UTC+08:00


News

SGX-listed OUE Lippo Healthcare intends to acquire 10.63% of First REIT’s total issued units. It also plans to acquire a 40% stake in Bowsprit Capital, the manager of First REIT. The proposed acquisitions’ total consideration will amount to approximately S$142 million (US$103.4 million).
The Australian Federal Government has announcement that it will establish a Royal Commission which will focus on the quality of care provided to older Australians. The announcement comes a couple of days after a two-part television report on abuse in the industry.
Chow Tai Fook Jewellery Group is collaborating with BookDoc, the largest integrated healthcare app in southeast Asia by healthcare network in giving more rewards to BookDoc users for maintaining an active healthy lifestyle.
Q&M Dental Group, which operates the largest network of private dental outlets in Singapore, is looking to delist its subsidiary Aidite from the National Equities Exchange and Quotations of the People’s Republic of China, also known as the New Third Board.
After a dispute going back 11 years, medical centre operator Primary Health Care (PRY) will now have to give its employees an up-to 20% pay increase after a Fair Work Commission awarded the workers at its Victoria pathology division workers higher allowances and back pay.
AUO Care, a subsidiary of electronics manufacturer AU Optronics, has formed a partnership with Suang-Lien Elderly Center in northern Taiwan to deliver real-time IoT-based smart healthcare solutions to elderly citizens.
Retirement village operator Summerset Group Holdings has priced its upsized seven year, fixed rate bonds at 4.2%. The margin for the bonds has been set at 1.65%.
Accuron MedTech, the largest medical device company in southeast Asia, has opened its new Technology Centre in Singapore.



Analysis

After listing on the Hong Kong Stock Exchange at the beginning of May, Ping An Healthcare and Technology, formerly known as Good Doctor, shows no sign of slowing down.
Amy Khor, senior minister of state, ministry of health in Singapore, looks at the challenges of how to deliver healthcare in the future.
First you must find a clinic space from which to practice. The good news is that space is available at most hospitals. The bad news is that a 1,200 square-foot clinic space at Mount Elizabeth Hospital currently retails for around S$10 million, or US$7.34 million to secure a space less than half the size of a tennis court. By the time you add fittings, equipment and staff, your relationship with your bank manager will likely be under severe strain.
China’s hospital landscape is rapidly changing as operators and owners respond to shifting policy incentives, an aging population, the opportunity to serve Tier 2 and 3 cities, and shifts in consumer preferences.
Today, more and more people are suffering from serious, incurable, and/or rare illnesses. However, access to information on such conditions has been quite limited, to hospitals or internet surfing. Even though there were communities and organizations serving people with certain illnesses, information was not widely available, due to the general nature of the illnesses.
CR Phoenix Healthcare, China’s largest private hospital group, recently announced plans to restructure Beijing Jingmei Group General Hospital, a flagship hospital managed by CR Phoenix under its investment-operation-transfer (IOT) model.
Severe abuses continue in China's organ transplant system – including the sourcing of organs from prisoners of conscience on a large scale – despite Chinese government assertions of reform, finds a new study by the China Organ Harvest Research Center.
Asia Pacific's transition from a volume- to value-based care model has been highly challenging due to the need for large-scale regulatory changes and lack of a funding. Rising healthcare consumerism, digital health adoption, and the growing influence of medical tourism are setting a foundation for population health management, one form of value-based care that shifts the industry focus from episodic, individualised healthcare approaches to collective action against the cost and burden of disease in a society.
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