The late sell-off on Wall Street last night, spooked markets in Asia which dropped to two-year lows. “The Dow and S&P 500 are now technically in correction territory as they have both fallen over 10% from their highs. While such a correction was expected by many people, the pace of it is somewhat alarming,” said William O’Loughlin, local investment analyst, at Rivkin Securities in Sydney. Chinese markets – dominated by retail investors – were particularly hit. The Shanghai Composite crashed more than 4% with the Hang Seng down more than 3%. No Asian bourse was in positive territory. Safe haven buying of the yen saw the Nikkei lose more than 3%. It recovered slightly in afternoon trading, but it is still down around 9% on the week. US Treasuries, however, were little changed. The 10-year pulled back marginally to 2.83%. Stephen Innes, head of trading APAC at online multi-asset trader OANDA in Singapore, reckons that markets are hell-bent on a 3% yield. It is not the yield itself that is the problem, rather the pace that has caused all of the problems. “The rapidity of the moves has caught the markets by surprise, and we are going through the predictable panicked repricing of most asset classes,” he said. The proximity of the Lunar New Year holidays is not going to help. Expect to see traders close down positions with increasing rapidity next week.
In a move that could resonate across the sector, Nasdaq-listed biopharmaceutical provider Sinovac Biotech has (at long last) filed its going-private transaction. It had been expected since early 2016. If the process goes smoothly, then a number of other Chinese healthcare names listed in the US could follow: notably iKang Healthcare Group, China’s largest private preventive healthcare services provider, and Concord Medical Services Holdings, the operator of the largest network of radiotherapy and diagnostic imaging centres in China. Not that this will entirely stop the flow of Chinese names that want to list in the US. Chinese online pharmacy and health service platform New Peak Group has plans for a US$150 million US IPO at some point this year with JP Morgan and Morgan Stanley on the deal.
Paragon Care, a leading distributor and manufacturer supplying medical equipment to hospitals, is to raise A$69.8 million (US$54.6 million) in a fully underwritten offer on the ASX. The offer includes an A$26.6 million institutional placement and a 1-for-2.8 accelerated entitlement offer to raise A$43.2 million. The issue price is A$0.725 per share which is a 4.8% discount to Paragon’s VWAP on 6 February. Bell Potter and Shaw and Partners are acting as joint lead managers and underwriters to the placement and entitlement offer.
Higher sales have given a boost to third quarter results at Malaysian medical rubber glove manufacturer Hartalega Holdings. It reported a 70.7% jump in Q3 profits to M$113 million (US$28.9 million) on revenues that rose 32.2% to M$603.1 million. Analysts remain positive on the group, though cautious given that the share price has run up 100% over the past 10 months. TA Securities maintains its “sell” on Hartalega but raises its target price to M$7.80; Kenanga downgrades it to “underperform” but maintains its target price of M$10.00; PublicInvest Research maintains its “neutral” rating but revises its target price also to M$10.00; HLIB Research calls the results “commendable” and maintains its “hold” with a target price of M$10.70; and Malacca Securities upgrades the group to “hold” with a target price of M$11.00. Its shares were last seen down slightly at M$11.10.
Reuters reports that the venture capital arm of Ping An Insurance intends to raise up to US$1.3 billion for two healthcare-focused funds: one in US dollars and the other in yen. Both will focus on pre-IPO funding. As we reported earlier this week, two of the group’s healthcare companies have raised US$1.6 billion in private placement financing recently ahead of planned Hong Kong listings. Ping An Good Doctor, the world’s largest healthcare portal in terms of traffic, has completed a pre-IPO financing during which it raised US$400 million while Ping An Healthcare Technology, the largest technology-driven managed care platform in China, completed Series A funding of US$1.15 billion.
Harmonicare Medical, the largest private obstetrics and gynaecology specialty hospital group in China, has increased its loan to help the Rmb160 million (US$25.3 million) construction of Wuxi Harmonicare, a new obstetrics and gynaecology hospital in Wuxi, Jiangsu Province. The loan now stands at Rmb152 million.
Kelantan-based Ain Medicare, which manufactures both blood and renal medical devices as well as pharmaceutical products, has raised M$20 million in a strategic investment from Malaysian government investment company A-BIO.
Beijing-based paediatric centre Dr Cuiyutao Healthcare has raised Series C plus funding led by New Oriental Education & Technology Group. The size of the funding has not been disclosed, but is understood to be in the millions of US dollars.
The AFR reports that Healthscope, Australia’s second largest private healthcare operator, could be looking to exit its Asian pathology business. In August, Singapore-based managed healthcare provider Fullerton Health acquired Healthscope’s standalone medical centre operations for A$55 million, and in 2016 Primary Health Care bought its domestic pathology business. UBS is likely to manage any deal that emerges. Healthscope has been looking to slim down after reporting an almost 40% decline in profits last year on revenues that only climbed a meagre 3.8% to A$2.3 billion. At its annual general meeting at the end of October, new CEO Gordon Ballantyne said that he was planning a thorough review of the group’s portfolio. Healthscope shares are down almost 16% over the past year.
Hang Seng-listed Golden Meditech has taken a 16.1% stake in Nanjing Ying Peng Hui Kang Medical Industry Investment Partnership for Rmb1.1 billion. The partnership includes a 65.4% stake in Global Cord Blood Corporation. Also see below.
Parkway Life REIT, which is owned by IHH Healthcare, is to acquire Konosu Nursing Home Kyoseien, a nursing rehabilitation facility in Greater Tokyo, under a sale-and-leaseback agreement with Iryouhoujin Shadan Kouaikai for ¥1.5 billion (US$13.7 million).
New Zealand-based cancer diagnostics company Pacific Edge (PEB) has entered into an agreement with MediNcrease Health Plans, a US national provider network, to make its bladder cancer diagnostic test available. Financial terms have not been disclosed. On the news, PEB shares rose 3.8% to NZ$0.41 (US$0.30).
Singapore-listed medical supplies group QT Vascular has entered into a term sheet with an unnamed multinational relating to the company’s coronary products. Financial terms have not been disclosed.
China Cord Blood Corporation, the country’s largest provider of cord blood storage and ancillary services, is changing its name. It plans to call itself Global Cord Blood Corporation. “The board believes that the change of name better reflects the future development direction and business strategy of the company,” it said in a statement. It is holding a meeting to decide on the matter on 16 March.
Anthea Muir has been named chief executive of Australian cosmetic clinic chain Laser Clinics Australia with Paul McClintock as chairman. Muir comes from Luxottica Group while McClintock is best known as the former chairman of Medibank Private.
And finally, a new paper from KPMG looks at the disconnect between consumer expectations and the current healthcare experience of patients in Australia.
