Well-known dental chain listed in Hong Kong! The business will usher in a major expansion

On March 22, Rare Group (HK6639), which is engaged in high-end private oral medical services, was officially listed on the Hong Kong Stock Exchange.

The author | Zhao Xiaohua

Source| Medical Community (ID: vistamed)

Rare Group Hong Kong stock listing!

According to public information, Rare Group, founded in 1999, has two brands of Rare Dental and Ryett-Hite Dental, 882 full-time dentists, footprints in 15 first- and second-tier cities across the country, 110 dental clinics or hospitals, a total of nearly 7.4 million patient visits, and its business covers general dentistry, orthodontics and implants and other oral medical services.

It is understood that after this listing, Rare Group will continue to increase investment in business expansion and accelerate its layout with the help of the successful management experience of the national chain. According to the prospectus, 75% of the IPO funds will be used for business expansion, opening new Rare, Rite-Hite hospitals and clinics in existing cities, and entering new cities through proven successful off-site self-construction or exploring synergistic mergers and acquisitions, further weaving the network layout of key areas.

According to the prospectus, as the third largest service provider in the domestic private oral medical service market, Rare Group focuses on the operation mode of combining high and mid-end in oral medical treatment, of which Rare Dental is positioned as a high-end and concentrated in the first-tier market, while Ruitai Dental is positioned in the second- and third-tier markets and takes the mid-end route. As of the end of September 2021, Rite-Hite Dental alone operates 7 dental hospitals and 53 dental clinics.

It is understood that Rare Group has submitted two listing prospectuses before landing on the Hong Kong stock market, of which the prospectus submitted for the first time on July 1, 2021 has expired on January 1 this year, and shortly thereafter, on January 24, Rare Group submitted a prospectus to the Hong Kong Stock Exchange again, and soon passed the hearing of the Hong Kong Stock Exchange.

According to Rare Group, it had conducted 5 rounds of financing before submitting the listing prospectus for the first time in Hong Kong. It is worth noting that in April last year, Rare Completed a US$200 million Series E financing, which was jointly invested by internationally renowned funds such as Temasek and Aobo Capital, which was the largest amount of financing in the group's history since 2010.

The company's data also shows that the revenue of the fiscal year from 2019 to the first quarter of 2021 was about 1.08 billion yuan, 1.1 billion yuan and 1.52 billion yuan, and the annual gross profit was about 160 million yuan, 110 million yuan and 360 million yuan, respectively, and its gross profit margin exceeded 10%.

As of the close of trading on March 22, Rare Group's offering price was HK$14.62 per share, with a total market capitalization of approximately HK$8.5 billion.

The dental track is favored

According to the medical community, in addition to the successful landing of Rare Group in Hong Kong stocks, since 2021, there are also a number of large dental medical institutions that are also eager to go public.

In September 2021, Dr. Dentist, who specializes in oral diagnosis and treatment services, submitted a prospectus to the Hong Kong stock market, opening the road to listing in Hong Kong. According to public information, Dr. Dentist, founded in 2010, is a large-scale private dental chain enterprise mainly engaged in implant services, orthodontic services and comprehensive oral services in East China, with a business footprint involving Jiangsu, Zhejiang, Shanghai and other provinces and cities, with more than 30 chain stores, and many of its dental medical institutions have also become designated units of medical insurance.

On March 3, 2022, according to the Hong Kong Stock Exchange, the prospectus of China Dental Medical Group has become invalid, which means that the group has gone to Hong Kong for the fourth time. It is reported that from the beginning of 2020 to September 2021, China Stomatological Medical Group has hit the main board of Hong Kong stocks four times, with an average of one time per six months.

In addition to impacting the secondary market listing, capital has also invested thousands of dollars on the oral track, and although a number of large oral medical groups have not impacted the IPO for the time being, they have obtained several rounds of huge financing.

Just in March 2021, Ma Taki Dental (China) announced the completion of a new round of strategic financing, led by CICC Capital and followed by Huaxi Yinfeng. It is understood that as of April 2021, Ma Taki Dental (China) has experienced 5 rounds of financing, with a cumulative financing of more than 500 million yuan, and has completed the strategic layout of the whole industry chain in 13 cities, 26 dental clinics, 2 denture processing centers, 1 education and training center and 1 procurement center.

In the second half of 2021, Meiwei Dental Medical Group has completed B and B+ rounds of financing, of which the B round of financing alone exceeded 1 billion yuan, and the investors involved well-known institutions such as Dachen Caizhi, Tianfeng Tianrui and New Hope Group. In November of the same year, Delun Dental also received 246 million yuan of M&A financing from the listed company Rongyu Group.

Looking at the A-share and Hong Kong stock markets, according to the medical community, before the Arrail Group, oral medical services were only known as "Dental Moutai" in A-share Tongce Medical. According to public information, Tongce Medical was listed on the backdoor of Zhongyan in 2007, and the major shareholder was Baoqun Industry, which was once a real estate development company. It is reported that as of the close of trading on March 22, the stock price of Tongce Medical was 126.48 yuan, and the market value exceeded 40.5 billion.

With the help of policies, the scale of the oral medical service market is huge

According to the medical community, in February 2019, the National Health Commission issued a healthy oral action plan (2019-2025), which clearly proposed to lead the high-quality development of the oral health service industry. Give full play to the role of the market in allocating resources in the field of oral non-basic health, encourage, guide and support social oral medical and health service institutions to participate in oral disease prevention and treatment and health management services. Explore the inclusion of commercial health insurance into the financing of oral health services to improve the level of protection. Relying on "Internet +", expand the space and content of oral health services, optimize service processes, promote the continuous recording and exchange of residents' oral health files, and meet the diversified and personalized oral health needs of the masses.

In terms of industry, with the rapid development of China's economy, people's awareness of oral health protection and policy support and encouragement, the scale of the mainland private oral medical service market continues to grow and develop, according to the Frost & Sullivan report, from 2015 to 2020, in a few years, it will grow from 43.3 billion yuan to 83.1 billion yuan, with a compound annual growth rate of 13.9%, and it is expected that by 2025, the market size will exceed 200 billion yuan.

With the blessing of the huge market scale, the oral track is favored by capital. Many large dental chains have opened the road to financing and listing. According to the statistics of the arterial network, in the first half of 2021 alone, there were 33 financing incidents in the oral primary market, and the total amount of financing exceeded 5 billion yuan, reaching the highest in history.

Policy encouragement, market support, capital favor, the oral track advantages are outstanding, but the industry believes that its restrictive factors are also worthy of attention. Zhao Heng, a partner at latitude health, a medical strategy consulting company, once said that the large-scale development of dental chains is greatly constrained by talents, and the capital market has requirements for the profitability indicators of listed companies, and after the expansion and development of dental chain institutions, whether high-quality talents can keep up with them is the key to profitability, and the lack of talents is one of the important reasons restricting the listing of private dental institutions.

However, on the other hand, with the continuous liberalization of social medical policies, the optimism of the capital market, and the successful listing of Rare Group in the front, some insiders said that the future of oral medical field or will usher in a wave of wave of impact on listing. (This article is published by "Seeing the Medical Community", reprinted with permission, and the author and source are indicated at the beginning of the article.) ）

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