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"Investor.com" Cai Jun
On April 17, on the 5th floor of Hangzhou Hopson International Trade Center, Tongce Medical (600763.sh, hereinafter referred to as the "Company") held an extraordinary general meeting of shareholders, and the management ushered in the handover.
During this period, the company elected a new chairman and board of directors, and the actual controller is still Lu Jianming, who was born in 1965. Over the years, the company has been looking for a way to expand, from in vitro cultivation to endogenous growth, and Lu Jianming has crossed the river by feeling the stones.
It's just that this river seems to be a river leading to the sky, and the period is difficult or beyond Lu Jianming's imagination. In the first three quarters of 2023, the company's operating income was 2.18 billion yuan, a year-on-year increase of 2.12%, and the net profit attributable to shareholders of listed companies was 512 million yuan, a year-on-year decrease of 0.67%.
As a leader in dental services, the market is waiting to see if the company can succeed.
In vitro cultivation under the iceberg
According to the announcement, in the re-election of the board of directors, the company elected Wang Yi as the new chairman. On his resume, Wang Yi, who was born in 1968, has worked in Zhejiang Tongce Real Estate Group Co., Ltd. and other companies, in charge of financial work.
At the same time, the company also elected 4 non-independent directors, an increase from the original 3. Among them, Lu Zixuan, born in 1993, holds a master's degree in computer science and a bachelor's degree in economics from University College London, and is currently a director of Zhejiang Tongce Holding Group and Zhejiang Tongce Ophthalmology Investment Management Company.
The new management is in place, and Tongce Medical ushers in a new era. However, the map of the Tongce system is like an iceberg, and hidden beneath the surface of the water is the intricacy of investments.
In April, the company announced that the controlling shareholder Baoqun Industrial pledged 2.05 million shares, accounting for 0.64% of the total share capital, for the purpose of funding for medical projects outside the system. According to the enterprise investigation, the equity pledged by Baoqun Industrial has reached the early warning line and liquidation line many times, involving banks, securities, wealth management companies and other financial institutions.
(Source: Qichacha)
Further penetration, Baoqun Industrial is wholly owned by Tongce Holding Group, and Lv Jianming holds 78% of the latter's equity. According to the enterprise investigation, part of the equity of Baoqun Industrial held by the group has been frozen, starting and ending from June 2023 to November 2024, and the year of the execution of the case is 2021.
After peeling back the layers, an old case is revealed.
According to the China Judgment Network, in 2021, the court ruled to seal, seize, and freeze the assets under the names of Tongce Holding Group, Zhuji Tongce Dental Medical Investment Fund (hereinafter referred to as "Zhuji Fund"), and Beijing Cunji Dental Hospital, with a total amount of 210 million yuan.
(Source: China Judgments Network)
The key to this is Beijing Cunji Stomatological Hospital. The hospital was established in 2007, and its shareholders include Baoqun Dental Hospital Management, Zhuji Fund, and the legal representative is Lv Chenzheng. According to the enterprise investigation, Lu Chenzheng's consumption was commanded high this year, and the cause was related to the dispute in Hangzhou Cunji Women's and Children's Hospital.
After a series of incidents, the "Cunji" department hospital was involved. In fact, this type of hospital is a common expansion model of medical institutions, that is, in vitro cultivation. This model is for the listed company to cultivate hospitals through related parties, and then inject them into the listed company after the target matures, so as to increase performance.
In this, there are not only hidden mysteries but also traces of the times.
Endogenous growth of the fall
The in vitro cultivation model was once thought to have more advantages than disadvantages.
On the one hand, dental services are at greater risk of cross-provincial expansion due to geographical restrictions. On the other hand, expansion is an effective way to improve performance, but the direct acquisition of assets will generate goodwill, and it is difficult to manage in different places.
In vitro cultivation can avoid risks to a greater extent. Those hospitals cultivated by related parties are not incorporated into the company's performance, and once mature, they have achieved cross-provincial expansion. Moreover, the company charges a management fee for the relevant in vitro cultivation hospitals. It looks like this is a good model.
However, no matter how clever the model design is, it also needs the support of actual operation.
Previously, the "Cunji" hospitals invested by Zhuji Fund were all over the country, covering Beijing, Chongqing, Wuhan, Xi'an, Chengdu, etc. These hospitals are large in scale, but many are not doing well, such as Beijing Cunji Dental Hospital. In other words, there are very few assets that can be injected into Tongce Medical.
In this regard, the company faces two difficult questions: what model to choose to drive expansion, and what kind of assets are suitable for expansion.
The first problem, Lu Jianming gave a clear answer in the letter to shareholders in 2022, that is, "take the step of merger and acquisition". In practice, the company has returned from in vitro cultivation to endogenous growth. The answer to the second conundrum is Dandelion Hospital.
Dandelion Hospital is a small and medium-sized dental institution built by the company, mainly located in Zhejiang, characterized by "small and fast". The small finger scale, the fast refers to the cultivation cycle, and the profit balance cycle of this type of hospital is 0.5 to 1.5 years.
It is worth noting that, unlike in vitro cultivation, endogenous growth of dandelion hospitals brings labor costs, losses during the cultivation period and other pains, but the advantage is that it will not generate a lot of goodwill. In the middle of the chess game, Tongce Medical has no regrets. Even in order to support, the company dispatched doctors from Pinghai Road, Chengxi and other large branches to sit for consultation.
In the first half of 2023, the company will put into operation 14 dandelion hospitals, with a total of 40 openings, achieving revenue of 271 million yuan, a year-on-year increase of 59%. In the same period, the total net profit of Dandelion Hospital was 24 million yuan, a year-on-year increase of 151%, and the net profit margin was 8.7%. In terms of profitability, 60% are profitable, 30% are close to breakeven, and 10% are in the cultivation stage.
Is there a chance for the company to turn around this time?
Explore consumer medical beauty
From in vitro cultivation to endogenous growth, the adjustment of Tongce Medical reflects the transformation of a consumer era.
Previously, large hospitals were the foundation of medical institutions, but with the Internet reconstructing public consumption habits, hospitals and clinics are gradually becoming smaller. Moreover, the implementation of centralized procurement is also like a catfish, stirring up the market of dental services.
In 2023, the national bidding for the centralized procurement of dental implant materials will be implemented. The decline of upstream materials reached about 50%, which was transmitted to the downstream, and the implant services of dental hospitals were also reduced, which in turn affected the profit of the sector.
Within the company, the planting sector is divided into centralized procurement and non-centralized procurement, and the corresponding service unit price is about 9,700 yuan and 15,000 yuan. In the first half of 2023, the company's planting segment revenue was 229 million yuan, a year-on-year increase of 2.7%, accounting for 17.9% of revenue, and 23,500 seedlings were planted, a year-on-year increase of 33.8%.
It can be seen that the effect of centralized procurement has been highlighted. The downward trend of service unit price is inevitable, and the price of planting sector will become normalized. The east side is not bright and the west side is bright, and the orthodontic sector with aesthetic consumption attributes and high customer unit price may support the company's growth.
In 2021, Tongce Medical's lean management was piloted in the orthodontic department, and promoted to other department teams, and gradually extended to the whole hospital. Among them, the goal of "lean management" includes improving team work efficiency, reducing patient waiting time, reducing time cost and material consumption.
In the first half of 2023, the revenue of the company's orthodontic business was 223 million yuan, a year-on-year decrease of 3.9%, accounting for 17.4% of revenue. It seems that the company's operational benefits of this business are also being explored. (Produced by Thinking Finance)■