HealthyWay Inc. (02587.HK), a digital health and medical service platform in China, is set to list on the Hong Kong Stock Exchange on December 30, 2024. Below is a detailed evaluation of the IPO based on the available information:
Purpose of IPO:
Business Development: Approximately 60.5% of the net proceeds will be allocated to health and medical services, as well as enterprise services and digital marketing services.
Strategic Investments or Acquisitions: About 21% is earmarked for strategic investments or acquisitions.
Research and Development: Around 14.5% will be used for R&D purposes.
Working Capital: The remaining 4% is designated for general working capital needs.
IPO Placement and Outstanding Shares
25 million shares are being offered, with 2.5 million shares (10%) allocated for the Hong Kong public offering and 22.5 million shares (90%) for the international offering.
The offer price ranges from HKD 7.80 to HKD 8.80 per share.
Based on the offer price range, the estimated market capitalization is between HKD 6.846 billion and HKD 7.724 billion.
While the exact number of outstanding shares post-IPO is not specified, the relatively small offering size and the involvement of significant shareholders like Baidu may generate investor interest, potentially leading to a positive first-day performance.
Major Shareholders:
Baidu: Holds approximately 13.26% of the company’s shares, making it the second-largest shareholder.
Pre-IPO Investments: Baidu has been involved since 2014, investing USD 60 million through its subsidiaries.
The company has introduced the Hengqin Industrial Investment Fund as a cornerstone investor, committing to invest RMB 95 million worth of shares.
CCB International Capital Limited is serving as the sole sponsor for the IPO.
The underwriting syndicate includes CCB International Capital Limited, Shenwan Hongyuan Securities (H.K.) Limited, BOCI Asia Limited, Livermore Holdings Limited, Fosun International Securities Limited, Zhongtai International Securities Limited, China Everbright Securities (HK) Limited, Ruibang Securities Limited, Guotai Junan Securities (Hong Kong) Limited, Victory Securities Company Limited, Futu Securities International (Hong Kong) Limited, and Bright Smart Securities International (H.K.) Limited.
The involvement of reputable financial institutions as sponsors and underwriters may enhance investor confidence, potentially contributing to favorable first-day trading performance.
Business Model and Industry:
Operations: HealthyWay operates a digital health and medical service platform in China, providing services to individual users, enterprises, institutions, and doctors.
Market Position: As of December 31, 2023, it was the fourth-largest digital health medical service platform in China by registered individual users and the fifth-largest by revenue, with a market share below 5%.
The company holds a competitive position in China’s digital health sector, supported by strategic partnerships and a diversified service offering.
Management Team: The founder and chairman is Mr. Zhang Wanneng, who holds a 34.7% stake in the company, making him the controlling shareholder.
The digital health sector in China is experiencing significant growth, driven by increasing demand for accessible healthcare services and technological advancements.
The involvement of major tech companies like Baidu in the digital health space indicates a positive outlook for the industry.
Potential risks include market competition, regulatory changes, and the company’s ability to maintain and grow its user base.
The company plans to utilize the IPO proceeds to expand its services, invest in strategic acquisitions, and enhance R&D capabilities, indicating a focus on long-term growth.
High promoter commitment is evident, with the founder holding a significant stake and Baidu as a substantial shareholder, suggesting confidence in the company’s prospects.
The cornerstone investor committed RMB 95 million, which constitutes a significant portion of the offering. This strong backing may lead to a favorable first-day performance.
The IPO is worth considering for investors with a medium-to-long-term perspective, given the company’s strong industry positioning and growth strategies.
First-Day Trading Estimate:
The stock is likely to trade in the range of HKD 9.00 to HKD 10.00, representing a potential 5%–15% premium above the offer price, based on strong investor interest and favorable market sentiment.
Prospectus Download
https://www.hkexnews.hk/index.htm
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