What Is The Layout Behind "H + A" Of Kangning Hospital?

Kangning hospital, a Hong Kong stock company known as "the first stock of psychiatric hospital", has been making a sound again after two years. The company recently announced that it intends to break through the GEM market of Shenzhen Stock Exchange and intends to issue a shares to realize the listing of "H + a" on both sides.

According to the publicity information of Kangning hospital, the company was founded in 1997. It is the only non-public tertiary psychiatric hospital in China. It is a national key clinical specialty (psychiatric) unit and has become the largest psychiatric hospital in China.

This time, the company once again rushed into the A-share market as a spiritual hospital, causing widespread concern in the market.

Kangning hospital said that the company wants to break through the GEM market of Shenzhen Stock Exchange, and plans to issue a shares to realize "H + a" dual listing. IC photo

Seeking "H + a" Capital Territory

In November 2015, Corning hospital landed on the stock exchange of Hong Kong and became the first psychiatric hospital listed company in China. However, the capitalization process of the company did not stop there. After landing in Hong Kong stock market, the company has been "coveting" the A-share market.

In December 2016, Corning hospital applied for A-share listing. After two years of long review, the application was rejected by the CSRC at the end of January 2018. But Corning hospital landing a share idea did not give up. According to the public information, as early as September 2020, the official website of Zhejiang Securities Regulatory Bureau disclosed the counseling filing documents of Kangning hospital.

In June 2021, Corning hospital officially released an inside information announcement, saying that the company has hired a sponsor to provide guidance and make business adjustments according to the recommendation of the sponsor. Two months later, Corning hospital announced that it plans to apply for A-share issuance and be listed on the Shenzhen Stock Exchange's gem.

"The issuance of a shares is in line with the overall interests of the company and its shareholders." all directors of Corning hospital believe that the company's own medical facilities, patients and business partners are located in the mainland, and the domestic issuance can realize the listing of A-share and H-share, and the company's reputation and influence will be further improved. At the same time, domestic investment circles and social media reports on the company's dual listing will further improve the company's brand image and influence. Domestic listing can provide liquidity of domestic shares and improve the growth potential of the company. For example, it can retain and attract more talents through the implementation of equity incentive plan, and use A-share payment to implement merger and acquisition.

What puzzles investors is that mainland companies listed in Hong Kong stock market can also carry out M & a through financing and launch equity incentive plan to attract talents. Why does Kangning hospital insist on A-share listing?

An investment bank personage pointed out to the reporter of 21st century economic report that Kangning hospital was eager to return, perhaps because the market value of the company in the Hong Kong stock market had been undervalued for a long time, and investors could not get better return on investment and return to the A-share market or seek a higher market value premium.

The 21st century economic report reporter noted that in November 2015, Kangning hospital landed in the Hong Kong stock market at the issuing price of HK $38.7 per share. As of 2020, the four dividend dividends have never been implemented, and the total share capital of the company has remained stable, but the company's share price has continued to operate at a low level after listing.

On November 23, 2015, the second trading day of Kangning hospital's listing, the company's share price reached a record high of HK $51.60 per share, and then it continued to decline until the end of 2020. In July 2020, in the early days of the company's re listing guidance, the company's share price once hit a record low of HK $13.04/share, with a total market value of less than HK $1 billion.

Some institutional investors to withdraw

In March 2013, Kangning Co., Ltd. (the predecessor of Kangning hospital) introduced institutional investors for the first time. New shareholders such as Defu fund, Beijing Dinghui Weixin and Beijing Dinghui Weisen respectively subscribed for the company's newly increased registered capital of 4.8437 million yuan, 1.8764 million yuan and 1.3039 million yuan with monetary capital of 90.5 million yuan, 35.0578 million yuan and 24.3622 million yuan respectively, and the capital increase price was 18.70 yuan / share.

In June 2013, Kangning Co., Ltd. increased its capital for the second time. Among them, Defu fund, Beijing Dinghui Weixin and Beijing Dinghui Weisen respectively subscribed the paid in capital of the second phase of 3.875 million yuan, 1.5111 million yuan and 1.0431 million yuan with monetary capital of 72.4 million yuan, 28.0462 million yuan and 1.043 million yuan respectively, with the price of about 18.70 yuan per share.

Due to the influence of share lock-in, the investors in the early stage of Kangning hospital have not found a feasible exit channel because the stock price of the company is not ideal.

In November 2016, for the fourth share transfer of Kangning hospital, Beijing Dinghui Weixin and Beijing Dinghui Weisen respectively signed share transfer agreements with Shanghai Qiangang investment. Beijing Dinghui Weixin transferred its 585600 shares to Shanghai Qiangang investment at a price of 18.5041 million yuan, and Beijing Dinghui Weisen transferred its 2667600 shares to Shanghai Qiangang investment at RMB 4.2963 million yuan.

Meanwhile, Beijing Dinghui Weixin transferred its 3.2532 million shares to Shanghai Tanying investment at a price of 103 million yuan. Guan Weili and Wang Hongyue, the actual controllers of Kangning hospital, agreed with Qingdao Jinshi that Guan Weili would transfer 1.46 million shares to Qingdao Jinshi at 46.136 million yuan, and Wang Hongyue would transfer 1.32 million shares to Qingdao Jinshi at 41.712 million yuan.

According to the stock transfer agreement at that time, the above-mentioned share conversion price was 31.60 yuan per share, which was only slightly lower than the stock price of Corning hospital at that time about HK $35 per share.

After the new institutional investors took over the offer, the stock price of Corning hospital continued to decline until July 2020, when it reached the historical lowest price of HK $13.04/share. The slump of Hong Kong stock price directly trapped most investors of Corning hospital in the early stage. Up to now, most of the above-mentioned shareholders are still shareholders of Corning hospital.

According to the above-mentioned investment bankers, the return to the A-share market demands higher valuation premium, creating exit channels for investors, which may be the main purpose of Corning hospital's return to a shares.

Stimulated by the good news of the rush to A-share listing, the stock price of Kangning hospital rose all the way after July 2020. Especially after the official announcement of the company's A-share listing in June this year, the stock price went out of a big wave, with an increase of more than 80% in the same month, and reached a historical high of HK $55 / share on June 28, and then started a correction. As of September 27, the company's share price closed at HK $34.10 per share, with a market value of HK $2.544 billion.

Is the question of "front car" resolved

It is worth noting that it is only two years after the company's last defeat that the A-share company broke through. Has Kangning hospital changed many previous problems and its performance has been guaranteed for a long time?

According to the financial reports before and after, the revenue of Kangning hospital continued to grow steadily from 2016 to 2020.

In 2020, the company's revenue was 1.031 billion yuan, with a year-on-year growth of 20%. The net profit attributable to the parent company was 70 million yuan, with a year-on-year growth of 22.2%. The revenue of its own hospital was 978 million yuan, doubling the scale compared with 2017. In that year, the number of medical institutions under Kangning hospital reached 24 (including an independent Internet hospital), and the number of operating beds increased to 7483. In the first half of 2021, the number of its own hospitals increased to 25, including an independent Internet hospital, and the number of operating beds increased to 8328.

What puzzles the market is that the company's revenue has grown rapidly, but the profitability of the company has not been greatly improved since the listing of Hong Kong shares. From 2016 to 2020, the revenue of Kangning hospital was 416 million yuan, 667 million yuan, 746 million yuan, 860 million yuan and 1.03 billion yuan respectively, but the net profit attributable to the parent company was 68.832 million yuan, 49.07 million yuan, 80.596 million yuan, 57.289 million yuan and 70 million yuan respectively, The net profit fluctuates greatly, and the double increase situation of increasing income and increasing profit is not realized.

When Kangning hospital applied for A-share listing for the first time, the regulatory authorities raised a number of questions and asked Corning hospital to explain whether the company provided management services to many psychiatric hospitals, general hospitals focusing on mental rehabilitation and psychiatric departments through management output. Whether the management service fees did not conform to the accounting standards and involved in department contracting violating laws and regulations, Whether there is horizontal competition in holding private non enterprise units.

The regulatory authorities asked Corning hospital to explain whether it was reasonable to cancel or transfer some related parties in the company's related parties during the reporting period, and whether the related party transactions were not related. At the same time, Corning hospital was required to explain that there were temporary changes in the planned use of the company's own and leased properties, State whether it is legal to temporarily change property for industrial use to medical purpose.

According to the investigation of 21st century economic report, the above problems still exist in Kangning hospital, and some of them have already started to explode.

For the operation project of Yanjiao Furen Hospital of Kangning hospital, which was named and inquired by the regulatory authorities, according to the hospital entrusted operation and management service agreement signed by both parties in March 2015, the period for Kangning hospital to obtain the full operation and management right is from April 1, 2015 to December 31, 2034. In 2019, the project has been sued by Ding Xinfu, the sponsor of Yanjiao Furen hospital, It is required to unilaterally terminate the management agreements of Yanjiao Furen hospital.

Kangning hospital said it would make its best efforts to reduce any negative impact of the possible termination of these management agreements in Yanjiao Furen hospital, and would take all appropriate actions to protect the interests of the company and its shareholders.

Not only that, the company has been questioned some of the doctor's practice compliance problems have also been exposed.

In March this year, Pingyang Kangning hospital even broke out that five "fake doctors" were punished. According to the punishment of public information, the main illegal fact is the use of five non-health technical personnel to engage in medical and health technical work.

When Kangning hospital first rushed to A-share listing in 2016, in addition to the management of operation mode, related party transactions, illegal change of land use nature and other matters, Kangning hospital was exposed during the key period of listing. From 2014 to the first half of 2017, the company involved in 25 medical disputes, 16 deaths and compensation expenses of millions of yuan.

According to the prospect of Kangning hospital, the company's financial operation is facing uncertainty compared with the previous market environment.

From 2018 to 2020, the settlement amount of the company's public medical insurance accounted for 56.6%, 58.2% and 61.4% of the cash received from the company's sales of goods and provision of labor services.

At present, the reform of medical insurance fee control is in-depth promoted. If the medical institutions of Kangning hospital can not maintain the qualification of medical insurance, or the national public medical insurance policy changes adversely, the company's operation relying on medical insurance settlement will have a significant adverse impact.

On the other hand, at present, the company's medical staff turnover rate is high. According to Corning hospital, with the increase in the number of medical institutions, the company may not be able to recruit or maintain sufficient medical staff, or it will be difficult to provide ideal medical services for patients.

In addition, medical institutions need to obtain a license to carry out business, which usually has a period of validity and needs to be inspected regularly. In the future, if the company's medical institutions fail to renew the license due to poor management or non-compliance with the law and other reasons, it will have an adverse impact on the company's operation.

Compared with the content disclosed in the previous prospectus, Kangning hospital still has problems in operation, finance and business to be solved. Whether the company's second sprint to the A-share market can be carried out in compliance with the regulations, no more specific information has been disclosed to the public at present, so the reporter will continue to pay attention to this.

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