BENQ HOLDING, touted as the largest private hospital group in East China, debuted on the Hong Kong Stock Exchange on the 22nd but saw its shares nearly halve on the first trading day, marking the worst IPO performance among Hong Kong-listed stocks this year. Despite a modest 3% rebound on the 23rd, the stock still recorded a staggering two-day drop of 48%. Over the past year and a half, the company has faced declines in both revenue and net profit.

Data shows that BENQ HOLDING operates two large-scale tertiary general hospitals in Nanjing and Suzhou, with a combined registered bed capacity of 1,850. According to Frost & Sullivan, it ranks as the largest private for-profit general hospital group in East China by 2024 revenue and leads in bed-to-revenue ratio among similar mainland Chinese hospitals. Its parent company is Qisda Corporation, listed in Taiwan.

The poor market reception was foreshadowed by lukewarm subscription rates—6.28x for the Hong Kong public offering and just 1.28x for international placement—far below recent hot IPOs. Pre-listing gray market trading saw shares slump to HK$7.15, down over 23% from the issue price. Analysts attribute the steep decline to an inflated valuation, with a median PE of 29.8x versus the sector average of 16.7x.

Financial reports reveal that from 2022 to 2024, revenue edged up from RMB2.34 billion to RMB2.66 billion, but net profit fell sharply from RMB167 million to RMB109 million (-34.95% YoY in 2024). H1 2024 results showed further deterioration: revenue dipped 1.34% to RMB1.31 billion, while net profit slid 23.18% to RMB48.7 million, with gross margin contracting to 15.9% from 19.3%.

The company cited reduced outpatient visits due to early-2024 infectious disease outbreaks as a key factor. Deeper structural challenges include profit pressure from DRG-based insurance reimbursements, which cap hospitalization payments. Market preferences also weigh on valuation—specialty hospitals typically command 30%+ gross margins versus sub-18% for general hospitals like BENQ HOLDING.

Controversy surrounds its premium pricing model: average hospitalization fees hit RMB18,000 per stay in 2023, and outpatient fees reached RMB500, both exceeding public hospital averages. The group also logged 284 patient complaints, mostly over inefficiency and poor service attitudes, alongside 231 unresolved medical disputes—54 involving fatalities—raising compliance concerns.

The healthcare sector’s IPO hurdles are not unique to BENQ HOLDING; peers like Shulan Medical and Lu Daopei Medical have similarly struggled. Proceeds from this listing (HK$555 million net) will primarily fund hospital expansions (74.3%) and M&A (16%), though DRG reforms have already trimmed per-patient revenue at its existing facilities.