BENQ HOLDING (02581), ranked as China's top private for-profit comprehensive hospital group in 2024, made its fourth attempt to list in Hong Kong, finally securing approval for trading on December 22 after completing its IPO subscription from December 12 to 17.
The journey to Hong Kong has been rocky. BENQ HOLDING first submitted its listing application in April last year, but the prospectus lapsed after six months due to incomplete documentation, compliance risks, and business model flaws. Subsequent attempts in October 2023 and April 2024 also stalled—despite passing the hearing in its third attempt, the company failed to proceed, leading to another lapse in October. This marks its fourth IPO bid, now the closest to success.
**A "Top-Ranked" Player Facing Growth Challenges** BENQ HOLDING operates two major hospitals in Nanjing and Suzhou. Post its latest equity transaction, the company was valued at $375 million. In 2024, it ranked as East China’s largest private for-profit hospital group and seventh nationally, holding a 0.4% market share. Notably, it led in revenue per bed among all such groups in China.
Financially, revenue grew from RMB 2.34 billion in 2022 to RMB 2.66 billion in 2024, but net profit fluctuated—RMB 168 million in 2023 dropped to RMB 109 million in 2024. H1 2024 saw revenue at RMB 1.31 billion, with net profit plunging 23% YoY to RMB 49 million. Operating cash flow also fell 52.05% to RMB 80.1 million.
The company attributed the decline to reduced outpatient visits amid early 2024 pandemic conditions, offsetting gains in inpatient revenue. Additionally, DRG payment reforms squeezed margins, with average hospitalization costs dropping post-implementation in both Nanjing and Suzhou. With bed occupancy hitting 97.1% (102.8% in Nanjing), BENQ HOLDING plans to expand capacity by adding 1,800 beds over six years, allocating 74.3% of IPO proceeds to hospital upgrades.
**"Mechanism B" Meets Tepid Demand** Hong Kong’s August 2024 IPO reforms introduced "Mechanism B," allowing issuers to fix public allocation at 10–60% without clawback. While designed to stabilize pricing and empower institutional investors, it risks backfiring for overpriced listings with weak institutional interest.
BENQ HOLDING adopted Mechanism B, offering 6.7 million shares (10% public, 90% institutional) at HK$9.34–11.68, aiming to raise up to HK$782 million. At the mid-price, its float would be just HK$394 million, with cornerstone investors locking 44.1%.
Subscription closed on December 17 with 3.7x oversubscription (HK$368 million margin financing). However, dark pool trading on December 19 opened at HK$9.00 (-3.64%), plunging 23.45% to HK$7.15 within an hour.
The weak reception likely stems from valuation concerns. At the mid-price, BENQ HOLDING’s P/E of 29.8x far exceeds peers like Hygeia Healthcare (15.67x) and the sector average (16.72x). With high financing needs and stagnant growth, its premium pricing appears a key deterrent.