Fangzhou Yunkang Advances Toward HKEX Listing Amid Strong Capital Market Confidence in Its Growth Prospects

After passing the IPO hearing of the Hong Kong Stock Exchange, in ChinaLarge-Scale Internet Chronic Disease Management Platform——Ark Cloud Health Holdings Limited(hereinafter referred to as“Ark Cloud Health”),Rapidly EnteringSprintStage.

According to available data, as a leading internet-based chronic disease management platform in China, Fangzhou Yunkang provides comprehensive medical services and online retail pharmacy services in the field of chronic disease management through its “Jianke Platform.” Among these, comprehensive medical services are delivered via the Hospital-to-Home (H2H) model, offering online follow-up consultations for chronic diseases and electronic prescription services, which are gaining increasing popularity among the public. Meanwhile, its online retail pharmacy services significantly facilitate public access to medications for chronic disease treatment and related health supplements.

A Hong Kong-based secondary market investment fund manager pointed out that with the advent of an aging society in China and the growing demand for diagnosis and treatment of chronic diseases, the internet-based chronic disease management market will experience rapid growth in the future.

Statistics show that there are currently over 300 million patients with chronic diseases in China, driving the market size for chronic disease management to grow from RMB 133.4 billion in 2022 to RMB 1.1389 trillion in 2030, at a compound annual growth rate (CAGR) of 30.7%.

In his view, compared with the high risks associated with the development of novel biologics, the chronic disease management sector offers steady and promising growth, making equity investments in related listed companies relatively lower in risk and more robust in potential returns.

The robustness of business development in the chronic disease management sector is also reflected in the year-over-year increase in paying users.

Driven by factors such as the aging population in China and the rising prevalence of chronic diseases among the public, an increasing number of people are willing to “pay” for higher-quality diagnosis and treatment services for chronic conditions on internet-based chronic disease management platforms.

Data from Ark Cloud Health shows that between 2021 and 2023, the number of paying users on its platform grew from 2.5386 million to 4.4397 million, driving total platform revenue up from RMB 1.759 billion to RMB 2.434 billion, with gross profit rising from RMB 220 million to RMB 487 million.

The aforementioned Hong Kong secondary market fund manager believes that if Ark Cloud Health can become the “entry point” for chronic disease management for a larger population, it will further lay the foundation for the company’s steady business development and stronger competitive barriers.

It is worth noting that capital markets are applying increasingly stringent evaluation criteria to leading listed companies in the internet healthcare sector.

Multiple professionals in the secondary capital market have pointed out that, looking at the growth trajectories of leading companies in the Western internet healthcare sector, current players in internet-based chronic disease management must possess three core capabilities to win the favor of investors. First, they need a sustainable business model capable of driving steady development across all operations. Second, they must build a comprehensive chronic disease diagnosis and treatment service system that attracts an increasing number of consumers willing to pay for “higher-quality services.” Third, they should leverage customized marketing services to connect more new drugs and novel diagnostic and therapeutic approaches with relevant patients, thereby continuously cultivating new growth engines.

Currently, Ark Cloud Health possesses strong business competitiveness in all three aforementioned areas.

In terms of sustainable business development, Fangzhou Yunkang continues to refine its H2H (Hospital to Home) service system. By integrating technological solutions with social medical resources, the company provides chronic disease patients with one-stop online services for follow-up consultations, medical advice, and management. This approach not only meets the personalized health service needs of a broad user base but also drives the sustainable and steady growth of its business.

In terms of user stickiness, Fangzhou Yunkang’s number of paying users has grown year by year, driving the continued steady development of its business.

In the realm of customized marketing services, Fangzhou Yunkang leverages its unique tailored content and marketing solutions to enable “precise” outreach of numerous new drugs and novel diagnostic and therapeutic modalities to patients with relevant diseases. This approach not only provides patients with more treatment options and higher cure rates but also boosts sales of new drugs, thereby creating greater growth potential for the company’s own business development.

According to Frost & Sullivan, as of December 31, 2022, there were over 50 service providers in China’s online chronic disease management market. However, based on monthly active users for the previous year, Fangzhou YunKang was the largest online chronic disease management platform in China.

The prospectus of Fangzhou YunKang also disclosed that the continuously growing number of registered users, paying users, and registered doctors has become an important cornerstone for the company's sustained revenue growth.

It is worth noting that, influenced by the relatively low valuations in the Hong Kong stock market, there is a stark contrast between the current valuations of listed companies in internet-based chronic disease management and healthcare management and the robustness of their future earnings growth. This discrepancy is expected to attract “smart money” to position itself at lower price levels, awaiting a reversion of corporate valuations to their intrinsic value.

Following the successful completion of its IPO hearing with the Hong Kong Stock Exchange, multiple investment institutions conducted due diligence visits to Fangzhou Cloud Health, expressing strong optimism about the vast growth potential of China’s chronic disease management sector and the company’s unique competitive advantages.

Fangzhou YunKang stated that, as a leading internet-based chronic disease management platform in China, the company will continue to integrate medical and pharmaceutical resources, consistently enhance user experience and the quality of chronic disease management, promote high-quality development of the chronic disease management industry, and strive to continuously improve returns for shareholders.