Haier Biomedical’s Stock Doubles on First Day of Public Trading in Shanghai
The home appliances juggernaut’s biotech branch saw its market cap climb to CNY 9.66 billion (USD 1.37 billion) on October 25.
Haier Biomedical (688139:SH), a Qingdao-based storage equipment manufacturer, started trading publicly on the Shanghai Stock Exchange (SSE) tech board. The firm’s stock price skyrocketed from CNY 15.53 (USD 2.20) to CNY 30.47 (USD 4.31) per share at the end of the first day of bids and asks.
At the moment, this is the 35th enterprise and the second medical equipment company – after aortic intervention devices producer Endovastec (688016:SH) – that has gone public on the Star Market, an experimental venue under the aegis of China’s largest bourse (read more about the marketplace in the latest EqualOcean report – download).
Founded in 2005, Haier Biomedical designs, manufactures and markets biobanks, freezers and facilities to store biomedical samples. Apart from that, it provides a number of cold chain services, as well as low- and constant-temperature storage solutions. The firm’s downstream network comprises a broad gamut of clients, including international organizations, hospitals, pharmaceutical industry players, labs and research institutes.
Currently, the United Nations Children's Fund (UNICEF) is the company’s largest client. It accounted for 8.96% of Haier Biomedical's operating income in 2018. Indian state-backed healthcare corporation HLL Lifecare, a loyal customer that has been buying Haier’s equipment for several years, took the silver, reporting a tally of CNY 33.16 million (USD 4.69 million), or 3.94% of operating revenue, in the same year.
Spurred by rapidly growing research and development expenses – which ballooned by 153% in the past two years, reaching CNY 90.35 million (USD 12.7 million) in 2018 – the firm’s sales are booming. It gained CNY 841.67 million (USD 118.27 million) in 2018, up 74.63% from 2016’s CNY 481.98 million (USD 67.73 million).
Smart labor allocation is another reason for the current success: according to the firm’s IPO materials, 213 employees, or over 23% of the total personnel, are directly involved in various R&D-related activities at the moment. As for the total headcount, the number grew by over 74% from 450 employees in 2016 to 784 in 2018. Importantly, two of them hold Ph.D. degrees; there are also 67 masters and 280 college graduates among Haier Biomedical’s staff.
While the numbers tell us that the firm is on the upswing, there are several cautionary notes to sounds. As previously reported by EqualOcean, some uncertainties come from the specifics of its supply chain: five of the biggest upstream partners of the company account for more than a third of the total operating costs. Another risk category is its dependence on the biotech industry as a whole and the exposure to possible shifts in terms of regulations.
The global medical device market is likely to gather pace over the next few years, with many industry experts being bullish about its prospects. For one, KPMG projects that the sector’s players will receive revenue of up to USD 795 billion in 2030, more than double that of 2015.