Good Doctor HK offering to provide healthy returns

Investors make a beeline for shares; Ping An Health may lock in HK$300b

Ping An Healthcare and Technology Company, an online medical services platform, is expected to cover the retail tranche of its up to HK$8.8 billion ($1.1 billion) initial public offering more than 500 times over, going by initial investor response.

Market insiders said if the expectation comes to pass, Ping An Healthcare could well prove to be Hong Kong's very first blockbuster New Economy IPO this year.

It will thus set the stage for a cluster of mega-sized deals that will likely follow suit, they said.

By Thursday morning, retail investors signed up for HK$168.4 billion of margin loans at 17 local brokerages.

That will help small investors to borrow funds to boost their orders in hopes of securing an allocation in the highly sought-after offering.

The margin loans extended to retail investors were more than 290 times the value of shares available to the public.

They also surpassed the HK$125.4 billion offered for the floatation of Tencent-backed Chinese Literature in 2017.

Back then, retail investors placed orders worth HK$520 billion, or 625 times more than the number of shares China Literature had on offer.

The healthcare unit of Ping An Group, the largest insurer by market value in the Chinese mainland, is estimated to lock in roughly HK$300 billion for its Hong Kong listing subscription.

That would put it on course to become the city's best-performing IPO, next only to China Railway Construction Corporation and Chinese Literature. The former took a record amount of HK$534 billion in 2008.

Widely known as Ping An Good Doctor, the online firm is considered the country's biggest of its kind in terms of users. It closed its retail book on Thursday and is scheduled to make a market debut on May 4.

It plans to offer 160 million shares in the price range of HK$50.8 to HK$54.8 each, with minimum investment of HK$5,535.2 for a board lot of 100 shares.

"Hailed as one of the hot investor themes of the year, Good Doctor comes right after the Hong Kong stock exchange almost put the final touches to its biggest listing rule reform in 25 years, in a move to turn the local market into a magnet for New Economy companies," said an analyst at one of the Big Four accounting firms in Hong Kong.

"The offering may have what it takes to rekindle Hong Kong investors' love affair with IPOs, especially as the mounting trade tensions between the Chinese mainland and the United States, as well as US bond yields' rise, cast a shadow on the Hong Kong stock market," said Daniel So, Hong Kong-based strategist at China Merchants Bank International.

"Given the sustained market uncertainties, whether Good Doctor could replicate the stellar market debut of Chinese Literature still remains to be seen," So said.

Founded in 2014, Shanghai-based Good Doctor is the first of an array of fintech spin-offs that Ping An Group is looking to cash in on, following the financial center's renewed love for New Economy unicorns, or startups with a valuation of $1 billion or more each.

The insurer's spin-off listing spree is said to include One-Connect, a provider of mobile banking and interbank trade technology, and Health Connect, which helps hospitals access patients' medical records.

Ping An Group's online lending platform Lufax is reported to be holding off on its Hong Kong listing until it receives more details on a renewed licensing framework.