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Dazhong Dental Files For Hong Kong IPO

The company has filed to list in Hong Kong, aiming to jumpstart its falling revenue and profits by buying up rivals in China's fragmented dental services market

Key Takeaways:

Dazhong Dental has filed to list in Hong Kong, aiming to attract investors with its status as China's fifth-largest dental services provider by revenue and third-largest by profit

The company's lackluster performance last year was mainly due to falling customer visits, but it could benefit from M&A opportunities as the industry consolidates

China's economic slowdown is wiping the smile from the face of Wuhan Dazhong Dental Medical Co. Ltd., as increasingly cautious consumers rein in their spending on services like tooth whitening and other oral procedures considered relatively discretionary. But that hasn't stopped the company from seizing on a recent wave of IPO fever in Hong Kong, as it tries to sell itself as a future consolidator in China's highly fragmented dental services sector.    

Dazhong is a relative old-timer on China's dental scene, established by Zhongshan Medical Investment in 2007 before being restructured into a joint stock company seven years later, according to its listing application filed late last month. It was planning to list on China's thinly traded National Equities Exchange and Quotations (NEEQ) board in 2018 but changed its mind due to limited trading volumes, and has now shifted its sights to Hong Kong.

China's dental services market is massive, worth 141.8 billion yuan ($19.7 billion) in 2019. But growth has largely stalled since then, partly due to the pandemic and a slow post-pandemic recovery. Since 2019, the market has only grown 1.9% to reach 144.6 billion yuan last year. Recent government policy measures to boost consumption have been providing some indirect relief to the market, which is expected to resume growing at an average rate of 6% from 2023 to reach 193.2 billion yuan in 2028.

The Chinese dental services market includes a mix of both public and private ...