24 May 2019
C-Mer Eye Care founder Dennis Lam (left) has roped in Tencent's Pony Ma (right) as a cornerstone investor ahead of an IPO. Photos: HKEJ
C-Mer Eye Care founder Dennis Lam (left) has roped in Tencent's Pony Ma (right) as a cornerstone investor ahead of an IPO. Photos: HKEJ

Tencent’s Pony Ma backs IPO of Hong Kong eye care company

Tencent-affiliated new listings were highly sought-after in Hong Kong last year. Now, there is one more firm that looks set to join the list: C-Mer Eye Care Holdings (03309.HK).

The Hong Kong-based ophthalmic services provider, which is seeking up to US$73 million in an initial public offering, has Tencent’s founder, Pony Ma, as one of three cornerstone investors.

The company plans to use the money for business expansion in mainland China, a market that offers huge potential.

Eye care services are badly needed in China as a large number of netizens spend long hours on their smartphones.

There were 109 million eye care patients in the country in 2016, and the number is expected to increase to 140 million by 2021, according to government data. That means one out of 10 Chinese has eye problems. However, most Chinese go to public hospitals for eye care services.

The nation’s eye care services market was worth 82.7 billion yuan as of 2016. Of this, public hospitals had a share of 83 percent, while private hospitals only took 17 percent.

The situation has led to a severe supply shortage in quality eye care services on the mainland. In recent years, many middle-class Chinese have been coming to Hong Kong to see ophthalmologists or get eye surgeries.

C-Mer was founded by Dennis Lam in 2012, and the company set up its first eye clinic in the Central district. In March 2014, Lam ventured into Shenzhen and opened an eye hospital there.

The company, which operates under the brand name C-MER Dennis Lam, is the first Hong Kong entity to own an eye hospital on the mainland under the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA).

Currently, the company has four eye clinics in Hong Kong. It will open its second mainland hospital in Beijing this month.

C-MER Dennis Lam had total revenue of HK$140 million and a net profit of HK$25.4 million in the first half of last year, up 21.8 percent and 23.2 percent respectively from the year before.

The Shenzhen hospital had 28,000 patient visits during the first half of 2017, compared with 21,000 patients in Hong Kong. The average surgery cost was HK$13,800 in Shenzhen, while in Hong Kong it was HK$35,000.

C-Mer Eye Care Holdings said it aims to raise up to HK$571 million in the IPO. Of the proceeds, nearly HK$200 million will be used for possible acquisition of three Chinese eye hospitals, while about 40 percent will be spent on launching three hospitals on the mainland.

Some of the remaining money will be used to open two clinics in Shenzhen. The company expects its future growth to come from mainland cities.

The company has a valuation of HK$2.9 billion, equivalent to over 60 P/E multiple. Despite that, it has attracted several big names, including Hong Kong billionaire Ying Lee-yuen and Zhao Yong, son of China’s richest women Chen Lihua, apart from Tencent’s Pony Ma.

Allan Zeman, known as “Father of Lan Kwai Fong”, and Sun Hung Kai’s Kwok family also invested in the firm in pre-listing B round.

There is speculation that C-Mer has attracted over 500 times over-subscription in margin booking.

This article appeared in the Hong Kong Economic Journal on Jan 5

Translation by Julie Zhu

[Chinese version 中文版]

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Hong Kong Economic Journal columnist

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