IPO pricing | Riel Group received 1.74 times more subscriptions, priced at HK$14.62 per share

Futu News, March 21, this Monday$ARRAIL GROUP (06639.HK)$The announcement announced that the company will issue 46.527,500 shares, priced at HK$14.62 per share, and 500 shares per lot. It is expected to go public on March 22.

Rhyl Group received about 1.74 times more subscriptions during the public offering phase. The final number of shares offered for sale was 4.653 million shares, accounting for about 10% of the total number of shares offered (before any over-allotment rights were exercised). A total of 3,268 valid applications were received. The first-hand winning rate was 80%, and the two-hand subscription won the first hand.

Furthermore, the international offering has been slightly oversubscribed (about 1.62 times), and the final number of shares offered was 41.7745 million shares, which is equivalent to about 90% of the total number of shares offered (before any over-allotment rights are exercised). Futu News has compiled relevant data in the following table:

The net proceeds of approximately HK$590 million will be used for the following purposes: approximately 75% will be used for business expansion and the opening of new Rhyl and Ruitai hospitals and clinics in existing and new cities; approximately 15% will be used for the construction and optimization of information technology infrastructure; and approximately 10% will be used for working capital through initiatives to continue providing quality dental care services to customers.

Established in 1999, Rhyl Group has become China's leading dental medical service group, with operations all over the country. It also operates Rhyl Dental (a leading high-port medical service brand) and Ruitai Dental (a leading medical service brand), providing a variety of professional and personalized dental services, including general dentistry, orthodontics and implantology.

According to Frost & Sullivan, in terms of total revenue in 2020, Rhyl Group is the largest dental care service provider in the high-end private dental care service market in China, and in terms of revenue for the same period, the company is the third largest dental service provider in the entire private dental care service market in China.

It is worth noting that the company has been recognized by many well-known international institutions. Shareholders include Temasek, Goldman Sachs, Xintianyu Capital, KPCB, and Qiming Venture Capital.

In terms of financial data, the company recorded a continuous increase in revenue during the past performance period. From 2018 to 2020, the company achieved revenue of RMB 1.08 billion, $1.1 billion and $1,515 billion respectively, with a compound annual growth rate of 18.4%; gross margins for the same period were 15.2%, 10.1% and 24.1%. For the six months ended September 30, 2021, revenue was approximately $841 million, up 16.8% year on year, and gross margin reached 22.3%.

On the industry side, in recent years, the aging population and increasing public awareness of oral health have led to a continuous increase in demand for dental care services in China. As citizens' medical expenses increase and medical insurance services improve, the market for dental care services in China continues to expand.

The market size of dental care services in China increased from RMB 75.7 billion in 2015 to RMB 119.9 billion in 2020, with a compound annual growth rate of 9.6%. Although the market size declined slightly in 2020 due to COVID-19, it is expected that the market size will continue to grow at a compound annual growth rate of 19.9% during the forecast period, reaching RMB 299.8 billion by the end of 2025.

According to the Frost & Sullivan report, growth is expected to be concentrated in the private sector, and its market size is expected to reach RMB 241.4 billion by the end of 2025.

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