Phoenix share sale likely to be big draw

Phoenix Healthcare, the first mainland hospital group seeking a listing in Hong Kong, is tipped to be a front runner when it opens its retail book today, along with two other listing candidates.

The three companies hope to raise up to HK$3.89 billion from their share offerings.

An ageing population, urbanisation and rising incomes on the mainland will attract investors to the float of the Beijing-based health-care group, say fund managers.

The group's 12 hospitals and 28 clinics in the capital could be a big net-revenue-spinner, especially after the removal of a clause that would have made it liable to compensate its three major investors if earnings for this year and next failed to meet an agreed level.

Alex Wong Kwok-ying, a fund manager at Ample Capital, said the listing would help affirm Phoenix's leading position on the mainland and bring down its labour costs, which had weighed on its gross margins amid fierce competition for talent.

"It now has the capital to expand its network, and it can offer options as well as cash to draw talent," he said.

While the group's net profit grew an annual average of 50.3 per cent in the three years to 2012, the gross margin of its most profitable hospital management business almost halved to 29.6 per cent from 52.1 per cent in the first six months of this year.