2月28Riel Group, the first unit of China's mid-and high-end oral chain, passed the hearing. Riel Group will become the first dental specialist chain in Hong Kong stocks, as well as the first national brand chain listed company in China's oral industry.

In addition to the halo on the head, the star organization behind it is blessed, which also makes it attract the attention of the whole market as soon as it is heard. Riel Group's shareholder background and sponsors can be said to be an all-star lineup, which can be called high-end among similar companies. Its shareholders include top Chinese and foreign investment institutions with rich investment experience in the field of health care, such as Temasek, Goldman Sachs Group, Hillhouse, QiMing Venture Partners and New Horizon Capital. In addition, the sponsors of this issue are veteran head investment banks Morgan Stanley and UBS.

With an all-star lineup of investors and sponsors, what is the point of interest behind the new Riel Group? You might as well take a look next.

The first unit of China's middle-and high-end oral chain, and the layout of the national chain is advancing steadily.

Founded in 1999, Reel Group is one of the largest chain dental service providers in China, dedicated to providing one-stop, professional and high-quality oral health services to patients throughout their life cycle.

According to the Frost Sullivan report, based on the total income in 2020, Reel Group is the largest high-end private oral health service provider in China, and the third largest private oral health service provider in China. Riel Group has served more than 7.4 million patients and accumulated a growing loyal customer base. For the six months ended September 30, 2021, the return visit rate of loyal customers of the riel group was 47.6%. Customer satisfaction has been 97% in the past three fiscal years.

The leading market position is mainly due to the outstanding standardized chain ability of Ruier Group. Riel Group has always adhered to the essence of medical care and adhered to the business philosophy that "one of the development priorities of chain enterprises is to replicate corporate culture". A set of proven and successful cross-regional business development and operation management model with high replicability and sustainability has been established to achieve national multi-point layout. At present, Ruier Group has 111direct dental hospitals and outpatients, with 1271 dental chairs and 882full-time doctors, and operates in 15 cities across the country.

The analysis of the development model of Ruier Group can be said to revolve aroundTalent, brand, systemThese core pillars.

First of all, based on its leading position in the field of private stomatology and its long-term quality service and customer experience, Ruier Group has built a wide range of brand reputation in the oral industry and the minds of consumers, and formed a strong customer stickiness. It is also conducive to attracting and recruiting doctors and strategic partners.Specifically, the Group conducts business under the dual brand strategy of Ruier Dentistry and Ruitai Dental, providing differentiated services to different target markets. Ruier Dental Power first-tier cities and new first-tier cities are located in high-affordability users and are the leading brand of high-end oral health services. Ruitai Oral mainly focuses on the fast-growing middle-end oral health service market and develops its business through self-construction and strategic mergers and acquisitions.

Second, the essence of the competition of oral medical service institutions lies in the competition of talents. Riel Group has become one of the preferred employers for campus recruitment graduates and public hospital doctors, with a retention rate of 95.8% for full-time dentists with three or more years of work experience, far ahead of most of its competitors.The team of doctors of the group agrees with the management concept of corporate culture and has excellent professional ability. many dentists have professional titles and qualifications such as attending physicians and discipline leaders, and many authoritative experts such as doctoral and master mentors hold full-time posts. In addition, thanks to riel's mature doctor training and empowerment system, the work efficiency of the doctor team has improved rapidly.The average performance of dentists who joined the real group in 2016 / 2017 / 2018 increased at a compound annual growth rate of 43%, 54% and 30%, respectively, during the five / four years / 3 years after joining.

In addition, Reel Group is undergoing digital transformation and upgrading.Based on the standardized operation management system of "ARRAILCARE Raier Road" and the self-developed intelligent and digital SaaS system platform, it can endow the existing chain medical and operation management system and cover the whole business process, which can improve the internal efficiency and benefit the industry ecology at the same time.This will be an important attempt for the transformation and upgrading of the oral health industry.

It depends onThe core system support of talent, brand and systemRiel Group has been able to achieve standardized doctor training empowerment and store operation management, achieve efficient expansion nationwide, and lay a solid foundation for seizing the opportunities of the times.

Industry Dongfeng已起，Of high qualityChain faucetTake the leadBenefit

There is no doubt that Riel Group, as a leader in oral medical services, is highly competitive. On the contrary, the biggest question in the market is whether the oral health service track still has a bright future under the background of dental implant collection.

On February 11, the State Information Office held a regular briefing on deepening the progress of centralized volume procurement of drugs and high-value medical consumables, at which the volume procurement of medical consumables, including dental implants, was mentioned again.

However, there is no need to talk about color change, in fact, dental implant collection has been put on the agenda many times before, and the market expectation of dental implant collection has been relatively sufficient. From 2018 to the present, the collection system has matured and tends to be routine, and "all things can be collected" has become expected.

Secondly, the scope of dental implant collection is "thing", not "service". For private medical service institutions, the price of implant consumable materials and the price of medical services are relatively independent. If the cost and price of consumables fall, it will help Reel Group to give way to consumers and launch a low-and medium-cost dental implant project to cover more levels of customers.

One of the purposes of collection is to achieve "accessibility" of medical treatment. This means that through dental implantation into the collection, its permeability will eventually be greatly increased. In the case of a substantial increase in penetration, the growth rate of patients in stomatology services in public hospitals is relatively slow.The demand for differentiated oral medical services will accelerate the transfer to the leading private chain hospitals and outpatients such as Ruier Group.

At present, the penetration rate of implant teeth in China is low, the base is huge, and the market potential is very great. There is a lot of room for improvement in China's oral market penetration against other mature oral markets such as Europe, the United States, Japan and South Korea. According to the Frost Sullivan report, China's oral health service market will grow at a compound annual growth rate of 19.9% from 2021 to 2025, with nearly 300 billion yuan (in RMB, the same below) in 2025, compared with public hospitals.Private hospitals undertake more incremental demandIn the same period, the market size of China's private oral medical services will grow to 241.4 billion yuan, with a compound growth rate of 23.3%.

For the high growth dividend brought by dental implant collection, the leading medical service enterprises with medical technology and brand advantages are expected to benefit and further expand their leading position.

The eve of the outbreak：Drive into the fast lane of growthCompanyThe profit inflection point has arrived.

The growth of the riel group is already on the eve of the outbreak.

Reviewing the past financial data, Reel Group's performance has grown steadily and has reached a profit inflection point.In fiscal year 2021, the operating income of Ruier Group reached 1.5 billion yuan, an increase of 37.7% over the same period last year, operating profit of 124 million yuan and operating cash flow of 243 million yuan.At the actual operational level, it has achieved a turnaround from losses to profits.

The final loss data on the book is only due to the relevant provisions of the accounting standards.Material losses that are not caused by poor management.This is a clich é. It was also a problem when Meituan and XIAOMI were listed on the stock market.

As the preferred shares and convertible bonds held by investors in each round of preferred shares are included in the financial liabilities measured at fair value and their changes are included in the profits and losses of the current period, as the overall evaluation value increases with the growth of the group's income performance, the corresponding loss of fair value changes increases.That is,Riel.The faster the group's valuation increases, the higher the loss due to changes in the fair value assumed by the contract--On the contrary, it shows the recognition of the value of the real group by the capital market.

The impact of preferred shares will be eliminated after listingConvertible redeemable preferred shares will all be converted into common stock at one time, and this portion of the liabilities measured at fair value will be transferred to equity as a whole and will no longer have an impact on the financial statements. AndExcluding related effects, as of March 31, 2021, Reel Group's adjusted EBITDA (profit before interest, tax, depreciation and amortization) was 359 million yuan, and the adjusted EBITDA profit margin was 23.7%, ranking in the forefront of medical service institutions.

As of2021年12月31The real group has cash and cash equivalents in RMB11100 million yuan, which can be enough to support sustainable development.

look into the future：The growth path of the group is clear, with both growth and certainty

First of all, the promotion of stock hospitals is the core driving engine.The next three years will be a critical period for the development of oral medical institutions under Ruier Group.Fiscal year 2021The proportion of stores in the "steady growth" phase exceeded 50% for the first time, which means that the stock hospital has gradually entered the stage of maturity and profit release.

With the rapid growth stage and the climbing expansion stage, the business of hospitals and clinics has gradually matured, and the profitability of individual stores has increased rapidly.The single chair income of Ruier Dental brand can reach more than 3 million / year, and the single chair income of Ruitai oral brand can reach more than 2 million / year; by contrast, the average single chair income of stores in the steady growth phase of fiscal year 2021 is more than 1 million / year, and there is a lot of room for improvement.

With the acceleration of store climbing, the overall profit margin of stock institutions has entered an upward range.From the perspective of financial data, the market sales and management expenses of the real group have been declining for a long time, and the labor costs of the group's stores have dropped sharply to 38% in fiscal year 2021.Driven by this, the overall store profit margin of the real group rose from 10 per cent in 2019 to 24 per cent in 2021.

In additionCross-regional self-construction and strategic mergers and acquisitions have become a strong driving force for the performance growth of Ruier Group.This kind of development strategy is more obvious especially in Ruitai oral brand. According to the prospectus, Ruitai mouth will speed up self-construction and strategic mergers and acquisitions, strengthen the penetration of existing first-tier cities, and further expand to major second-tier cities.

From the perspective of the company's self-construction and development in Chengdu.Ruier Group opened its first Ruitai Stomatological Hospital in Chengdu in 2014, and then added five new clinics until December 31, 2020. From fiscal year 2015 to fiscal year 2021, the company'sThe annual compound growth rate of income is100%The number of dental chairs increased from 19 to 81.

From the perspective of the company's strategic merger and acquisition model in ChongqingRuier Group entered the Chongqing market in 2016 through the acquisition of 10 clinics, followed by the opening of one Ruitai hospital and six Ruitai clinics. since then, the company's Chongqing revenue has increased significantly, from 2015 to 2015.The annual compound growth rate of income is35%The number of dental chairs has increased from 80 to 217.

It can be said that as the first stock of oral medical services in Hong Kong stock market, Ruier Group not only has a good reputation and bright shareholders, but also has excellent fundamentals, and the follow-up is worth looking forward to.