Legend Holdings: Good as the "savior" of the medical profession?

On March 17, 2017, the father of Lenovo, Liu Chuanzhi, announced the listing of Honghe Renai Medical at the Hong Kong Stock Exchange's “咚咚咚咚咚” five consecutive sounds, and Lenovo's medical map was another city.

In our impression, Lenovo is the king of the PC that grew up from the Zhongguancun Communication Room in 1984. It is inseparable from medical treatment. In fact, in the millennium, Lenovo's business structure has undergone important adjustments. In 2000, Lenovo's business structure was divided into two parts, part of which was led by Yang Yuanqing's computer products business, today's Lenovo Group, and the other part is the Digital China IT sales agency led by Guo. After 2000, Lenovo Group and Digital China listed separately. Liu Chuanzhi led several generals such as Zhu Linan and Zhao Linghuan to establish Legend Holdings, and opened up new financial investment business. Medical investment is also a key area of ​​concern.

In recent years, along with the macroeconomic downturn, capital winter and so on, the development of a relatively stable medical industry has become a “big cake” for all walks of life. Ali, Wanda, Evergrande, Ping An Group and other industry leaders have laid out.

Zhu Linan, the current president of Legend Holdings, has not concealed his optimism in the medical field: "Medical health is an industry that benefits the country and the people, and has great potential for development. It is an important topic of strategic concern for the entire investment system of Legend Holdings." Therefore, the wings of Lenovo's medical care are also becoming fuller.

Lenovo's medical empire

At present, Legend Holdings' strategic investment business focuses on financial services, innovative consumption and services, agriculture and food, among which medical health is an important direction of the innovative consumption and service sector. Since 2008, Legend Holdings has been in the medical field. Its Junlian Capital, Hony Capital, and Lenovo Star have been working in the medical field for many years, including new drug research and development, genetic technology, CRO, medical services, etc. All have a wide layout.

As of May 2018, the company's Junlian Capital Medical Fund has accumulated more than 70 investment companies, involving more than 700 million US dollars. The investment in WuXi PharmaTech, Jinyu Medicine, Berry Gene, Mingde Bio and other enterprises has been listed; In 2008, Lenovo Star focused on early investment, and now has invested in five or sixty companies including pioneering pharmaceuticals, burning stone medicine, and Paige Bio; In 2017, Hongyi Capital, who was at the helm of Zhao Linghuan, also led Honghe Renai Medical to Hong Kong IPO. As early as 2008, it has also included the well-known listed pharmaceutical company Shijiazhuang Group.

In terms of business model, Legend Holdings is driven by strategic investment and financial investment. Financial investment generally has “rental period” and “time requirement”. Lenovo mainly relies on exit to obtain financial returns, while strategic investment is to achieve the company's vision – “leading companies in multiple industries” It has become Lenovo's own "pro-son", even if it is listed, Legend Holdings will hold it for a long time. There are many “dry sons” invested by Legend Holdings, and two affiliated medical companies that are “pro-life” are relatively cautious: Baibo Dental and Shanghai Deji Hospital focus on medical services.

For both, Lenovo is a big entry. In June 2014, Legend Holdings invested 500 million yuan in strategic investment, and obtained 54.90% of the equity, and entered the medical and health field. In 2016, Legend Holdings and its subsidiary Junlian Capital invested more than 100 million yuan in strategic investment in Shanghai Deji Hospital, and Lenovo held a 60-70% stake in Deji. This is the second time that Lenovo has entered the medical field after holding the Baibo oral cavity. It is also the first brain specialist hospital in China that integrates medical treatment, teaching and scientific research.

So, what is Lenovo’s medical investment strategy? What about Lenovo’s “investment vision”?

Investment strategy: "stable" word

In the past 18 years, Legend Holdings has invested in more than 800 large and small enterprises. Liu Chuanzhi once talked about the investment strategy of Legend Holdings in an interview. One word: stable. Focusing on the most certain factors in uncertainty, consumption, health, etc. are the first choices, and will not be completely subverted because of business models or technology. It seems that Lenovo's layout of medical care is not difficult to understand.

In addition to financial investment, whether it is Baibo focusing on oral cavity or Deji Hospital focusing on brain science, it belongs to private specialized hospitals, and the entry point of Lenovo medical layout can be seen. In fact, in the context of public hospitals in China, private hospitals are difficult to compete with public hospitals regardless of their talents or payment advantages. Specialties are actually the inevitable development law that forms differentiated competitive advantages.

However, Liu Chuanzhi’s entry into private specialty hospitals is mainly for stability. He once said in an interview that on the one hand, the private specialist hospital system is simple and better adjusted. On the other hand, it has invested in a comprehensive large hospital at the beginning, but lacks the leading figures familiar with the industry. Is it really in line with the hospital management method? Clear things can't be rashly acted. Cut in from private hospitals and extend relevant experience to other projects.

Regardless of the overall investment layout or the decision-making on specific projects, Liu Chuanzhi has consistently followed the words “stable” and “insurance”, which is in line with Lenovo’s “100-year-old shop” corporate culture. In the same year, Liu Chuanzhi also missed the opportunity to invest in “BAT” because of “stable” and has regretted it so far.

Legend Holdings has reached 18, and the medical service sector has only two sons under the knee. Is it too "stable" and lacks a little adventurous spirit? Can stability be "winning"?

Investment vision: good as a "savior"?

"Stable" really does not necessarily "win". From the perspective of corporate revenue, both Baibo Dental acquired in 2014 and Deji Hospital invested in 2016 are all at a loss.

In June 2014, Legend Holdings held a billion-dollar investment holding Baibo oral. Baibo took the 10 billion yuan and did not make up the loss in time to “big hole”, but to expand the scale. At the end of 2015, Baibo's dental stores increased by 80% compared to 2014, with 27 hospitals and 108 clinics. By the end of 2017, the number of stores reached 212, which is the largest dental chain in China.

At the same time, however, the “holes” of losses have also grown. The annual net loss in 2015 was 369 million, up to 795 million in 2016, and 793 million in 2017, with a loss of nearly 2 billion in three years. .

Then in 2016, Legend Holdings acquired and controlled Deji Hospital, which is based on brain science. From September to December 2016, it lost 12 million yuan, and in 2017, it lost 9 million yuan.

Is it that Lenovo’s “investment vision” is too bad? Good as a "savior"?

In fact, compared with the loss in 2016, Baibo's oral loss in 2017 was 793 million, down 2 million, and its profitability is gradually improving. Some industry insiders pointed out that the prototype of the Baibo dental aircraft carrier has already appeared. As long as lean management, the solution to the loss problem is only a matter of time. In the field of oral medical services, Lenovo seems to be about to "call the wind"?

Interestingly, this year, Taikang invested 2.062 billion in Baibo, and Legend Holdings also increased its capital, but it also relegated to the second largest shareholder, accounting for 36.51%. In addition, although Lenovo Holdings has also controlled, but did not participate in direct business management, but the owner of the money, and Taikang entered the Baibo, came to personal affairs and exchange blood. The most obvious is that Zhu Zhenghong, vice president of Taikang Health Industry Investment and general manager of the Medical Development Division, is the CEO of Baibo. Lenovo acquired Baibo for four years. Seeing that Baibo ushered in profitability, Lenovo lost its controlling stake, as if it was making a wedding dress for others?

In Deji Hospital, after a year of acquisition of Deji Hospital, Legend Holdings achieved initial results through operations management, cultural construction, improvement of medical services and talent introduction. The loss dropped from 12 million to 9 million. It is understood that Deji Hospital is composed of well-known Chinese medical experts as the core team. Although it was only established for five years, it has established a leading level of expertise in China. For medical, especially brain specialist hospitals, the importance of medical technology is self-evident, and Deji Hospital does have the potential of an industry leader. For this "potential stock", can Lenovo Holdings "control the end"?

Although it has been adhering to the investment strategy of “stable words”, from the current performance, Lenovo does not seem to be “stable” in the medical field. In 2018, Legend Holdings also ushered in "adult ceremony", how will Lenovo develop in adulthood?

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