Aier Eye Hospital Envisions ‘Golden Age’ For PRC Ophthalmology

AIER EYE HOSPITAL Envisions ‘Golden Age’ For PRC Ophthalmologg

Written by Andrew Vanburen (in Shenzhen)

Friday, 17 January 2014 06:30

AIER EYE HOSPITAL GROUP (SZA: 300015), the first healthcare play to go public in China, saw its April-September revenue rise by nearly a quarter to 1.5 billion yuan.

The ophthalmological chain with nearly 50 hospitals to its name envisions even stronger growth going forward on a robust expansion strategy and a strong brand image.
Aier is not only China’s top dedicated ophthalmology group, but is also the world’s largest ophthalmological hospital chain.
“Mainland China’s medical industry is somewhat special.“In the PRC, the sector comprises just 5% of the GDP versus around 17% in the US, which means there is tremendous growth potential here,” said Aier Eye Hospital

 Secretary of the Board Mr. Wu Shijun, speaking in Shenzhen on Friday at the Aries Consulting-organized “3rd Scaling New Heights – Asia Investment Forum 2014.”

Headquartered in Changsha, Hunan Province, the firm currently operates via 49 specialized ophthalmological hospitals across the PRC.
And the number of hospitals under Aier’s umbrella is likely to increase steadily going forward.
“Our fast revenue growth forecasts are based on an aggressive hospital expansion plan with our sector-leading brand recognition also being a big driver.
“Our strategy is to keep adding to our hospital presence, primarily in urban areas with higher population densities, as well as continuing to expand our products and services,” Mr. Wu said.
By 2020, Aier plans to have 150-200 hospitals under its umbrella, which on the high end represents a quadrupling of the current number.
Aier went public in Shenzhen in 2009.
The decision was based on a desire to chase more capital to fuel its rapid growth campaign, and management believes Aier is also expected to benefit from growing investment in the high-growth potential medical/healthcare sector in the world’s most populous country.
“Within the current ‘15th Five-Year Plan’, the central government places a major emphasis on private capital entering the country’s medical and healthcare sector.
“We feel that the sector in China is now entering a ‘Golden Age’,” he said.
Aier’s “Eye” for Technical Detail
The company has been able to prove its ability to make use of benchmark, cutting-edge equipment along with global-benchmark management practices to continually strive for ever higher standards of professionalism and excellence while always putting technological supremacy at its core.
“Aier is helping raise the standard of ophthalmological development in China,” he added.
The medical play must be onto something because it also managed to raise its April-September bottom line 23% year-on-year to 182 million yuan.
Aier operates under the model “National Presence, Regional Concentration,” which allows the Group to be present across the country, while also maintaining its focus on key metropolitan areas.
It was one of the few ophthalmological groups in China to maintain growth between the years 2010 to 2012, a successful run widely attributable to its blue ocean strategy — i.e. stimulating new demand in uncontested market spaces.
Management also attributes its stellar performance to an independent scaled market exposure/expansion strategy in which Aier carefully adjusts the size, scale and scope of its clinical/hospital presence to meet demand on a region-by-region basis.
“This allows us to enjoy stable, sustained growth while extending our service network across the country as market demand emerges.”
It looks like Aier will be able to hold onto its top position in the local market as it carries out its expansion drive.
“There is a very high entry barrier to this sector given the technological requirements and a lot of substandard peers see us as the national benchmark of quality and safety.
“In fact, we own the only registered trademark in our industry nationwide, are the only play with its own affiliated ophthalmological institute, and our business model allows uniformity of technology and service quality across our entire network,” Mr. Wu said.
He added that in continuing to rely on its independent, scaled-market exposure/expansion model of growth, Aier utilizes mainly newly-built or newly-acquired facilities to grow nationwide.
“This allows us to carefully yet steadily expand the reach and depth of our services to become an even more established national player with a broader geographical footprint, and also substantially boosts our domestic market share in the ophthalmology sector.
“As our Chairman has said: ‘Aier’s unified hospital chain development campaign will keep going forward’.”
Mr. Wu said that China’s ongoing and historic urbanization as well as the graying of the country’s population all contribute to Aier’s growth, as does the expansion of the nation’s health care insurance program.
“But the main driver for us going forward will be an increasing appreciation for eye care in China, both preventative and curative.
“Our goal is to become a top level medical services firm not only in China, but on a global scale as well.”

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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