What do you think about Ping An Good Doctor's generous dividend distribution after achieving profitability?
A massive dividend plan of HK$9.7 per share has quickly pushed Ping An Healthcare, which has just turned profitable, into the spotlight of the market.
According to the announcement, Ping An Healthcare plans to distribute a special dividend of HK$9.7 per share to shareholders. Based on the company's current total shares of approximately 1.12 billion, the total dividend payout will reach HK$10.85 billion. The source of this dividend is the company's reserved share premium account. Shareholders can choose to receive the dividend directly or opt for a scrip dividend. Based on the closing price on November 19, the company's total market capitalization was HK$16.58 billion, with the dividend accounting for over 65% of the market value.
According to the financial report, Ping An Healthcare currently has ample operating funds. To reward shareholder support and improve capital utilization, the board approved the special dividend, which aligns with the overall interests of the company and its shareholders.
However, the announcement was not met with universal praise. On one hand, Ping An Healthcare only achieved its first profit in the first half of this year, with a net profit of RMB 89.74 million. Announcing such a large dividend at this stage inevitably raises concerns about its impact on operations. On the other hand, Hong Kong-listed companies have many tricks for managing market capitalization, leading some to speculate about ulterior motives.
In our view, this dividend is genuinely good news for all shareholders, and there's no need to worry about hidden agendas. Moreover, Ping An Healthcare's fundamentals have gradually improved after its strategic transformation, and with the backing of Ping An Group, it has steadily returned to robust business growth.
Let’s look at the specifics of this dividend. Under current regulations, the share premium account is a statutory reserve and cannot be used for daily operating expenses. It can only be used for special purposes, such as dividend payouts (subject to company law), capitalization (e.g., bonus shares), or offsetting share repurchase costs or issuance expenses.
According to Ping An Healthcare's interim report, the company's total share premium is approximately RMB 20.343 billion, of which RMB 19.662 billion comes from capital injections, forming the bulk of the premium accumulated during financing rounds and the IPO.
Meanwhile, the company's financial assets, restricted assets, term deposits, and cash equivalents exceed RMB 9.2 billion, with operating funds surpassing RMB 10.1 billion. The total dividend payout is HK$10.85 billion. According to the announcement, eligible shareholders can opt for a scrip dividend. Even if the entire amount were paid in cash, it would unlikely affect daily operations.
In reality, due to the Stock Connect program, not all shareholders will choose cash dividends. Additionally, following the precedent set by Lufax, major shareholder Ping An Group (holding 39.4% of Ping An Healthcare) may again opt for a scrip dividend.
On the surface, this would increase Ping An Group's stake, but in the long run, if the two companies consolidate, it signals the group's strong confidence in Ping An Healthcare's future and willingness to deepen ties. It also hints at greater business support from Ping An Group.
If these funds weren’t distributed, they wouldn’t benefit daily operations and might even draw criticism for excess capital. Distributing them not only strengthens ties with parent company Ping An Group but also marks the first real return to all shareholders.
By any measure, this is positive news for Ping An Healthcare.
After years of strategic transformation, Ping An Healthcare is no longer the same company—its fundamentals have improved significantly. Since launching its Strategy 2.0 upgrade in 2021, the company has integrated deeply into Ping An Group's "integrated finance + healthcare and elderly care" strategy, advancing its managed care approach.
Many investors compare Ping An Healthcare to Ali Health and JD Health, which focus on drug sales, but Ping An Healthcare is now a completely different entity. It has shifted from drug sales to comprehensive healthcare and elderly care services, particularly managed care. This model emphasizes collaboration with payers (e.g., insurers and enterprises) to optimize cost and outcomes through health risk management, service process management, and medical quality management.
According to the interim report, Ping An Healthcare achieved its first profit in the first half of this year, with adjusted net profit reaching RMB 89.74 million, a turnaround of approximately RMB 340 million year-on-year. The business structure has also shifted significantly, with strategic revenue growing 19.7% YoY, accounting for over 87% of total revenue. This indicates the company has largely completed its strategic "changing of the guard" phase, returning to mid-to-high growth.
In family doctor and elderly care services, Ping An Healthcare has vast untapped potential. Its proactive health management system effectively bridges gaps in public healthcare by engaging directly with family members. This segment also boasts strong margins, with a gross margin of 32.2% in the first half, outperforming other internet healthcare firms.
This model is unique among Hong Kong-listed companies, avoiding cutthroat competition. The decision to pay dividends shortly after turning profitable reflects management's commitment to shareholder returns. With interest rates falling, strong fundamentals, a unique business model, growth potential, and backing from a major shareholder, Ping An Healthcare is worth watching. $PA GOODDOCTOR(1833.HK) $Ping An Insurance (Group) Company of China, Ltd.(SH601318)$ $Ping An Insurance (Group) Company of China, Ltd.(02318)$
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