's previous article, we talked about the expansion prospects of Tongce Medical . Frankly speaking, with the increase in per capita income and consumption levels, and the arrival of the aging population, dental medical services are still a vibrant sub-industry. First of all, my country's population base is extremely large. From children, teenagers to middle-aged and elderly people, different age structures have different oral health needs. According to the agency's forecast, by 2030, the oral service industry in East China (private dental medical institutions are mostly clustered in the economically developed East China) is expected to exceed a market size of more than 200 billion.
Secondly, the oral health consumption penetration of Chinese people is far from reaching the level of developed countries. Theoretically, with the development of social economy in the future, there is still considerable room for improvement in the penetration of oral health consumption.
Thirdly, the demand for personalized and differentiated dental care is increasing day by day, but the majority of public hospital departments only meet basic medical needs and are difficult to adapt to new needs in the new situation; private medical institutions that can provide more convenient and differentiated services will become an important supplementary force and are expected to play an increasingly leading role.
Judging from the actual situation, the company's earliest basic product - Hangzhou Stomatological Hospital , is said to have been radiating around the surrounding area for a long time. In theory, the needs of the audience are somewhat saturated, but it has still maintained a good growth rate in recent years, which is enough to show that the above three trends are completely feasible.
In addition, another very important factor regarding Tongce’s future imagination is the off-site replication expansion under the chain model. In the previous article, we mentioned that Tongce is only a regional king. About 90% of the company's revenue comes from Zhejiang Province, which means that it does not have deep involvement in markets outside the province. If the national market is viewed as a whole, theoretically speaking, Tongce's model still has an extremely broad space for replication and expansion. Imagine that according to Tongce's own blueprint, if it can really cover the whole country, then the current market value will obviously only be regarded as a younger brother.
Is it possible to copy and expand? At least in the past, the company started from a dental hospital in Hangzhou and swept the entire Zhejiang Province through the incubation and expansion model of "main hospital + branch hospital". It seems to have proven its ability in this area to everyone, so it can trigger greater imagination in the market.
Of course, we can’t just look at the good side of the problem. When looking into the future, we must also see some possible hidden dangers on the development path of Tongce. According to personal subjective understanding, there are mainly the following points that need to be observed:
. The main concentration of business in the province is actually a double-edged sword. On the one hand, it means that the national market has a broader space for replication and expansion; on the other hand, it also means that the company does not have many advantages outside the province. From the competitive landscape diagram below, we can see that Tongce, as the leader of private dental medical institutions, only holds 2.3% of the market share . Baibo Dental, which is based in Hainan, is not inferior to it. At the same time, the market share gap between the second and third place does not seem to be too big. Obviously, once you leave Zhejiang Province, your first-mover advantages such as brand, reputation, and strength will be very limited, which will bring a lot of uncertainty to the off-site replication and expansion across the country.
. A common problem of popular tracks is that they easily attract a large number of market competitors to compete for food. In recent years, under the influence of the track effect and the attributes of the dental medical handicraft industry, the number of small dental clinics has grown rapidly, leading to intensifying competition in the industry. This may not be a big problem in Zhejiang Province, where Tongce already has a dominant position. After all, Tongce can rely on many first-mover barriers to crush new entrants. However, once it crosses outside Zhejiang Province and starts working in areas without sufficient first-mover advantages, these competitors that have sprung up like mushrooms will naturally be a big trouble.
, The company has always been stingy with dividends, and often likes to engage in additional issuances. Of course, if it can always maintain a high equity return rate, this will not be a problem. However, as a company dominated by private capital, the major shareholders (actual controllers) have always maintained high equity pledges and some past behaviors have not been very worrying, which makes people feel somewhat unreliable. For example:
In 2015, Tongce launched a huge private placement plan of up to 5.5 billion, intending to acquire 95.67% of the equity of Haijun Technology and 90% of the property shares of Yinghu Creation and Yinghu Sharing by issuing stock ; It also plans to raise matching funds of no more than 550 million yuan to invest in the construction of hospital information management systems and medical data cloud service platforms; and this Haijun Technology is also a company under the name of Tongce's actual controller Lv Jianming . The suspicion of asset transfer is very obvious. Fortunately, it was stopped by Shanghai Stock Exchange that year.
In 2022, Lu Jianming, the actual controller and chairman of , was investigated by the China Securities Regulatory Commission for suspected violations of information disclosure and violations. His behavior involved an illegal transaction of 143 million yuan, which once again made it to the hot search list.
Buffett once said: "If you find a cockroach in the kitchen, then there will definitely be more than one in the kitchen. If you wait patiently, one will follow one after another."
Let’s stop talking about this for today. In the next article, we will talk about the current problems Tongce is encountering and the current valuation situation. Please continue to pay attention (to be continued).
(Risk warning: The views mentioned in this article only represent personal opinions, and the subject matter involved is not recommended. Buy and sell based on this at your own risk.)
