BrainAurora-B (06681.HK)
BrainAurora-B, a China-based company specializing in digital therapeutics for cognitive impairments, is set to list on the Hong Kong Stock Exchange on January 8, 2025, with the stock code 06681.HK.
IPO Details:
Purpose of IPO: The company aims to raise approximately HKD 501 million, with the net proceeds allocated as follows:
40% for further R&D activities, advancing clinical trials for additional indications, and promoting sales and distribution of its core product system.
16.5% to assist more hospitals in China in establishing new cognitive centers.
15% to enhance AI and related technological capabilities.
5% to accelerate the development and commercialization of other pipeline products.
15% for collaborations with academic institutions and hospitals in brain science and digital therapeutics research centers.
8.5% for working capital.
IPO Placement and Outstanding Shares:
Offer Price: HKD 3.22 per share.
Total Shares Offered: 181.12 million shares, comprising 18.11 million shares for the Hong Kong public offering and 163 million shares for the international offering.
Market Capitalization: Approximately HKD 4.077 billion post-IPO.
The relatively modest offering size and the company’s position in a niche market may influence first-day trading performance.
Joint Sponsors and Underwriters:
China International Capital Corporation Hong Kong Securities Limited.
SPDB International Capital Limited.
ETNET
The involvement of reputable financial institutions may positively influence investor confidence and the IPO’s performance.
Business Model and Industry: BrainAurora-B focuses on developing digital therapeutic solutions for cognitive impairments caused by vascular diseases, neurodegenerative diseases, mental disorders, and developmental defects. As of December 21, 2024, their core product, the Brain Function Information Management Platform Software System, has been commercialized for eight indications across four major types of cognitive impairments. The company holds a 25% share in China’s cognitive impairment digital therapeutics market and a 91.6% share in the medical-grade segment, based on 2023 revenue.
Financial Health: The company has reported consistent losses over the past three years, with losses attributable to shareholders of approximately HKD 114.3 million in the most recent period, representing a 51.3% decrease from the previous year’s loss of HKD 359.1 million.
Market Position: BrainAurora-B is a leading player in China’s cognitive impairment digital therapeutics market, holding significant market shares in both the general and medical-grade segments.
Sector Trends: The digital therapeutics industry is experiencing growth, driven by increasing recognition of cognitive impairments and the adoption of digital health solutions.
The IPO is scheduled for January 8, 2025.
Recent developments include the company’s involvement in a national project initiated by China’s National Health Commission to establish over 2,100 cognitive centers across public hospitals, potentially enhancing its market presence.
The prospectus outlines the company’s growth strategies, including expanding R&D activities, enhancing AI capabilities, and accelerating product commercialization.
Potential risks include ongoing financial losses, market competition, regulatory challenges, and the need for successful commercialization of pipeline products.
The IPO allotment results are expected to be announced on or before January 7, 2025.
Based on BrainAurora-B’s leading position in a niche and growing sector and the favorable timing of its IPO, it is likely to see moderate to strong demand on the first day of listing. The underwriters’ reputation and the strong fundamentals of the healthcare sector further bolster the outlook.
However, financial losses and reliance on successful commercialization of pipeline products pose risks. These factors may temper short-term investor enthusiasm but provide long-term potential for growth-driven investors.
The IPO price is set at HKD 3.22 per share. Considering the current sector trends and market sentiment, the share price is expected to trade moderately above the IPO price, potentially reaching HKD 3.50 – 3.80 on the first trading day, depending on demand.
Worth Subscribing?
For long-term investors seeking exposure to the digital therapeutics market, BrainAurora-B’s IPO offers a unique opportunity.
Short-term investors should weigh the potential for moderate first-day gains against market risks and volatility.
You can download the BrainAurora-B prospectus directly from:
Thank you
