Angel Align, No.1 in China's Clear Aligner Market, to List in Hong Kong... Attention on Ray JV

Care Capital Holds 67.1% Stake
Ray Establishes JV with Care Capital

[Asia Economy Reporter Yoo Hyun-seok] Recently, Angel Align, the leading company in China's clear aligner market, has attracted increasing attention regarding Ray as it submitted its initial public offering (IPO) application for listing on the Hong Kong Stock Exchange.

According to the financial investment industry on the 25th, Angel Align is a clear aligner specialist company 67.1% owned by Care Capital, a dental-focused investment firm. This marks Care Capital's first successful listing result since it began investing exclusively in the dental industry in 2015. Ray is gaining momentum regarding performance growth and future synergy in the rapidly growing Chinese market through a memorandum of understanding (MOU) for establishing a joint venture (JV) with Care Capital.

According to Angel Align's IPO application, despite the COVID-19 environment, it recorded cumulative sales of 601 million yuan (approximately 103.1 billion KRW) and net profit of 156 million yuan (approximately 26.8 billion KRW) up to the third quarter of last year. Compared to the previous year, sales and net profit increased by 23.9% and 120.6%, respectively.

Encouragingly, while sales increased by 23.9%, the cost of sales rose by only 9.09%, which is interpreted as an expansion of operating leverage due to the stabilization of the distribution network. Angel Align shifted from primarily direct sales to hospitals and clinics to starting distribution agent sales in 2018. As of September 2020, the proportion of sales through distribution agents increased to 32.8% of total sales. Angel Align is evaluated to have rapidly grown due to Care Capital, a Chinese dental-focused investment firm and major shareholder, leveraging its distribution network and deep understanding of the dental market.

The financial investment industry is paying attention to the ambitions of Care Capital and Hillhouse Capital, who have continuously supported Angel Align over a long period until its listing in Hong Kong. Angel Align had been operating at a loss for 12 years since its establishment in 2003 until 2015, when it successfully turned profitable immediately after receiving investment from Care Capital, which was established in 2015. Care Capital started as a dental-focused investment firm funded by Hillhouse Capital, a global investment firm in China managing assets of $50 billion as of 2018. Currently, it is rebuilding the Chinese dental industry centered on digital dentistry, investing approximately 2 trillion KRW across upstream zirconia raw materials, implant companies, and downstream franchise dental chains.

With Angel Align's listing on the Hong Kong Stock Exchange, expectations are rising for Ray's entry into China through a JV, not just general investment, led by Care Capital for the first time. Jung Min-gu, a researcher at Hana Financial Investment, analyzed, "When establishing a JV production corporation in China with Care Capital, not only will stable sales channels within Care Capital's network be secured, but sales per case through solution distribution will also occur, leading to an explosive increase in sales to China."

The scale of Angel Align's IPO is expected to be up to $300 million (approximately 360 billion KRW), and as the leading company in China's clear aligner market, a high valuation comparable to the U.S. clear aligner company Align Technology is anticipated.