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Chinese cosmetics and biomedical company Bloomage BioTech, is on the lookout for acquisitions, chief executive Xuekun Jin told FinanceAsia on Thursday.
The Hong Kong-listed corporation has acquired two European businesses already, paying €59 million ($63.7 million) for French cosmetic device maker Vivacy in 2015 and €25.15 million for Revitacare, another French manufacturer, in January. But Jin is eager to gobble up more overseas rivals.
“We have some targets, and we’re working together with a partner,” he said, adding that the company is considering acquisitions in both Europe and the United States.
Bloomage will be helped in its search by its relationship with Singaporean sovereign wealth fund GIC, which owns an 11.93% stake in the company. GIC built its stake in Bloomage through a mix of convertible bonds and straight equity, and holds the shares partly through its private equity and venture capital arm, GIC Special Investments.
“We’re trying to find … companies with technology or brands … especially outside China,” he said. “GIC can be a very useful resource, providing [a lot of] information.”
That is the biggest contribution the Singaporean fund has made as an investor, Jin said. But he added that GIC’s oversight of the company, which comes through quarterly surveys of the business, is also beneficial, ensuring that Bloomage stays “alert”.
Swelling profits
Bloomage announced its annual results on Thursday, telling investors it generated a net profit of Rmb228.1 million ($33.1 million) last year, a 19.8% year-on-year jump. That came as a result of a 29.7% rise in revenues, which hit Rmb844.4 million.
It was not all good news. Bloomage declared Rmb14.5 million in impairments on receivables the company booked last year, a 1,880% rise on the year before.
Ryan Yau, the Hong Kong-based financial controller, told FinanceAsia that Bloomage’s rising number of products meant more suppliers were needed, forcing the company to adjust its credit policy with customers in order to keep growing.
Of the six analysts watching Bloomage’s stock performance over the last year, five had predicted a rally before the latest results. They have an average price target of HK$17.66 between them, compared to the HK$11.08 closing price on Wednesday. (EVA Dimensions analyst Timothy Stanish, the sole dissenter, rates the company a ‘hold’.)
The company’s stock is still a long way from that level. The price is well below a peak of HK$26.80 hit in March, 2014 and has fallen around 30% in the last 12 months. It has moved slightly closer to analysts’ target after the results announcement on Thursday, closing at HK$11.20 after losing much some early gains.
Bloomage is far from the only Chinese biotechnology company to benefit from interest from venture capital funds, as FinanceAsia has previously reported. Bloomage is in discussion with other funds keen to get exposure to the company, although not those that would be likely to break the 5% cap beyond which the Hong Kong stock exchange forces disclosure of interest.
