Hong Kong unicorn bets on positive Covid-19 results

Prenetics reckons its 2025 revenue will hit $640mln, a near-10-fold jump from last year

  
Floor traders work during afternoon trading at the Hong Kong Stock Exchange November 6, 2013.

Floor traders work during afternoon trading at the Hong Kong Stock Exchange November 6, 2013.

REUTERS/Bobby Yip

(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)

HONG KONG - Even Hong Kong's startups are not immune to the SPAC craze. Biotech company Prenetics, known for providing Covid-19 testing for travellers at airports and English Premier League soccer players, said on Thursday it will go public by merging with Artisan Acquisition, a special-purpose acquisition company backed by local tycoon Adrian Cheng. The deal values the combined equity at $1.7 billion and the Prenectics enterprise at 4.1 times the company's own forecast 2023 revenue.

That looks cheap. Listed peers like Exact Sciences and Invitae Corp trade at over 7 times their estimate top line for that year, per Refinitiv. Still, Covid-19 testing is unlikely to remain a revenue generator for Prenetics for long. That business is expected to ring in $173 million in sales this year, or 84% of its revenue. The company run by Danny Yeung conservatively estimates that only a fifth of current testing revenue will remain by 2023. That explains why it’s launching products like on-the-go diagnostic kits for influenza and sexually-transmitted diseases, colorectal cancer-screening and at-home blood collection. Prenetics reckons its 2025 revenue will hit $640 million, a near-10-fold jump from last year.

Eye-watering growth based on new technologies and changing habits has burned investors before. Prenetics insists its upcoming products are mostly in late-stage development and that the pandemic is an opportunity to “better reimagine healthcare”. It’s a brave new post-Covid world.

CONTEXT NEWS

- Hong Kong biotech company Prenetics will go public by merging with Artisan Acquisition, a special-purpose acquisition company, the two said in a statement on Sept. 16. The deal values the combined company's equity at $1.7 billion and is expected to close in the fourth quarter of 2021 or the first quarter of 2022.

- Prenetics will be "the first unicorn from Hong Kong to be publicly listed in any market", according to the two companies.

(Editing by Antony Currie and Sharon Lam) ((For previous columns by the author, Reuters customers can click on MAK/ SIGN UP FOR BREAKINGVIEWS EMAIL ALERTS http://bit.ly/BVsubscribe | robyn.mak@thomsonreuters.com; Reuters Messaging: robyn.mak.thomsonreuters.com@reuters.net))


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