Analysis of Diasys Biotech's Hong Kong IPO and Its Impact on IVD Industry Investment & Valuation Logic

Based on available public information and industry data, I provide the following comprehensive assessment and recommendations on the impact of Diasys Biotech’s Hong Kong IPO on IVD industry investment, as well as the valuation logic and investment opportunities for biotech companies listed in Hong Kong.

I. Potential Impact of Diasys Biotech’s IPO on the IVD Sector

IPO Scale and Sector Signals (search result clues):

• Diasys Biotech (DIAGENS) plans to issue no more than 31,004,000 overseas listed ordinary shares and is advancing its Hong Kong IPO filing (see clues from screenshots related to company name and stock code). Although there is no exact offering price range yet, this scale indicates that the company is entering Hong Kong stocks via a ‘small market capitalization + high growth’ path, which has a demonstration effect for domestic small and medium-sized IVD companies.
• Impact on the IVD sector: Against the backdrop of top IVD enterprises (such as Roche, Danaher, Abbott) facing growth pressure in China in 2025, even layoffs and business adjustments, domestic IVD companies are expected to continue increasing their market share and performance resilience by leveraging localized channels, cost control, and overseas expansion as a hedge [1]. If Diasys Biotech successfully lists, it will send a signal to the market that strengthens the dual themes of ‘domestic substitution + overseas expansion’.

Reflection of Industry Pattern Changes (search result clues):

• In 2025, foreign IVD giants made significant adjustments in China: Roche China saw a marked decline, Danaher incurred losses and implemented cost-reduction measures internally, while Thermo Fisher and BD divested diagnostic businesses and streamlined their organizations [1]. Volume-based procurement and medical insurance cost control continued to suppress the conventional chemiluminescence and immunoassay tracks, which is both pressure and opportunity for domestic companies.
• Accelerated domestic overseas expansion: Mindray Medical’s overseas IVD revenue accounted for 37% of total revenue; New Industry’s overseas revenue increased by 21% year-on-year, accounting for 43% of total revenue. Overseas channels and localized production (layout in multiple countries) have become key growth drivers [1]. If Diasys Biotech can replicate or benchmark their overseas business paths, it will be easier to obtain a valuation premium.

Investment Implications:

• Market attention will shift to medium-sized IVD companies with ‘differentiated technology or overseas expansion capabilities’, especially leading enterprises in segmented tracks such as molecular diagnostics, POCT, and companion diagnostics.
• The post-IPO trading performance of Diasys Biotech (first-day rise/fall, break/ premium, trading volume and turnover) will affect the window and pricing space for subsequent IVD companies to issue in Hong Kong.

II. Evolution of Valuation Logic for Hong Kong Biotech Companies (Especially 18A)

Paradigm Shift from ‘Pipeline Storytelling’ to ‘Commercialization Landing’ (search result clues):

• The Hong Kong 18A sector once allowed unprofitable biotech companies with core products entering Phase II clinical trials to list. Early valuations relied more on pipeline potential and academic background to ‘tell stories’. However, after the market sentiment shifted in 2025, investors paid more attention to commercialization capabilities and self-hematopoiesis capabilities [2][3].
• Starting from the second half of 2025, 18A new stocks continued to break, the standards for cornerstone and anchor investors increased, pressure on the issuance side rose significantly, and the market became more cautious about ‘tail enterprises’ (advanced pipelines, lack of products, insufficient core advantages) [2].

Transformation of Valuation Support Elements:

• Key elements shifted from: number of pipelines, novelty of targets, team background → commercial milestones (number of listed products, revenue scale and growth rate), BD authorization capabilities (down payment and milestone payments), cash flow and cash runway, overseas cooperation or equity monetization, etc. [2][3].
• ‘BD + Commercialization’ has become the main line of valuation repair and valuation increase: targets with products approved/near listing or having reached authorization cooperation with multinational pharmaceutical companies are more likely to be favored by capital [3].

Practical Constraints on Valuation Multiples (search result clues):

• Institutional reports show that valuations of comparable Hong Kong biotech and IVD companies are highly differentiated:
  • Leading companies that have been commercialized, profitable or close to profitable have a forward P/E ratio of 10-30x in the next one or two years (e.g., some IVD and service enterprises have an FY26E P/E ratio of about 10-24x) [1].
  • Unprofitable but near commercialization/with blockbuster pipelines 18A targets mostly use pipeline DCF or comparable sales peak multiple methods, with large valuation elasticity but higher uncertainty [2].
• For IVD companies like Diasys Biotech, the market will refer to both ‘IVD sector P/E’ and ‘18A pipeline valuation method’, eventually forming a mixed valuation anchor of ‘product + pipeline’.

III. Comparable Valuation and Key Indicators for Diasys Biotech and the IVD Sector

Comparable Valuation Anchors (search result clues):

• The 2025-2026E P/E ratios of some IVD/medical testing enterprises already listed in Hong Kong/Shanghai/Shenzhen roughly fall into:
  • 10-20x: Some companies with stable profits and overseas channels [1].
  • 20-30x: Targets with stronger growth or obvious advantages in segmented tracks [1].
• For unprofitable/near-profitable biotech (especially 18A):
  • Market capitalization is closely related to cash balance, pipeline progress, and potential peak sales. The valuation range is large, and some small-cap companies (market capitalization below HKD 500 million) experienced drastic valuation repairs when sentiment reversed [3].

Practical Dimensions for Evaluating Diasys Biotech’s Valuation:

• Valuation Anchoring: Comparable IVD enterprises’ FY26E P/E (10-30x), pipeline value (if involving high-elasticity segments such as molecular diagnostics and companion diagnostics) [1][2].
• Growth and Quality: Revenue and gross margin trends, overseas revenue ratio, channels and partners, inventory and accounts receivable quality.
• Pipeline and Registration: Registration stage of core products, applicable population and market size,兑现ability of clinical/regulatory milestones.
• Cash Flow and Runway: Cash on account and short-term investments, Burn rate, supplementary effect of financing and BD on cash flow [2][3].

IV. Investment Opportunity Evaluation Framework

Opportunities and Positive Factors (search result clues):

• Policy and Demand: Medical equipment renewal, primary diagnosis capacity expansion and precision medical demand long-term support IVD demand; volume-based procurement suppresses prices in the short term, but promotes domestic substitution and share increase [1][3].
• Overseas Expansion and Globalization: Increase in overseas revenue ratio, localized production and service network construction, hedge domestic price pressure and raise valuation ceiling [1].
• BD and Commercialization: Cooperation with multinational pharmaceutical companies or large channel providers, high-proportion down payment authorization transactions, can provide credit endorsement and cash flow support, and improve market expectations [3].
• Sentiment Repair Space: After the 2025 break and correction, the valuations of some high-quality companies that have been commercialized or close to profitable are already in a reasonable low range, and the weight of fundamentals has increased [2][3].

Risks and Factors to Watch Out For (search result clues):

• Sustained Break Risk: If 18A new stocks continue to ‘plunge’ (large first-day decline), it will form negative feedback, affecting subsequent issuance and new subscription enthusiasm. Tail enterprises are more likely to experience insufficient subscription, pricing below expectations, or even issuance failure [2].
• Commercialization Below Expectations: Pipeline clinical results not meeting expectations or promotion progress slower than planned will lead to valuation downgrades.
• Volume-based Procurement and Payment Environment: Prices of conventional testing items continue to be under pressure, eroding revenue and gross profit, which needs to be hedged through overseas expansion and high-value-added products [1][2].
• Cash Runway Pressure: For unprofitable or early-profit companies, mismatches between Burn rate and financing window may lead to liquidity risks [2][3].

V. Executable Recommendations and Strategy Points

• Offering Pricing and New Subscription Strategy:

  • If Diasys Biotech’s final pricing falls at the ‘lower limit of comparable companies’ or below the industry average P/E, and the issuance scale is moderate (corresponding to controllable floating shares), it has good safety margin and odds.
  • Focus on the structure of cornerstone and anchor investors, the historical project performance of sponsors, and the coverage of the green shoe mechanism to reduce the risk of break.

• Secondary Trading Strategy:

  • For listed IVD and biotech targets, focus on screening: companies with high overseas revenue ratio, clear BD authorization or cooperation progress, commercialized products and stable revenue growth, and P/E in the range of 10-25x.
  • For small-cap 18A targets, if they break below net cash, have cash runway pressure but have expected key clinical data or commercialization breakthroughs, they can be regarded as high-risk and high-odds game targets, and strict position control is required.

• Primary and Secondary Linkage and Portfolio Allocation:

  • Combine the post-IPO performance of Diasys Biotech to re-evaluate the valuation of unlisted IVD/biotech enterprises with similar business models and technical paths.
  • Recommended Portfolio: Core positions allocate leading IVD with ‘mature commercialization + overseas verification’; satellite positions allocate small and medium-cap targets with ‘pipeline elasticity + BD/commercialization inflection point’; avoid tail targets with pure concepts, no products, and no cash.

• Time Window and Rhythm:

  • The sentiment and liquidity of the Hong Kong 18A sector are cyclical. After continuous breaks, there is often a rebalancing of valuation and pricing. The issuance and allocation window of high-quality targets often appears in the early stage of sentiment repair [2][3].

VI. Summary and Key Conclusions

• Diasys Biotech’s Hong Kong IPO is a representative case under the trend of IVD domestic substitution and overseas expansion. Against the background of top foreign capital under pressure, domestic IVD with technology and channels have a better chance to increase their share and open up overseas increments [1]. The post-IPO market performance will directly affect the subsequent IVD enterprises’ Hong Kong issuance window and valuation benchmark.
• The valuation logic of Hong Kong biotech (18A) has shifted from ‘storytelling’ to ‘seeing products, seeing revenue, seeing cash flow’. Commercialization capabilities and BD authorization quality are the key drivers of valuation repair [2][3].
• For the evaluation of IVD and biotech targets, it is recommended to adopt a five-dimensional framework of ‘product/business (P/E) + pipeline (DCF/peak sales) + commercialization/overseas expansion + cash runway + BD cooperation’. Comparable companies’ P/E (10-30x) and pipeline value are important valuation anchors [1][2].
• In terms of investment strategy, targets with reasonable issuance pricing and solid fundamentals have allocation value; in the secondary market, priority is given to companies with high overseas revenue ratio, clear BD and cooperation progress, and reasonable valuations; strictly control exposure to tail high-risk targets.

References
[1] CMB International - China Pharmaceutical Industry Report (December 2025): Medical device collection continues, IVD faces the dilemma of volume and price decline; Mindray and New Industry’s overseas IVD business ratio and growth data; IVD comparable company valuation (P/E 10-30x range example). https://www.cmbi.com.hk/upload/202512/20251208866295.pdf
[2] Sina Finance - ‘Hong Kong 18A Meets ‘Cold Current’: Continuous Break, Hidden Worries on Issuance Side Emerge’ (2025-12-24): 18A sector break and sentiment changes, commercialization capability becomes the key to breaking the situation, issuance side pressure and differentiation. https://finance.sina.com.cn/roll/2025-12-24/doc-inhcwaft4625266.shtml
[3] Securities Times - ‘JPMorgan Deciphers BD Tide: Where is the Next Explosive Product for Giants ‘Bottom Fishing’ Chinese Innovative Drugs?’ : Reconstruction of valuation logic from ‘storytelling’ to ‘competing products’; BD and commercialization’s driving force on valuation; the role of international investment banks’ endorsement and market expectation management. https://stcn.com/article/detail/3532689.html

(Note: The above analysis is based on public information and retrievable industry reports, and does not constitute any investment advice. Actual investment decisions should be made based on comprehensive considerations of offering pricing, prospectus disclosures, market environment, and personal risk tolerance.)