B A S E C A R E
[CICC Report] Basecare Acquires 51% Equity of Cellpro Biotech for A Better Assisted Reproductive Industry
November 3, 2021 · Suzhou
On November 3, 2021, Basecare announced that it reached an investment agreement with Cellpro, pursuant to which Basecare acquired 51% equity of Cellpro by CNY 85 million. After the acquisition, Cellpro will become a non-wholly owned subsidiary of Basecare.

Recent development

On November 3, 2021, Basecare announced that it reached an investment agreement with Cellpro, pursuant to which Basecare acquired 51% equity of Cellpro by CNY 85 million. After the acquisition, Cellpro will become a non-wholly owned subsidiary of Basecare.
Cellpro has prominent advantages in andrology. Founded in June 2012, Cellpro focuses on promoting products and technical services in diagnosis and treatment of assisted reproductive technology. It is one of the earliest and largest male IVD companies in China. Its DNA Fragmentation Index (DFI) test has been included into the Expert Consensus on Male Reproductive Genetics Examination and the Guide for Diagnosis and Treatment of Male Infertility. It undertakes 13 scientific research projects, including 7 national-level projects, and obtained 13 patents and 3 software copyrights. Cellpro's business scope covers 30 provinces, municipalities and autonomous regions, and has cooperated with more than 400 clinical medical institutions.
The market for good prenatal and postnatal care is vast, and the two laboratories should be combined for synergy effects. According to data by the China Population Association and the National Health and Family Planning Commission, the infertility rate of reproductive age couples in China was 12% to 15% by 2016, with about 30% to 40% of infertility caused by male factors. The male laboratory of Cellpro tests male dysfunction and sperm quality, and Basecare embryo laboratory provides accurate embryo screening for fewer birth defects and a complete solution in assisted reproductive screening to expand the market demand of prenatal and postnatal care and accelerate industrialization.
The acquisition is expected to create a complete system of assisted reproductive services. Dr. Liang Bo, founder of Basecare, said that the domestic biomedicine industry has entered the stage of industrial scale. The acquisition will integrate the resources of Cellpro and Basecare, realize the channel, academic and technical sharing, and jointly develop, register and produce kits and instruments. In the medium and long term, Basecare is expected to seize the opportunity of localization and intelligence, accelerate the localization of the platform and instrument, and continue to expand business in andrology for a more comprehensive full productive cycle solution for patients with infertility.
Valuations and recommendations
EPS -0.03/0.17/0.64 of 2021/2022/2023 is unchanged. The current share price corresponds to a P/E ratio of 49.6/13.0 of 2022/2023. The rating of outperforming the industry is maintained and the target price has been lowered by 20% to HK$ 13.2, which corresponds to P/E ratio of 17.7 times of 2023 and has a 36.8% upside over the current share price given the recent correction in the overall valuation of the pharmaceutical sector.