AngelAlign - Chinese clear aligners (6699 HK)

And what Private Equity group MBK is up to..

Disclaimer: Healthy Stock Picks uses information sources believed to be reliable, but their accuracy cannot be guaranteed. The information contained in this publication is not intended to constitute individual investment advice and is not designed to meet your personal financial situation. The opinions expressed in such publications are those of the publisher and are subject to change without notice. You are advised to discuss your investment options with your financial advisers and to understand whether any investment is suitable for your specific needs. From time to time, I may have positions in the securities covered in the articles on this website. Full disclosure: I do hold a position in AngelAlign when publishing this article. Note that this is a disclosure and not a recommendation to buy or sell.

There was heavy rain in the air as my wife and I rushed into the building from the bustling street of Mongkok. Every time I venture away form Hong Kong Island to the “dark side” I realize how a different of a world it is over here. The people, the bustle, the vibe - not bad, just different. My eyes looked over the board listing all the businesses in the building. It was like looking at a page in the yellow pages, I gave up to try and confirm we were at the right spot. Wasn’t it eight floor honey? Ok up we go.

A big lift brought us up to the dental clinic where we had an appointment. The first thing that the clinic show-cases on the wall entering the reception is a mix of the doctors degrees and their awards for being a Platinum Invisalign clinic.

I thought for myself that its amazing, how out of all products in a dental clinic, Invisalign has created this brand awareness that customers ask for. “I want Invisalign” is something many dentists explained that their customers say. For something else like an implant, nobody would insist on getting a Noble implant, you just go with what the dentists says is good, don’t you?

I walk up to the reception counter and a take a look at the price list. Not updated since 2022 July, is this really their latest list? Anyhow let’s take a look together:

And surely enough, somewhere two-thirds down on the list is one of the most expensive treatments you can do in a dental clinic, braces for HK$36-40k or Invisalign for HK$46-50k. I also quickly note the mark-up for a crown, which in HK with a high degree of certainty comes from my other holding Modern Dental, the ASP for those are HK$1500 from Modern Dental but this fairly low priced clinic is charging HK$7000. Interesting..

Since this is not one of the luxury clinics in Princes Building central we get asked to sit and wait for a while. When it’s our turn I of course (as always) take the opportunity to ask the dentists about the products she uses.

- Do you have any alternatives to Invisalign to offer at this clinic?

- Yes we do have one other brand called Angel aligner.

- Interesting, what do you think of the product?

- Well in-fact I happen to be trying out the product currently myself.

- Ok I guess that says quite a lot about the product that you as a dentist is using it yourself, so overall you are happy then so far? And how about price?

- Yes so far so good, they have a different approach than Invisalign, they have two different sets of clear aligners which you alternate, that gives a little bit more comfortable experience using them. Price-wise we offer these about HK$10,000 cheaper than Invisalign.

- Thanks that very interesting!

AngelAlign (6699 HK)

AngelAlign, listed on the HK exchange has emerged as the only other substantial stand-alone clear aligner brand worldwide. With a 3% global market share, AngelAlign is on par with the other big dental companies who all try land grab within the clear aligner space. Many dentists want to at least have an option to Invisalign to both offer different price points but also to not be at the mercy of Align Technology’s pricing.

By studying the whole dental space I have identified a business acquisition that would make a lot of sense, involving AngelAlign and Private Equity group MBK. This is to be clear pure speculation on my part, I have no sources which verifies this thesis. It’s just putting the puzzle pieces together and seeing that this really makes sense.

I have as usual created a pitch book for my idea, which spells out the thesis for why this acquisition would make sense, what the clear aligner market looks like and what AngelAlign looks like as a stand-alone investment.

Press below to download the deck, hope you enjoy it!

Angelalign Healthystockpicks

1.57MB ∙ PDF file

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