Business Summary

Fullshare Holdings Limited is a healthy living-focused conglomerate based in Nanjing and focused on assets primarily in China and Australia. Since going public via a RTO in December 2013 as a property developer, Fullshare has rapidly transformed through a wide range of healthy lifestyle asset acquisitions and minority share equity investments. The Company currently operates in five segments, Properties, Tourism, Healthcare, New Energy and Investments, all of which target aspects of a healthy lifestyle, from childhood through elderhood either through owned operating assets or equity investments in third parties.

Key Points

- Fullshare's shift from real estate development to healthy living-focused companies will enable it to deploy cash more broadly and into higher growth potential businesses.

- Greenridge Global believes the Company has ample capital to engage in both large and small acquisitions in the near future given the demand from sellers for FS common stock in deals, its cash on hand, its relatively unleveraged Balance Sheet, and its RMB 10 billion line with CITIC Bank.

- In December, FS acquired China High Speed in an all stock deal, which is significant because of the absence of cash needed to close the deal, the speed at which it was done (roughly three months), the widespread shareholder approval for the deal, and the ability for FS to acquire an operating asset that generates a large and growing net profit annually.

- Greenridge Global believes FS acquired China High Speed at a discount to future revenue and earnings growth, with Chairman Ji leveraging his business network to take advantage of a uniquely undervalued company for the benefit of shareholders. Greenridge Global believes Chairman Ji's network and reputation, specifically in the Nanjing-area, could enable FS to source and close deals that will be immediately accretive to shareholders.

- The Sparrow acquisition provides near term cash flow, as well as significant upside as FS intends to spread the Sparrow model from Australia to China, which could become a significant profit driver.

- Anke, already an established name in hospitals of Tier 2 and 3 cities is working to enhance its product quality to compete with international brands, is rolling out new products domestically, and working to build its sales outside of China.

- Rather than engaging in outright acquisitions of assets, Fullshare has selectively made minority equity investments in private real estate development companies and a variety of listed companies, which reduces cash needs while providing upside from both the profit appreciation of the business and the unrealized investment gains on the rising stock prices.

Valuation

Greenridge Global are initiating coverage of Fullshare Holdings Limited [HK: 607] with a Buy rating and HK$4.00.