Aoxin acquired a 51% stake in Acumen back in October 2021 to capture such demand amid pandemic-related restrictions still in place, recalls Chua Ser Miang, Aoxin’s non-executive chairman, in the same interview with Ng. With vaccines soon discovered and widely available, testing demand was no longer required. “Earnings and revenue came down significantly,” says Chua.
Since then, Acumen has become a dormant company following the closure of the Sengkang Joint Testing and Vaccination Centre (JTVC) and the expiry of its laboratory licence. Differences arose between Aoxin and Q&M on the one hand, and Dr Ong Siew Hua, Acumen’s then CEO, on the other. The issue was settled with Ong’s acquisition of an indirect interest in the assets of a supplier to Acumen, along with the ancillary issues arising from the acquisition. She has since stepped down as the director of Aoxin and as the CEO of Acumen.
Apart from Ong’s departure, the removal of Aoxin’s former CEO and founder, Dr Shao Yongxin, following a series of written and verbal whistleblowing reports, also cast a negative spotlight on the company.
In the whistleblowing report, Shao was alleged to have obtained approximately RMB2 million in 2017 from four whistleblowers, including employees and minority shareholders, by purporting to sell them approximately 2.8 million shares in Aoxin, which he claimed to own. In addition, between 2017 and 2022, Shao obtained RMB 13 million ($2.4 million) (including accrued and payable interest) from certain whistleblowers as personal loans.
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Following Shao’s removal, Aoxin has appointed four deputy CEOs, each responsible for a specific area. They are to work closely with Dr Bai Yi, the general manager, and Dr Huang Zhenxing, the deputy general manager, on day-to-day operations and to help with Aoxin’s expansion plans ahead.
“We have to admit that Dr Shao was the central man for Aoxin, given that he founded Aoxin in the first place. Of course, his departure has left a leadership vacuum, but we were prepared for that,” says Chua.
At the same time, to further strengthen its balance sheet and raise funds for expansion, Aoxin raised $15 million with a one-for-one rights issue at 3 cents per share last December. Q&M, the largest shareholder and a supporter of this rights issue, now owns a stake of more than 53% in Aoxin.
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Proceeds from the rights issue will be used to invest in new equipment and potential acquisitions, and RMB43.7 million has been set aside to help expand its dental clinic footprint beyond northeast China.
Following the rights issue, Aoxin conducted another fundraising exercise on March 3, this time placing 113 million new shares at an issue price of 15.66 cents. Q&M has agreed to support this placement by taking up 50 million new shares. The majority of the $17 million in net proceeds will be used to expand its business operations, while the remaining proceeds will be used for general working capital.
“With the departure of Dr Shao, we also realise that we cannot just keep our business operations within Liaoning province. We need to expand out to other provinces as well,” says Chua.
Aoxin is also hoping to take advantage of an ongoing consolidation of the dental services industry in China, where intensified competition and pricing pressures, plus higher operating costs, have combined to put greater strain on certain smaller dental operators, thereby creating “selective acquisition” opportunities.
Aoxin is eyeing other first-tier cities in China, such as Wuhan and Beijing, where it can differentiate itself through branding and high-quality services, given that consumer spending in these cities tends to be higher, says Chua.
Despite China’s large population, Chua is aware that Aoxin faces tough competition from other dental clinics, both public and private. “I think after Covid, there are a lot of dental clinics and even hospitals closed down in China. But we continue to stand strong in Liaoning province, given our recapitalised balance sheet and existing resources on hand,” says Chua.
