Pan-Asia Index Flows & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Pan-Asia Index Flows & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Event-Driven

Inner Mongolia Furui Medical Scie / Event-Driven

Inner Mongolia Furui Medical Science Co Ltd. manufactures and sells hepatology C hinese medicines. The Company's products include anti-fibrosis drug, anti fattyliver disease medicine, and liver fibrosis testing instruments.

Inner Mongolia Furui Medical Scie (300049 CH)

<ul>
<li>CSI Medical Service represents the top 50 largest and most-liquid stocks involved in medical devices, medical care, medical informatization and other medical theme from the Shanghai, Shenzhen and Beijing Exchanges.</li>
<li>The reference period for the December 2024 index rebal event ended recently. In this insight, we take a look at our final expected ADDs/DELs.</li>
<li>There has been no change to our list of expected changes presented in my last insight.</li>
</ul>


CSI Medical Service represents the top 50 largest and most-liquid stocks involved in medical devices, medical care, medical informatization and other medical theme from the Shanghai, Shenzhen and Beijing Exchanges.
The reference period for the December 2024 index rebal event ended recently. In this insight, we take a look at our final expected ADDs/DELs.
There has been no change to our list of expected changes presented in my last insight.


Quiddity Leaderboard CSI Medical Dec 24: Final Rankings; Exp ADDs Underperforming Exp DELs

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

WuXi AppTec Co., Ltd. manufactures medical products. The Company produces biological agents, antibodies, biological diagnostic reagents, and other products. WuXi AppTec also provides biological analysis, technical study, and other services.

<ul>
<li>24Q4 is under pressure to meet performance targets, and may even miss the guidance. It’s already good if net profit can reach about RMB9.6 billion in 2024 full year.</li>
<li>US clients use WuXi AppTec’s shorter-term services with lower prices to save on cash. These contracts may not be converted into later commercial-stage projects as expected due to geopolitical risks.</li>
<li>2024 is obviously a low point for performance, but it is uncertain whether the expected recovery will occur in 2025 and beyond. The BIOSECURE Act makes future performance growth unclear.</li>
</ul>


24Q4 is under pressure to meet performance targets, and may even miss the guidance. It’s already good if net profit can reach about RMB9.6 billion in 2024 full year.
US clients use WuXi AppTec’s shorter-term services with lower prices to save on cash. These contracts may not be converted into later commercial-stage projects as expected due to geopolitical risks.
2024 is obviously a low point for performance, but it is uncertain whether the expected recovery will occur in 2025 and beyond. The BIOSECURE Act makes future performance growth unclear.


WuXi AppTec (2359.HK/603259.CH) 24Q3 - Performance Pressure Has Not Been Relieved

Innovent Biologics Inc / Equity Bottom-Up

Innovent Biologics, Inc. operates as a biopharmaceutical company. The Company develops, manufactures, and distributes monoclonal antibody drug candidates for the treatment of oncology, ophthalmology, autoimmune, cardiovascular, and other diseases. Innovent Biologics serves customers in China.

<ul>
<li>The third batch of TCM VBP expansion and successive price reduction will continue to be implemented. The price dominance of exclusive TCM patent medicines may collapse based on this VBP.</li>
<li>Since 2019, the ADC drug market has entered a period of rapid growth, the significance of which is that the good story of ADC CXO is able to continue.</li>
<li>Innovent divested important subsidiary at low price, which apparently "irritated" investors. Valuation of Innovent will move towards traditional enterprise such as CSPC. Time to offload Innovent as investment logic changes.</li>
</ul>


The third batch of TCM VBP expansion and successive price reduction will continue to be implemented. The price dominance of exclusive TCM patent medicines may collapse based on this VBP.
Since 2019, the ADC drug market has entered a period of rapid growth, the significance of which is that the good story of ADC CXO is able to continue.
Innovent divested important subsidiary at low price, which apparently "irritated" investors. Valuation of Innovent will move towards traditional enterprise such as CSPC. Time to offload Innovent as investment logic changes.


China Healthcare Weekly (Nov.3) - TCM VBP Update, ADC CXO's Logic Is Solid, "Ugly Move" Of Innovent

Global Healthcare Analyst

Tina Banerjee

Thematic (Sector/Industry)

<ul>
<li>Eisai Announced that global revenue of Leqembi in Q2FY25 was ¥10B, up 1.6x than Q1FY25. Takeda Pharma announced positive interim results from a Phase 3 study.</li>
<li>Shionogi’s COVID-19 drug was effective in reducing transmission of the disease. JCR Pharmaceuticals initiated first patient dosing in Japan in the Phase I clinical trial of JR-441.</li>
<li>Celltrion signed a contract with a U.S. GPO to list Zymfentra on private insurance formularies, which will expand the drug's coverage to 90%+ of the U.S. health insurance market.</li>
</ul>


Eisai Announced that global revenue of Leqembi in Q2FY25 was ¥10B, up 1.6x than Q1FY25. Takeda Pharma announced positive interim results from a Phase 3 study.
Shionogi’s COVID-19 drug was effective in reducing transmission of the disease. JCR Pharmaceuticals initiated first patient dosing in Japan in the Phase I clinical trial of JR-441.
Celltrion signed a contract with a U.S. GPO to list Zymfentra on private insurance formularies, which will expand the drug's coverage to 90%+ of the U.S. health insurance market.


APAC Healthcare Weekly (Nov 3)- Eisai, Takeda, Shionogi, Astellas Pharma, Celltrion, Wuxi AppTec

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

Shanghai United Imaging Health / Equity Bottom-Up

Shanghai United Imaging Healthcare Co., Ltd. develops, manufactures, and distributes medical imaging systems and equipment. The Company produces computed tomography scanners, mobile medical devices, molecular imaging instruments, magnetic resonance equipment, and others. Shanghai United Imaging Healthcare also offers equipment leasing services.

Shanghai United Imaging Health (688271 CH)

<ul><li>United Imaging’s 9M24 revenue declined by 6.4% YoY to RMB6,954mn, with 3Q24 revenue down by 25.0% YoY to RMB1.6bn.</li><li>This downturn was primarily due to a challenging domestic market environment, marked by stringent industry regulations and delays in equipment renewal projects.</li><li>Attributable net profit in 9M24 decreased by 36.9% YoY to RMB671mn, with net profit margin falling by 4.7 ppts. </li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

United Imaging’s 9M24 revenue declined by 6.4% YoY to RMB6,954mn, with 3Q24 revenue down by 25.0% YoY to RMB1.6bn.This downturn was primarily due to a challenging domestic market environment, marked by stringent industry regulations and delays in equipment renewal projects.Attributable net profit in 9M24 decreased by 36.9% YoY to RMB671mn, with net profit margin falling by 4.7 ppts. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

United Imaging (688271 CH) - Anticipating a Rapid Rebound in Domestic Business

China Healthcare
Growing pains

Quiddity Leaderboard CSI Medical Dec 24: Final Rankings; Exp ADDs Underperforming Exp DELs

We expect the index changes to be announced after market close on 29th November 2024. We currently estimate one-way flow to be US$248mn. Most...

Janaghan Jeyakumar, CFA

WuXi AppTec (2359.HK/603259.CH) 24Q3 - Performance Pressure Has Not Been Relieved

24Q4 face pressure to meet targets.US clients opt for short-term service to save cash.Such contracts won't convert into late-stage...

Xinyao (Criss) Wang

China Healthcare Weekly (Nov.3) - TCM VBP Update, ADC CXO's Logic Is Solid, "Ugly Move" Of Innovent

The 3rd batch of TCM VBP will hit the performance of exclusive TCM varieties.Due to the "ugly move" of Innovent's management, we advise investors...

Xinyao (Criss) Wang

APAC Healthcare Weekly (Nov 3)- Eisai, Takeda, Shionogi, Astellas Pharma, Celltrion, Wuxi AppTec

Large APAC healthcare companies are reporting mixed earnings. Demography will play a key role in ensuring how the overall domestic demand scenario...

Tina Banerjee

United Imaging (688271 CH) - Anticipating a Rapid Rebound in Domestic Business

United Imaging’s 9M24 revenue declined by 6.4% YoY to RMB6,954mn, with 3Q24 revenue down by 25.0% YoY to RMB1.6bn. This downturn was primarily due...

CMB International

Quiddity Leaderboard CSI Medical Dec 24: Final Rankings; Exp ADDs Underperforming Exp DELs

We expect the index changes to be announced after market close on 29th November 2024. We currently estimate one-way flow to be US$248mn. Most...

Janaghan Jeyakumar, CFA

WuXi AppTec (2359.HK/603259.CH) 24Q3 - Performance Pressure Has Not Been Relieved

​24Q4 face pressure to meet targets.US clients opt for short-term service to save cash.Such contracts won't convert into late-stage...

Xinyao (Criss) Wang

China Healthcare Weekly (Nov.3) - TCM VBP Update, ADC CXO's Logic Is Solid, "Ugly Move" Of Innovent

The 3rd batch of TCM VBP will hit the performance of exclusive TCM varieties.Due to the "ugly move" of Innovent's management, we advise investors...

Xinyao (Criss) Wang

APAC Healthcare Weekly (Nov 3)- Eisai, Takeda, Shionogi, Astellas Pharma, Celltrion, Wuxi AppTec

Large APAC healthcare companies are reporting mixed earnings. Demography will play a key role in ensuring how the overall domestic demand scenario...

Tina Banerjee

United Imaging (688271 CH) - Anticipating a Rapid Rebound in Domestic Business

United Imaging’s 9M24 revenue declined by 6.4% YoY to RMB6,954mn, with 3Q24 revenue down by 25.0% YoY to RMB1.6bn. This downturn was primarily due...

CMB International

24Q4 face pressure to meet targets.US clients opt for short-term service to save cash.Such contracts won't convert into late-stage...