HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

Sihuan Pharmaceutical Hldgs / Equity Bottom-Up

<ul>
<li>The disposal of generic drug segment would bring one-time cash flow. Together with the cash on hand, <a href="https://www.smartkarma.com/entities/sihuan-pharmaceutical-hldgs" target="_blank" data-smartkarma-citation="entities:33:1" rel="noopener">Sihuan Pharmaceutical Hldgs (460 HK)</a> is undervalued based on its current market value. </li>
<li>In the context of its innovative drug segment facing long-term losses, and the decreasing profit margins of medical beauty segment due to increasing competition, Sihuan’s prospects are no brighter.</li>
<li>Due to the concerns on outlook and its development mode, Sihuan’s upside potential could be lower than expected, and the share price could fluctuate largely. </li>
</ul>


The disposal of generic drug segment would bring one-time cash flow. Together with the cash on hand, Sihuan Pharmaceutical Hldgs (460 HK) is undervalued based on its current market value. 
In the context of its innovative drug segment facing long-term losses, and the decreasing profit margins of medical beauty segment due to increasing competition, Sihuan’s prospects are no brighter.
Due to the concerns on outlook and its development mode, Sihuan’s upside potential could be lower than expected, and the share price could fluctuate largely. 


Sihuan Pharmaceutical (460.HK) - The Potential Disposal of Generic Drug Business and the Outlook

Huadong Medicine Co Ltd A / Equity Bottom-Up

<ul>
<li>The most recent two quarters have maintained positive growth. It is of great significance for Huadong, who once suffered a significant decline and now in a critical period of transformation.</li>
<li>The large growth potential of medical cosmetology and industrial microbiology would be important driver for future development. It’s also wise to strike a balance between current performance and future strategy.</li>
<li>Huadong’s revenue growth would be above 10% in next few years. It would have higher valuation than Imeik. Investors are advised to follow Huadong. It could be a “dark horse”.</li>
</ul>


The most recent two quarters have maintained positive growth. It is of great significance for Huadong, who once suffered a significant decline and now in a critical period of transformation.
The large growth potential of medical cosmetology and industrial microbiology would be important driver for future development. It’s also wise to strike a balance between current performance and future strategy.
Huadong’s revenue growth would be above 10% in next few years. It would have higher valuation than Imeik. Investors are advised to follow Huadong. It could be a “dark horse”.


Huadong Medicine Co Ltd (000963.CH) - A “Dark Horse” to Reverse Performance Dilemma

Imeik Technology Development C / Equity Bottom-Up

<ul>
<li>Imeik keeps its outstanding financial performance in 2021/2022Q1. On the surface, it looks prosperous, but its development strategy, product layout and resilience in front of risks would bring many uncertainties.</li>
<li>Considering the pandemic/lockdown and a slowing economy in China, the revenue growth in 2022 could fall to about 50%, then to about 40% and 30% in 2023 and 2024 respectively.</li>
<li>Imeik’s valuation is “unreasonably high”, which is expected to be lower than Bloomage in the future. Anything that deviates from fundamentals would inevitably return to the origin. </li>
</ul>


Imeik keeps its outstanding financial performance in 2021/2022Q1. On the surface, it looks prosperous, but its development strategy, product layout and resilience in front of risks would bring many uncertainties.
Considering the pandemic/lockdown and a slowing economy in China, the revenue growth in 2022 could fall to about 50%, then to about 40% and 30% in 2023 and 2024 respectively.
Imeik’s valuation is “unreasonably high”, which is expected to be lower than Bloomage in the future. Anything that deviates from fundamentals would inevitably return to the origin. 


Imeik Technology Development (300896.CH) - Superficial Prosperity Hardly Masks Underlying Risks

Shanghai Haohai Biological Tec / Equity Bottom-Up

<ul>
<li>Haohai's development is fuelled by a series of acquisitions, which help Haohai establish the existing diversified businesses, but we haven’t seen any growth point with high certainty.</li>
<li>Compared with Bloomage and Imeik, Haohai has no competitive advantage in the field of medical aesthetics. It’s also difficult for Haohai to make a substantial breakthrough without obvious product advantages.</li>
<li>Although Haohai’s PE/TTM is significantly lower than its peers, due to centralized procurement, Haohai’s valuation could be further lower. Considering the risks, we choose to stay cautious on Haohai.</li>
</ul>


Haohai's development is fuelled by a series of acquisitions, which help Haohai establish the existing diversified businesses, but we haven’t seen any growth point with high certainty.
Compared with Bloomage and Imeik, Haohai has no competitive advantage in the field of medical aesthetics. It’s also difficult for Haohai to make a substantial breakthrough without obvious product advantages.
Although Haohai’s PE/TTM is significantly lower than its peers, due to centralized procurement, Haohai’s valuation could be further lower. Considering the risks, we choose to stay cautious on Haohai.


Shanghai Haohai Biological Technology (688366CH)- Diversified Business Layout Doesn't Secure Outlook

<ul>
<li>The reason why Sihuan has received more attention from the market mainly lies in the medical aesthetics segment. However, both hyaluronic acid and botulinum toxin are facing challenges.</li>
<li>Recently, China Resources is rumored to be in talks to privatize <a href="https://www.smartkarma.com/entities/sihuan-pharmaceutical-hldgs" target="_blank" data-smartkarma-citation="entities:33:1" rel="noopener">Sihuan Pharmaceutical Hldgs (460 HK)</a>, but Sihuan denied it.</li>
<li>Sihuan is undervalued. The reasonable market value should be over RMB20 billion. We recommend investors to follow closely with Sihuan, either for decent upside potential or privatization possibility.</li>
</ul>


The reason why Sihuan has received more attention from the market mainly lies in the medical aesthetics segment. However, both hyaluronic acid and botulinum toxin are facing challenges.
Recently, China Resources is rumored to be in talks to privatize Sihuan Pharmaceutical Hldgs (460 HK), but Sihuan denied it.
Sihuan is undervalued. The reasonable market value should be over RMB20 billion. We recommend investors to follow closely with Sihuan, either for decent upside potential or privatization possibility.


Sihuan Pharmaceutical Hldgs (460.HK)- Privatization Rumor, Upside Potential and Concerns on Business

China

Sinopharm Group Co Ltd is a pharmacy distribution company. The Company also owns several pharmacy enterprise groups in different industries such as logistics, retail stores, pharmaceutical manufacturing, and chemical testing.

Shanghai Pharmaceuticals Holding Co., Ltd. manufactures, retails, and wholesales a variety of pharmaceuticals including biopharmaceuticals, chemical and Chinese traditional medicines, and healthcare products. The Company also invests in new medicine development and provides related services.

Shanghai Pharmaceuticals Holding (2607 HK)

WuXi Biologics (Cayman) Inc. is a leading open-access R&D capability and technology platform company serving the pharmaceutical, biotechnology, and medical device industries, with operations in China, U.S., and Iceland.  We provide a broad and integrated portfolio of laboratory and manufacturing services throughout the drug and medical device R&D process.  Our services are designed to help our global partners in shortening the cycle and lowering the cost of drug and medical device R&D through cost-effective and efficient solutions. 

Guangzhou Baiyunshan Pharmaceutical Holdings Co., Ltd. manufactures and sells Chinese patent medicine. The Company also wholesales, retails, imports, and exports Western and Chinese pharmaceutical products and various medical apparatus.

Guangzhou Baiyunshan Pharmaceu (600332 CH)

China National Medicines Corp. Ltd. wholesales and retails chemical material medicines, western medicine preparations, biochemical medicines, biological products, and Chinese traditional medicines.  Through its subsidiaries, the Company also manufactures pharmaceuticals including injections, capsules, tablets, and other related products under the CNCM brand name.

Topchoice Medical Investment Corporation provides dental and oral health care services.

Tibet Rhodiola Pharmaceutical Holding Co. develops, manufactures, and markets Tibet medicines.  The Company's products include Rhodiola capsules, Rhodiola pellets, and other related medicines.

Shenzhen Neptunus Bioengineering Co., Ltd. develops, manufactures, and markets biochemical pharmaceuticals, biological products, traditional Chinese medicines, and healthcare products.  Through its subsidiaries, the Company also manufactures food.

Searainbow Holding Corp., produces chemical fibers and other textile products. The company, through its subsidiaries, also provides medical e-commerce and on-line games.

Zhejiang Dian Diagnostics Co., Ltd. provides medical diagnostic solutions, as an outsourcer, to various general hospitals, specialized hospitals, community health service centers (stations), township (county) hospitals, medical centers,  disease prevention and control centers.

Ramsay Health Care Ltd. provides health care services. The Company offers private hospital services, including, rehabilitation, psychiatric care, day, and complex surgery. Ramsay Health Care owns, operates, and manages health care facilities throughout Australia, Indonesia, and Europe.

Bumrungrad Hospital Public Company Limited, through its subsidiaries,  owns and operates the Bumrungrad Hospital. Located in Bangkok, the Hospital has capacity of international standard medical care with 554 beds for inpatients and approximately 125 clinic examination suites that can serve up to 3,000 outpatients daily.

LHC Group Inc. provides post-acute healthcare services primarily to Medicare beneficiaries in rural markets in the southern United States. The company provides home-based services through home nursing agencies and hospices and facility-based services through long-term acute care hospitals and  outpatient rehabilitation clinics.

Ensign Group, Inc. operates facilities offering nursing and rehabilitative care services in multiple states. The Company provides a broad spectrum of nursing and assisted living services, physical, occupational and speech therapies, and other rehabilitative and healthcare services, for both long-term residents and short-stay rehabilitation patients.

Encompass Health Corporation provides inpatient rehabilitative healthcare services.  The Company operates inpatient rehabilitation hospitals, outpatient and rehabilitation satellites, and home health agencies. Encompass Health provides treatment on both an inpatient and outpatient basis.

HealthEquity, Inc. provides technology-enabled services platforms that allow consumers to make healthcare saving and spending decisions. Consumers can access their tax-advantaged healthcare savings, compare treatment options and pricing, evaluate and pay healthcare bills, receive personalized benefit and clinical information, and earn wellness incentives.

Chemed Corporation operates in the healthcare field through its subsidiary Vitas Healthcare Corporation.  The Company also maintains a presence in the residential and commercial repair-and-maintenance-service industry under the names Roto-Rooter and Service America Network Inc.

Sonic Healthcare Limited is a medical diagnostics company with operations in Australia, New Zealand, and Europe.  The Company provides a comprehensive range of pathology and diagnostic imaging services to medical practitioners, hospitals and their patients along with providing administrative services and facilities to medical practitioners.

Acadia Healthcare Co Ltd operates a network of behavioral health centers. The Company provides psychiatric and chemical dependency services, inpatient psychiatric hospitals, residential treatment centers, outpatient clinics, and therapeutic school based programs across the United States.

Select Medical Holdings Corporation is an operator of specialty hospitals and outpatient rehabilitation clinics. The Company provides medical rehabilitation services on a contract basis at nursing homes, hospitals, assisted living and senior care centers, schools and work sites.

Huadong Medicine Co., Ltd. wholesales and retails medicines, pharmaceutical preparations, biological products, and medical instruments.  Through its subsidiaries, the Company also manufactures antibiotic medicines and biochemical products.

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Huadong Medicine Co Ltd A (000963 CH)

Sihuan Pharmaceutical (460.HK) - The Potential Disposal of Generic Drug Business and the Outlook

The medical aesthetics/innovative drug business face various challenges.Though Sihuan is undervalued,concerns on outlook/development mode will...

Xinyao (Criss) Wang

Huadong Medicine Co Ltd (000963.CH) - A “Dark Horse” to Reverse Performance Dilemma

The outstanding performance and promising outlook of medical cosmetology and industrial microbiology will help Huadong reverse performance dilemma,...

Xinyao (Criss) Wang

Imeik Technology Development (300896.CH) - Superficial Prosperity Hardly Masks Underlying Risks

Imeik’s valuation is unreasonably high. The risks related to development strategy, product layout, R&D, etc. will bring many uncertainties.There's...

Xinyao (Criss) Wang

Shanghai Haohai Biological Technology (688366CH)- Diversified Business Layout Doesn't Secure Outlook

Haohai builds diversified business via M&A,but none is growth point with high certainty. Its medical aesthetics has no obvious advantage and the...

Xinyao (Criss) Wang

Sihuan Pharmaceutical Hldgs (460.HK)- Privatization Rumor, Upside Potential and Concerns on Business

Sihuan receives attention due to medical aesthetics but it's facing challenges,especially after CBC acquired Hugel.But Sihuan is undervalued, with...

Xinyao (Criss) Wang

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