HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

<ul>
<li>The approval rate of Draft Bill is very low. So, it's more of a “strangulation” of investment sentiment. But considering the 2024 US presidential election, similar negative proposals may resurface. </li>
<li>WuXi AppTec has little control over the entire situation.There's “valuation discount” for China CXOs due to geopolitical conflicts. It’s difficult to completely rule out the possibility of “deliberate short selling”. </li>
<li>If look deeper, considering "sensitive situations" at present, to some extent, we may have already been in a financial war.The goal of short selling is to pick up cheap chips. </li>
</ul>


The approval rate of Draft Bill is very low. So, it's more of a “strangulation” of investment sentiment. But considering the 2024 US presidential election, similar negative proposals may resurface. 
WuXi AppTec has little control over the entire situation.There's “valuation discount” for China CXOs due to geopolitical conflicts. It’s difficult to completely rule out the possibility of “deliberate short selling”. 
If look deeper, considering "sensitive situations" at present, to some extent, we may have already been in a financial war.The goal of short selling is to pick up cheap chips. 


WuXi AppTec (2359.HK/603259.CH) - Behind the Plunge Is a War

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

<ul>
<li>There are 4 changes for the CSI Medical Service Index that will be implemented at the close on 8 December.</li>
<li>The constituent changes plus capping result in one-way turnover of 5.9% and in a one-way trade of CNY 1.86bn (US$261m).</li>
<li>Some stocks will have passive flows from global trackers at the end of November while there will be flows from other local passive trackers at the close on 8 December.</li>
</ul>


There are 4 changes for the CSI Medical Service Index that will be implemented at the close on 8 December.
The constituent changes plus capping result in one-way turnover of 5.9% and in a one-way trade of CNY 1.86bn (US$261m).
Some stocks will have passive flows from global trackers at the end of November while there will be flows from other local passive trackers at the close on 8 December.


CSI Medical Service Index Rebalance: Chunky Flows for Some Stocks

<ul>
<li>
<a href="https://www.smartkarma.com/entities/li-auto-inc-3dbe6187-544f-40dd-b9f9-72fba9c0110e" target="_blank" data-smartkarma-citation="entities:33811:1" rel="noopener">Li Auto (2015 HK)</a> and <a href="https://www.smartkarma.com/entities/wuxi-apptec-co-ltd-bf4a1265-beef-48b6-b82d-29308426030f" target="_blank" data-smartkarma-citation="entities:27795:1" rel="noopener">WuXi AppTec (2359 HK)</a> will be added to the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hang Seng</a> at the close on 1 December taking the number of index constituents to 82.</li>
<li>Neither inclusion is a surprise. The non-inclusion of primary listed foreign companies is a bigger surprise - that could take place at the next rebalance.</li>
<li>Estimated one-way turnover is 3.53%, estimated one-way trade is HK$6.88bn (US$882m). Capping leads to buying in <a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd-d7b798e2-202d-4e01-9a1e-799e2ae8f0c7" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba (9988 HK)</a> and selling in <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> and <a href="https://www.smartkarma.com/entities/hsbc-holdings-plc" target="_blank" data-smartkarma-citation="entities:516:1" rel="noopener">HSBC (5 HK)</a>. </li>
</ul>



Li Auto (2015 HK) and WuXi AppTec (2359 HK) will be added to the Hang Seng at the close on 1 December taking the number of index constituents to 82.
Neither inclusion is a surprise. The non-inclusion of primary listed foreign companies is a bigger surprise - that could take place at the next rebalance.
Estimated one-way turnover is 3.53%, estimated one-way trade is HK$6.88bn (US$882m). Capping leads to buying in Alibaba (9988 HK) and selling in Tencent (700 HK) and HSBC (5 HK). 


Hang Seng Index Rebalance: Li Auto (2015) & WuXi AppTec (2359) Added

<ul>
<li>23Q3 results has sounded an alarm for investors. Obviously, the deterioration of financing situations both domestically and internationally has forced WuXi AppTec to readjust projected revenue growth.</li>
<li>Almost all of the important logic at the moment is negative for CXOs.Revenue growth in TIDES business alone is hard to offset the decline in WuXi AppTec’s other businesses/industry trend.</li>
<li>After a pullback, investors can bet on the next rebound, but we still recommend taking profits in time, because without persuasive fundamentals, rebound driven by sentiment is difficult to sustain.</li>
</ul>


23Q3 results has sounded an alarm for investors. Obviously, the deterioration of financing situations both domestically and internationally has forced WuXi AppTec to readjust projected revenue growth.
Almost all of the important logic at the moment is negative for CXOs.Revenue growth in TIDES business alone is hard to offset the decline in WuXi AppTec’s other businesses/industry trend.
After a pullback, investors can bet on the next rebound, but we still recommend taking profits in time, because without persuasive fundamentals, rebound driven by sentiment is difficult to sustain.


WuXi AppTec (2359.HK/603259.CH) 23Q3 - Will the TIDES Business Turn the Tide?

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.

<ul><li>WuXi AppTec reported 3Q23 revenue of RMB10,670mn, up 0.3% YoY, and attributable recurring net income of RMB2,948mn, up 23.8% YoY, with attributable adjusted non-IFRS net income of RMB3,072mn, up 24.3% YoY.</li><li>3Q23 revenue accounted for 25.6% of our 2023 full-year estimate, in line with its historical average, while attributable adjusted non-IFRS net income represented 29.1% of our forecast, higher than its historical average of c.26%.</li><li>In 9M23, non-IFRS gross profit margin (GPM) improved by 3.6ppt to 42.3% while non-IFRS net profit margin increased by 3.7ppt to 27.6%, driven by favourable currency exchange rates and continuously improved operating efficiency. </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>

WuXi AppTec reported 3Q23 revenue of RMB10,670mn, up 0.3% YoY, and attributable recurring net income of RMB2,948mn, up 23.8% YoY, with attributable adjusted non-IFRS net income of RMB3,072mn, up 24.3% YoY.3Q23 revenue accounted for 25.6% of our 2023 full-year estimate, in line with its historical average, while attributable adjusted non-IFRS net income represented 29.1% of our forecast, higher than its historical average of c.26%.In 9M23, non-IFRS gross profit margin (GPM) improved by 3.6ppt to 42.3% while non-IFRS net profit margin increased by 3.7ppt to 27.6%, driven by favourable currency exchange rates and continuously improved operating efficiency. 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.

WuXi AppTec (603259 CH) – Peptide Business Becoming a New Growth Driver

China

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.

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WuXi AppTec (603259 CH)

WuXi AppTec (2359.HK/603259.CH) - Behind the Plunge Is a War

The plunge of WuXi AppTec and its subsidiaries are due to some negative progress of US Draft Bill - There're already 6 senators votes secured at...

Xinyao (Criss) Wang

CSI Medical Service Index Rebalance: Chunky Flows for Some Stocks

There are 4 changes for the CSI Medical Service Index in Dec. There are chunky flows on some stocks. There is overlap between global and local...

Brian Freitas

Hang Seng Index Rebalance: Li Auto (2015) & WuXi AppTec (2359) Added

Li Auto and WuXi AppTec will join the HSI at the close on 1 Dec. Non-inclusion of foreign companies is a surprise. Capping increases turnover and...

Brian Freitas

WuXi AppTec (2359.HK/603259.CH) 23Q3 - Will the TIDES Business Turn the Tide?

WuXi AppTec received Lilly's GLP-1 order, but it's too small to guarantee the reversal logic.23Q3 results sounded an alarm for investors.The savior...

Xinyao (Criss) Wang

WuXi AppTec (603259 CH) – Peptide Business Becoming a New Growth Driver

WuXi AppTec reported 3Q23 revenue of RMB10,670mn, up 0.3% YoY, and attributable recurring net income of RMB2,948mn, up 23.8% YoY

CMB International

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