Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Quantitative Analysis

<ul>
<li>We analyzed the latest HK SFC report for aggregate short position as of Mar 17th.</li>
<li>Top short increases and decreases were tabulated for one week and four week period. </li>
<li>We highlight short changes in Meituan, Gcl Tech, Link Reit, Sensetime, Trip.Com, Hsbc, Baba, Wuxi Apptec.</li>
</ul>


We analyzed the latest HK SFC report for aggregate short position as of Mar 17th.
Top short increases and decreases were tabulated for one week and four week period. 
We highlight short changes in Meituan, Gcl Tech, Link Reit, Sensetime, Trip.Com, Hsbc, Baba, Wuxi Apptec.


HK Short Interest Weekly: Meituan, Gcl Tech, Link Reit, Sensetime, Trip.Com, Hsbc, Baba, Wuxi Apptec

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

<ul>
<li>If WuXi Chemistry’s performance shows downward trend, the overall performance growth won’t be satisfactory. The negative growth of WuXi DDSU means that ineffective competition for domestic innovative drugs is decreasing.</li>
<li>The asset structure is shifting from light asset to heavy asset.It’s particularly crucial whether business model of "one-stop end-to-end service+royalty income" can enable WuXi AppTec to explore new growth points. </li>
<li>The current sentiment on CXO is “fragile” because CXO doesn't have performance sustainability and stability, with “risk discount” problem. Its valuation haven't reached inflection point. Without industry beta,alpha is useless.</li>
</ul>


If WuXi Chemistry’s performance shows downward trend, the overall performance growth won’t be satisfactory. The negative growth of WuXi DDSU means that ineffective competition for domestic innovative drugs is decreasing.
The asset structure is shifting from light asset to heavy asset.It’s particularly crucial whether business model of "one-stop end-to-end service+royalty income" can enable WuXi AppTec to explore new growth points. 
The current sentiment on CXO is “fragile” because CXO doesn't have performance sustainability and stability, with “risk discount” problem. Its valuation haven't reached inflection point. Without industry beta,alpha is useless.


WuXi AppTec (2359.HK/603259.CH) 2022 Results- Say Goodbye to High Growth and Get Used to True Colors

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>Strong earnings growth in 2022. WuXi AppTec reported 2022 revenue of RMB39.4bn, up 72% YoY, attributable recurring net income of RMB8.3bn, up 103% YoY, and attributable adjusted non-IFRS net income of RMB9.4bn, up 83% YoY.</li><li>The Company delivered resilient growth despite COVID-19 impacts through 2022, with revenue increasing by 71%/ 66%/ 78%/ 72% YoY for 1Q/ 2Q/ 3Q/ 4Q, respectively.</li><li>Considering the high revenue base of 2022, management guided positive revenue growth of 5-7% YoY for 2023E, and reiterated its revenue CAGR target of over 34% in 2021-24E. </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>

Strong earnings growth in 2022. WuXi AppTec reported 2022 revenue of RMB39.4bn, up 72% YoY, attributable recurring net income of RMB8.3bn, up 103% YoY, and attributable adjusted non-IFRS net income of RMB9.4bn, up 83% YoY.The Company delivered resilient growth despite COVID-19 impacts through 2022, with revenue increasing by 71%/ 66%/ 78%/ 72% YoY for 1Q/ 2Q/ 3Q/ 4Q, respectively.Considering the high revenue base of 2022, management guided positive revenue growth of 5-7% YoY for 2023E, and reiterated its revenue CAGR target of over 34% in 2021-24E. 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) – Non-COVID business to maintain solid growth

Thematic (Sector/Industry)

<ul>
<li>National centralized procurement on ophthalmology and orthopedics would be carried out soon, including ICL and sports medicine. Products in neuro-intervention/neurosurgery/peripheral intervention/IVD reagents would be included in 2023 VBP as well.</li>
<li>After NRDL negotiation/VBP/DRGs policies are fully mature, it is expected to see the emergence of some high-price-oriented payment system for innovative products. Only then will the industry beta really emerge.</li>
<li>If long-term money doesn't have enough understanding of the trend of long-term interest rates, the expected return and valuation model of healthcare companies can't be adjusted in time (e.g. CXO).</li>
</ul>


National centralized procurement on ophthalmology and orthopedics would be carried out soon, including ICL and sports medicine. Products in neuro-intervention/neurosurgery/peripheral intervention/IVD reagents would be included in 2023 VBP as well.
After NRDL negotiation/VBP/DRGs policies are fully mature, it is expected to see the emergence of some high-price-oriented payment system for innovative products. Only then will the industry beta really emerge.
If long-term money doesn't have enough understanding of the trend of long-term interest rates, the expected return and valuation model of healthcare companies can't be adjusted in time (e.g. CXO).


China Healthcare Weekly (Mar.17) - VBP on ICL/Sports Medicine, New Payment System, Time to Long CXO?

<ul>
<li>We analyze the weekly Shanghai/Shenzhen northbound Connect flows with our data engine for holding position as of March 10th.</li>
<li>We estimate the weekly outflows to be US$1,487.9 million, led by financials, materials, and offset by industrials, health care, utilities.</li>
<li>We highlight flows for China Tourism Group Duty Free, Kweichow Moutai, Byd, China Merchants Bank, Inner Mongolia Yili Industrial, Longi Green Energy Technology, Tongwei, Luxshare Precision Industry.</li>
</ul>


We analyze the weekly Shanghai/Shenzhen northbound Connect flows with our data engine for holding position as of March 10th.
We estimate the weekly outflows to be US$1,487.9 million, led by financials, materials, and offset by industrials, health care, utilities.
We highlight flows for China Tourism Group Duty Free, Kweichow Moutai, Byd, China Merchants Bank, Inner Mongolia Yili Industrial, Longi Green Energy Technology, Tongwei, Luxshare Precision Industry.


Northbound Flows (Mar 10th): CTG, Moutai, Byd, CMB, Yili, Longi Green Energy, Tongwei, Luxshare

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)

HK Short Interest Weekly: Meituan, Gcl Tech, Link Reit, Sensetime, Trip.Com, Hsbc, Baba, Wuxi Apptec

We analyzed the latest HK SFC report for aggregate short position as of Mar 17th and highlight short interest changes in Meituan, Gcl Tech, Link...

Ke Yan, CFA, FRM

WuXi AppTec (2359.HK/603259.CH) 2022 Results- Say Goodbye to High Growth and Get Used to True Colors

Investors may need to get used to low performance growth in post-COVID era. WuXi AppTec's performance may recover in 2024 but high growth like...

Xinyao (Criss) Wang