HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

<ul>
<li>The CARVYKTI commercialization will bring GenScript increasing revenue and cash flow. Together with the rapid growth of GCT CDMO, it is expected to see gradual improvement in GenScript’s financial performance.</li>
<li>The complex international relations, geopolitical conflicts and anti-globalization risks could weigh on bullish sentiment in the short term or cause stock prices to fluctuate wildly.</li>
<li>In the long term, GenScript’s “all-in” on GCT area enables it follow the industry trend closely. So,GenScript have the exponential growth potential in valuation, with possibility of surpassing WuXi Biologics.</li>
</ul>


The CARVYKTI commercialization will bring GenScript increasing revenue and cash flow. Together with the rapid growth of GCT CDMO, it is expected to see gradual improvement in GenScript’s financial performance.
The complex international relations, geopolitical conflicts and anti-globalization risks could weigh on bullish sentiment in the short term or cause stock prices to fluctuate wildly.
In the long term, GenScript’s “all-in” on GCT area enables it follow the industry trend closely. So,GenScript have the exponential growth potential in valuation, with possibility of surpassing WuXi Biologics.


Genscript Biotech - Commercialized CAR-T & Strong CGT CDMO Indicate Exponential Growth in Valuation

<ul>
<li>It’s understandable to take advantage of current market value and reserve capital in advance.Considering potential risks, how low the price of proposed issuance has to be to feel “safe enough”?</li>
<li>Yingyi’s illegally reducing its holdings of WuXi AppTec could be a signal– Yingyi and other shareholders/executives are not confident in WuXi AppTec’s outlook, who may not regain its glory days.</li>
<li>We recommend investors to view this proposed issuance rationally. If investors want to trade, a good strategy is to catch rebound after plunge, although the temporary rebound does not last.</li>
</ul>


It’s understandable to take advantage of current market value and reserve capital in advance.Considering potential risks, how low the price of proposed issuance has to be to feel “safe enough”?
Yingyi’s illegally reducing its holdings of WuXi AppTec could be a signal– Yingyi and other shareholders/executives are not confident in WuXi AppTec’s outlook, who may not regain its glory days.
We recommend investors to view this proposed issuance rationally. If investors want to trade, a good strategy is to catch rebound after plunge, although the temporary rebound does not last.


WuXi AppTec (603259.CH/2359.HK)- The Private Placement and Shanghai Yingyi’s Illegal Share Reduction

Thematic (Sector/Industry)

<ul>
<li>China biotech companies are “being squeezed” between the negative domestic policies and the dilemma of internationalization. The investment logic of biotech has broken and the valuation forecasts are ineffective.</li>
<li>For CXO, the uncertainties outweigh the certainties.Investors need to be prepared for the possibility of CXO not to return to its peak, because its best time may have been over.</li>
<li>We’re in a very complicated environment. A lot of things come together. Survive first. Seize rebounds after plunge rather than go bottom fishing. You don't know when the bottom is. </li>
</ul>


China biotech companies are “being squeezed” between the negative domestic policies and the dilemma of internationalization. The investment logic of biotech has broken and the valuation forecasts are ineffective.
For CXO, the uncertainties outweigh the certainties.Investors need to be prepared for the possibility of CXO not to return to its peak, because its best time may have been over.
We’re in a very complicated environment. A lot of things come together. Survive first. Seize rebounds after plunge rather than go bottom fishing. You don't know when the bottom is. 


Re-Examine the Outlook and Investment Strategy for China Biotech and CXO

<ul>
<li>As one of the few CXOs in the industry that has layout of the whole industry chain, Pharmaron carries many expectations. But it cannot compete with WuXi AppTec so far.</li>
<li>If Pharmaron could make breakthrough either in its CMC services (improving gross profit margin and scale) or the CGT services, the Company’s outlook and valuation logic would improve greatly.</li>
<li>The valuation of Pharmaron should be lower than WuXi AppTec and WuXi Biologics, but higher than Asymchem, Tigermed and Joinn. Considering the macro uncertainties, short-term trades are advised.</li>
</ul>


As one of the few CXOs in the industry that has layout of the whole industry chain, Pharmaron carries many expectations. But it cannot compete with WuXi AppTec so far.
If Pharmaron could make breakthrough either in its CMC services (improving gross profit margin and scale) or the CGT services, the Company’s outlook and valuation logic would improve greatly.
The valuation of Pharmaron should be lower than WuXi AppTec and WuXi Biologics, but higher than Asymchem, Tigermed and Joinn. Considering the macro uncertainties, short-term trades are advised.


Pharmaron Beijing Co Ltd (3759.HK/300759.CH) 2022/2021Q1 Results- Expectations Coexist with Concerns

<ul>
<li>The weak performance of WuXi AppTec's investment business dragged down the overall net profit growth, which could get worse considering the macro uncertainties, leading to the change of valuation logic.</li>
<li>The gross profit margin showed a declining trend, and cost control in the context of inflation becomes urgent. Reduced cash balance, weaker short-term solvency and liquidity should also be noticed.</li>
<li>With majority revenue from overseas markets, external uncertainties (e.g. geopolitical conflict, complex Sino-US relationship, etc.) may be greater than expected. Investors may need to be ready for this.</li>
</ul>


The weak performance of WuXi AppTec's investment business dragged down the overall net profit growth, which could get worse considering the macro uncertainties, leading to the change of valuation logic.
The gross profit margin showed a declining trend, and cost control in the context of inflation becomes urgent. Reduced cash balance, weaker short-term solvency and liquidity should also be noticed.
With majority revenue from overseas markets, external uncertainties (e.g. geopolitical conflict, complex Sino-US relationship, etc.) may be greater than expected. Investors may need to be ready for this.


WuXi AppTec Co Ltd (2359.HK/603259.CH) 2022Q1 - Some Points Worth the Attention

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)

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Re-Examine the Outlook and Investment Strategy for China Biotech and CXO

The investment logic of China biotech has broken due to dilemma of domestic policy and internationalization risk.CXO couldn't sustain high...

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We analyzed Pharmaron's performance in 2021 & 2022Q1.Expectations coexist with concerns. Its outlook/valuation logic would improve greatly if it...

Xinyao (Criss) Wang

WuXi AppTec Co Ltd (2359.HK/603259.CH) 2022Q1 - Some Points Worth the Attention

The poor investment business affected overall net profit growth and could get worse due to macro uncertainties, leading to change of valuation...

Xinyao (Criss) Wang

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Genscript Biotech - Commercialized CAR-T & Strong CGT CDMO Indicate Exponential Growth in Valuation

GenScript’s commercialization of CAR-T, rapid growing GCT CDMO and “all-in” on GCT industry chain indicate exponential growth potential in...

Xinyao (Criss) Wang