Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

KraneShares CSI China Internet ETF / Event-Driven

<ul>
<li>The PCAOB has not, despite a cooperation agreement with the CSRC signed in 2013, been able to conduct on-site investigations of a HK or mainland-based company since 2010.</li>
<li>On Friday, the CSRC published a new Strengthening Confidentiality and File Management Related to Overseas Issuance to replace 2009 rules. </li>
<li>Importantly, the revised Provisions deletes the stipulation that “on-site inspections shall be dominated by domestic regulators or depend on the conclusions of inspections by domestic regulators.” Will it be enough?</li>
</ul>


The PCAOB has not, despite a cooperation agreement with the CSRC signed in 2013, been able to conduct on-site investigations of a HK or mainland-based company since 2010.
On Friday, the CSRC published a new Strengthening Confidentiality and File Management Related to Overseas Issuance to replace 2009 rules. 
Importantly, the revised Provisions deletes the stipulation that “on-site inspections shall be dominated by domestic regulators or depend on the conclusions of inspections by domestic regulators.” Will it be enough?


New CSRC "Provisions" Take a Step Towards Meeting PCAOB Requirements

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

<ul>
<li>The market is satisfied with BeiGene's 24Q1 performance. The major reason for BeiGene to narrow net loss in 24Q1 was based on strong product revenue growth rather than cost control. </li>
<li>Given the varying pace of product promotion/R&amp;D expenditure and the changes of product sales growth, BeiGene’s adjusted loss may achieve breakeven in a certain quarter of this year (e.g. 24Q4).</li>
<li>
<a href="https://www.smartkarma.com/entities/beigene-ltd" target="_blank" data-smartkarma-citation="entities:27352:1" rel="noopener">BeiGene (6160 HK) </a>is hard to cut costs largely. Sustained overall profitability may not be achieved until 2026 or 2027. But at least, we still see hope for a turnaround.</li>
</ul>


The market is satisfied with BeiGene's 24Q1 performance. The major reason for BeiGene to narrow net loss in 24Q1 was based on strong product revenue growth rather than cost control. 
Given the varying pace of product promotion/R&amp;D expenditure and the changes of product sales growth, BeiGene’s adjusted loss may achieve breakeven in a certain quarter of this year (e.g. 24Q4).

BeiGene (6160 HK) is hard to cut costs largely. Sustained overall profitability may not be achieved until 2026 or 2027. But at least, we still see hope for a turnaround.


BeiGene (6160.HK/​BGNE.US/688235.CH) 24Q1- A Breakeven Point Is on the Horizon, but It Is Not Stable

<ul>
<li>Although people acknowledged BeiGene's performance, it still makes us uneasy about a long-standing question: When will BeiGene be profitable?With current cost structure, there’s at least two years left until breakeven. </li>
<li>BeiGene’s internationalization only proves decent increase in revenue, but it doesn’t yet verify its profitability.SG&amp;A expense ratio completely deviates from the normal state of Biotech with over US$2 billion sales.</li>
<li>If BeiGene indeed has a plan to turn loss into profits, besides maintaining a high growth rate in sales, reasonable optimization in cost and expenses is the most basic “sincerity”.</li>
</ul>


Although people acknowledged BeiGene's performance, it still makes us uneasy about a long-standing question: When will BeiGene be profitable?With current cost structure, there’s at least two years left until breakeven. 
BeiGene’s internationalization only proves decent increase in revenue, but it doesn’t yet verify its profitability.SG&amp;A expense ratio completely deviates from the normal state of Biotech with over US$2 billion sales.
If BeiGene indeed has a plan to turn loss into profits, besides maintaining a high growth rate in sales, reasonable optimization in cost and expenses is the most basic “sincerity”.


BeiGene (6160.HK/​BGNE.US/688235.CH) - Pain Points Behind the High Growth

<ul>
<li>Since Imbruvica's sales continued to decline and Calquence hadn’t shown much growth in US since 23Q2, either Zanubrutinib gained more market share or the entire BTK inhibitors market is shrinking. </li>
<li>BeiGene's recent sluggish share price could be related to geopolitical conflicts/weak market sentiment.However, innovative drugs don’t involve supply chain security issues. There’s no need for US to sanction China's biotech.</li>
<li>We are relatively optimistic about BeiGene's 23Q4 sales growth. In our view, BeiGene’s reasonable market value is at least about US$18 billion. <a href="https://www.smartkarma.com/entities/beigene-ltd" target="_blank" data-smartkarma-citation="entities:27352:1" rel="noopener">BeiGene (6160 HK)</a> is undervalued.   </li>
</ul>


Since Imbruvica's sales continued to decline and Calquence hadn’t shown much growth in US since 23Q2, either Zanubrutinib gained more market share or the entire BTK inhibitors market is shrinking. 
BeiGene's recent sluggish share price could be related to geopolitical conflicts/weak market sentiment.However, innovative drugs don’t involve supply chain security issues. There’s no need for US to sanction China's biotech.
We are relatively optimistic about BeiGene's 23Q4 sales growth. In our view, BeiGene’s reasonable market value is at least about US$18 billion. BeiGene (6160 HK) is undervalued.   


BeiGene (6160.HK/​BGNE.US/688235.CH) - 2023 Results Preview and Undervaluation Concerns

<ul>
<li>A better week for HK stocks as A-shares rebound on National Team buying, a PBOC RRR cut, and potentially other measures to boost the market. Foreigners stopped selling; that helped.</li>
<li>Southbound saw decent net buying on ETFs late in the week, but otherwise the week was pretty flat in single-stock land - net buying of SOEs, selling of tech.</li>
<li>Net SOUTHBOUND buying was HK$4.5bn on the week, mostly through Shanghai (interestingly, 90+% of the decent NORTHBOUND buy was also through Shanghai). </li>
</ul>


A better week for HK stocks as A-shares rebound on National Team buying, a PBOC RRR cut, and potentially other measures to boost the market. Foreigners stopped selling; that helped.
Southbound saw decent net buying on ETFs late in the week, but otherwise the week was pretty flat in single-stock land - net buying of SOEs, selling of tech.
Net SOUTHBOUND buying was HK$4.5bn on the week, mostly through Shanghai (interestingly, 90+% of the decent NORTHBOUND buy was also through Shanghai). 


HK Connect SOUTHBOUND Flows (To 26 Jan 2024); ETFs and High Div SOEs Again BIG Buys, Tech Sold

China

BeiGene, Ltd. operates as a commercial stage biopharmaceutical company. The Company focuses on discovery, development, and commercialization of molecularly targeted and immuno-oncology drugs for the treatment of cancer. BeiGene serves patients worldwide.

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BeiGene (6160 HK)

New CSRC "Provisions" Take a Step Towards Meeting PCAOB Requirements

CSRC has published new Provisions putting the onus of info management on companies, making it easier for the PCAOB to conduct on-site audits. It...

Travis Lundy

BeiGene (6160.HK/BGNE.US/688235.CH) 24Q1- A Breakeven Point Is on the Horizon, but It Is Not Stable

BeiGene's high product revenue growth in 24Q1 narrowed net loss, with potential for breakeven in 24Q4.This is an affirmation for BeiGene....

Xinyao (Criss) Wang

BeiGene (6160.HK/BGNE.US/688235.CH) - Pain Points Behind the High Growth

Due to quick pick-up of expenses, breakeven is more challenging. BeiGene hasn't proved its profitability. If it indeed has a plan to turn loss into...

Xinyao (Criss) Wang

BeiGene (6160.HK/BGNE.US/688235.CH) - 2023 Results Preview and Undervaluation Concerns

BeiGene's sluggish share price could be related to geopolitical conflicts/weak market sentiment. But there’s no need for US to sanction China's...

Xinyao (Criss) Wang

HK Connect SOUTHBOUND Flows (To 26 Jan 2024); ETFs and High Div SOEs Again BIG Buys, Tech Sold

SOUTHBOUND flows were positive on the week but most of the net buying was in the big two ETFs. The trend of buying low PER high div SOEs continues....

Travis Lundy

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52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

New CSRC "Provisions" Take a Step Towards Meeting PCAOB Requirements

CSRC has published new Provisions putting the onus of info management on companies, making it easier for the PCAOB to conduct on-site audits. It...

Travis Lundy

BeiGene (6160.HK/​BGNE.US/688235.CH) 24Q1- A Breakeven Point Is on the Horizon, but It Is Not Stable

​BeiGene's high product revenue growth in 24Q1 narrowed net loss, with potential for breakeven in 24Q4.This is an affirmation for BeiGene....

Xinyao (Criss) Wang

BeiGene (6160.HK/​BGNE.US/688235.CH) - Pain Points Behind the High Growth

Due to quick pick-up of expenses, breakeven is more challenging. BeiGene hasn't proved its profitability. If it indeed has a plan to turn loss into...

Xinyao (Criss) Wang

BeiGene (6160.HK/​BGNE.US/688235.CH) - 2023 Results Preview and Undervaluation Concerns

BeiGene's sluggish share price could be related to geopolitical conflicts/weak market sentiment. But there’s no need for US to sanction China's...

Xinyao (Criss) Wang

HK Connect SOUTHBOUND Flows (To 26 Jan 2024); ETFs and High Div SOEs Again BIG Buys, Tech Sold

SOUTHBOUND flows were positive on the week but most of the net buying was in the big two ETFs. The trend of buying low PER high div SOEs continues....

Travis Lundy

BeiGene (6160.HK/BGNE.US/688235.CH) 24Q1- A Breakeven Point Is on the Horizon, but It Is Not Stable

BeiGene's high product revenue growth in 24Q1 narrowed net loss, with potential for breakeven in 24Q4.This is an affirmation for BeiGene....

BeiGene (6160.HK/BGNE.US/688235.CH) - Pain Points Behind the High Growth

BeiGene (6160.HK/BGNE.US/688235.CH) - 2023 Results Preview and Undervaluation Concerns