China/Asia TMT

Shawn Yang

China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

Thematic (Sector/Industry)

<ul>
<li>Baba: Alibaba's annual report, Chinese media discussions and our thoughts</li>
<li>BGNE/9926HK/9995HK/1801HK/1877HK/LGNE/ZLAB: NHSA issued new rule to protect drug pricing (-)</li>
<li>BEKE: China reinforce the city village reconstruction policy, which is different with Shantytown Renovation project（+)</li>
</ul>


Baba: Alibaba's annual report, Chinese media discussions and our thoughts
BGNE/9926HK/9995HK/1801HK/1877HK/LGNE/ZLAB: NHSA issued new rule to protect drug pricing (-)
BEKE: China reinforce the city village reconstruction policy, which is different with Shantytown Renovation project（+)


China TMT Update-BABA/BGNE/9926HK/9995HK/1801HK/1877HK/LGNE/ZLAB/BEKE-Baba's Annual Report/NHSA Rule

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.

Equity Bottom-Up

<ul><li>BGNE hosted its 2023 R&amp;D Day on 18 Jul. The Company highlighted 3 major synergetic assets in haematology, Brukinsa (BTKi), sonrotoclax (BCL2i) and BGB11673 (BTK CDAC).</li><li>With superior efficacy and safety shown in H2H and multiple pivotal trials, Brukinsa has been widely approved globally for multiple indications, including CLL/SLL, WM, MCL, MZL and potentially FL, and is the backbone of the Company’s haematology franchise.</li><li>Ph3 trial of sonrotoclax to be initiated. Sonrotoclax is a potential BIC BCL2 inhibitor with differentiated profiles. In the Ph1/2 study, in 56 efficacy evaluable treatment-naïve (TN) CLL/SLL patients receiving sonrotoclax + Brukinsa, the ORR reached 100% (CR 26.8%), and in the patients with at least 3 postbaseline response assessments (n=37), the CR reached 35%. I</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>

BGNE hosted its 2023 R&amp;D Day on 18 Jul. The Company highlighted 3 major synergetic assets in haematology, Brukinsa (BTKi), sonrotoclax (BCL2i) and BGB11673 (BTK CDAC).With superior efficacy and safety shown in H2H and multiple pivotal trials, Brukinsa has been widely approved globally for multiple indications, including CLL/SLL, WM, MCL, MZL and potentially FL, and is the backbone of the Company’s haematology franchise.Ph3 trial of sonrotoclax to be initiated. Sonrotoclax is a potential BIC BCL2 inhibitor with differentiated profiles. In the Ph1/2 study, in 56 efficacy evaluable treatment-naïve (TN) CLL/SLL patients receiving sonrotoclax + Brukinsa, the ORR reached 100% (CR 26.8%), and in the patients with at least 3 postbaseline response assessments (n=37), the CR reached 35%. IContent 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.

BeiGene (BGNE US) – Solidifying Leadership in Haematology with Three Synergistic BIC Molecules

<ul>
<li>Novartis’s forfeit of option to license BeiGene’s (BGNE) Ociperlimab (TIGIT) likely suggested pessimism towards its year-end read-out.  </li>
<li>The priority of Tislelizumab in Novartis’s pipeline may also be sidelined; With Chinese innovative drug sales subdued under NDRL, the global biotech model is gaining superiority over local biopharma model.</li>
<li>BGNE’s pipeline faces an aging problem, which must be mitigated by smart licensing. We downgrade BGNE to SELL and ZLAB to BUY.</li>
</ul>


Novartis’s forfeit of option to license BeiGene’s (BGNE) Ociperlimab (TIGIT) likely suggested pessimism towards its year-end read-out.  
The priority of Tislelizumab in Novartis’s pipeline may also be sidelined; With Chinese innovative drug sales subdued under NDRL, the global biotech model is gaining superiority over local biopharma model.
BGNE’s pipeline faces an aging problem, which must be mitigated by smart licensing. We downgrade BGNE to SELL and ZLAB to BUY.


[Blue Lotus Innovative Drugs Sector Update]: Biotech-Biopharma Ecosystem Is Coming of Age in China

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

<ul>
<li>BeiGene and Novartis mutually terminate the Option Agreement on ociperlimab. Our interpretation is Novartis may think its clinical data wouldn’t meet expectations, and is therefore unwilling to take the risk.</li>
<li>Theoretically, BeiGene still has the possibility of creating miracles to turn things around, but based on the current situation, the risk of TIGIT project failure is already very high.</li>
<li>We suggest that investors can reduce the position of BeiGene in advance or even consider offload entirely (In case its stock price falls due to unsatisfactory clinical data in 23H2).</li>
</ul>


BeiGene and Novartis mutually terminate the Option Agreement on ociperlimab. Our interpretation is Novartis may think its clinical data wouldn’t meet expectations, and is therefore unwilling to take the risk.
Theoretically, BeiGene still has the possibility of creating miracles to turn things around, but based on the current situation, the risk of TIGIT project failure is already very high.
We suggest that investors can reduce the position of BeiGene in advance or even consider offload entirely (In case its stock price falls due to unsatisfactory clinical data in 23H2).


BeiGene (6160.HK/​BGNE.US) - Novartis Chose to Escape Before Tragedy of TIGIT Truly Comes

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>Hang Seng has announced the conclusions of the market consultation. Primary-listed foreign stocks will be eligible for inclusion in the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">HSI INDEX</a> and <a href="https://www.smartkarma.com/entities/hang-seng-tech-index" target="_blank" data-smartkarma-citation="entities:31367:1" rel="noopener">HSTECH INDEX</a> from the December rebalance.</li>
<li>The coming week has the rebalances for the <a href="https://www.smartkarma.com/entities/nifty-index" target="_blank" data-smartkarma-citation="entities:23617:1" rel="noopener">NIFTY Index</a>, <a href="https://www.smartkarma.com/entities/nse-nifty-next-50-index" target="_blank" data-smartkarma-citation="entities:36053:1" rel="noopener">Nifty Next 50 Index</a>, <a href="https://www.smartkarma.com/entities/nse-nifty-bank-index" target="_blank" data-smartkarma-citation="entities:26811:1" rel="noopener">Nifty Bank Index</a> and <a href="https://www.smartkarma.com/entities/s-p-bse-sensex-index" target="_blank" data-smartkarma-citation="entities:31494:1" rel="noopener">SENSEX Index</a> as a result of the <a href="https://www.smartkarma.com/entities/housing-development-finance" target="_blank" data-smartkarma-citation="entities:252:1" rel="noopener">HDFC Limited</a>/ <a href="https://www.smartkarma.com/entities/hdfc-bank-ltd-4b6b7a92-9087-468d-9dbe-ab169e77f014" target="_blank" data-smartkarma-citation="entities:558:1" rel="noopener">HDFC Bank</a> merger.</li>
<li>There were inflows to <a href="https://www.smartkarma.com/entities/tracker-fund-of-hong-kong-ltd" target="_blank" data-smartkarma-citation="entities:29257:1" rel="noopener">Tracker Fund of Hong Kong Ltd (2800 HK)</a> and outflows from <a href="https://www.smartkarma.com/entities/hang-seng-china-enterprises-index-etf" target="_blank" data-smartkarma-citation="entities:25:1" rel="noopener">Hang Seng H Share Index ETF (2828 HK)</a> during the week.</li>
</ul>


Hang Seng has announced the conclusions of the market consultation. Primary-listed foreign stocks will be eligible for inclusion in the HSI INDEX and HSTECH INDEX from the December rebalance.
The coming week has the rebalances for the NIFTY Index, Nifty Next 50 Index, Nifty Bank Index and SENSEX Index as a result of the HDFC Limited/ HDFC Bank merger.
There were inflows to Tracker Fund of Hong Kong Ltd (2800 HK) and outflows from Hang Seng H Share Index ETF (2828 HK) during the week.


Index Rebalance & ETF Flow Recap: HSCI, HSCEI, HSI, CSI300, CSI500, SSE50, HDFC Bank, Sensex

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)

China TMT Update-BABA/BGNE/9926HK/9995HK/1801HK/1877HK/LGNE/ZLAB/BEKE-Baba's Annual Report/NHSA Rule

Baba: Alibaba's annual report;BGNE/9926HK/9995HK/1801HK/1877HK/LGNE/ZLAB: NHSA issued new rule to protect drug pricing;BEKE: China reinforce the...

Blue Lotus Research Institute

BeiGene (BGNE US) – Solidifying Leadership in Haematology with Three Synergistic BIC Molecules

BGNE hosted its 2023 R&D Day on 18 Jul. The Company highlighted 3 major synergetic assets in haematology, Brukinsa (BTKi), sonrotoclax (BCL2i) and...

CMB International

[Blue Lotus Innovative Drugs Sector Update]: Biotech-Biopharma Ecosystem Is Coming of Age in China

With Chinese innovative drug sales subdued under NDRL, the global biotech model is gaining superiority over local biopharma model. We downgrade...

Blue Lotus Research Institute

BeiGene (6160.HK/BGNE.US) - Novartis Chose to Escape Before Tragedy of TIGIT Truly Comes

Our understanding of Novartis' decision to abandon TIGIT project is that it believes there's a high failure risk. Since TIGIT is critical for...

Xinyao (Criss) Wang

Index Rebalance & ETF Flow Recap: HSCI, HSCEI, HSI, CSI300, CSI500, SSE50, HDFC Bank, Sensex

This recap highlights Insights covering Asian index rebalances (announcements/ forecasts/ IPO Fast Entry/ M&A driven changes). We also highlight...

Brian Freitas

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China TMT Update-BABA/BGNE/9926HK/9995HK/1801HK/1877HK/LGNE/ZLAB/BEKE-Baba's Annual Report/NHSA Rule

Baba: Alibaba's annual report;BGNE/9926HK/9995HK/1801HK/1877HK/LGNE/ZLAB: NHSA issued new rule to protect drug pricing;BEKE: China reinforce the...

Blue Lotus Research Institute

BeiGene (BGNE US) – Solidifying Leadership in Haematology with Three Synergistic BIC Molecules

BGNE hosted its 2023 R&D Day on 18 Jul. The Company highlighted 3 major synergetic assets in haematology, Brukinsa (BTKi), sonrotoclax (BCL2i) and...

CMB International

[Blue Lotus Innovative Drugs Sector Update]: Biotech-Biopharma Ecosystem Is Coming of Age in China

With Chinese innovative drug sales subdued under NDRL, the global biotech model is gaining superiority over local biopharma model. We downgrade...

Blue Lotus Research Institute

BeiGene (6160.HK/​BGNE.US) - Novartis Chose to Escape Before Tragedy of TIGIT Truly Comes

Our understanding of Novartis' decision to abandon TIGIT project is that it believes there's a high failure risk. Since TIGIT is critical for...

Xinyao (Criss) Wang

Index Rebalance & ETF Flow Recap: HSCI, HSCEI, HSI, CSI300, CSI500, SSE50, HDFC Bank, Sensex

This recap highlights Insights covering Asian index rebalances (announcements/ forecasts/ IPO Fast Entry/ M&A driven changes). We also highlight...

Brian Freitas

BeiGene (6160.HK/BGNE.US) - Novartis Chose to Escape Before Tragedy of TIGIT Truly Comes