Pan-Asia Index Flows & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Pan-Asia Index Flows & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Event-Driven

<ul>
<li>The HSCEI serves as a benchmark to reflect the overall performance of the top 50 "Mainland China" securities listed in Hong Kong.</li>
<li>In this insight, we take a look at the final rankings for the HSCEI potential ADDs and potential DELs for the index rebal event in March 2025.</li>
<li>We expect one change for the HSCEI index in March 2025 and capping flows of US$136mn one-way.</li>
</ul>


The HSCEI serves as a benchmark to reflect the overall performance of the top 50 "Mainland China" securities listed in Hong Kong.
In this insight, we take a look at the final rankings for the HSCEI potential ADDs and potential DELs for the index rebal event in March 2025.
We expect one change for the HSCEI index in March 2025 and capping flows of US$136mn one-way.


Quiddity Leaderboard HSCEI Mar 25: China Resources Power (836 HK) Could Replace Li Ning (2331 HK)

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

<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

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 sales momentum of zanubrutinib eased market concerns. In 4Q23, BeiGene recorded total product sales of US$631mn (+6% QoQ or +86% YoY).</li><li>Zanubrutinib (zanu) maintained strong sales momentum, with revenue increasing 15% QoQ or 135% YoY to US$413mn, mainly driven by market share gains in the US.</li><li>In 4Q23, zanu sales in the US increased 16% QoQ to US$313mn, contributing 76% of zanu’s global sales. 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>

Strong sales momentum of zanubrutinib eased market concerns. In 4Q23, BeiGene recorded total product sales of US$631mn (+6% QoQ or +86% YoY).Zanubrutinib (zanu) maintained strong sales momentum, with revenue increasing 15% QoQ or 135% YoY to US$413mn, mainly driven by market share gains in the US.In 4Q23, zanu sales in the US increased 16% QoQ to US$313mn, contributing 76% of zanu’s global sales. 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) – Expect a Productive 2024 for Early Pipeline Assets

<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

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

<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)

Quiddity Leaderboard HSCEI Mar 25: China Resources Power (836 HK) Could Replace Li Ning (2331 HK)

The 12-month reference period used for index selection rankings is now complete. We expect China Resources Power (836 HK) to replace Li Ning (2331...

Janaghan Jeyakumar, CFA

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 (BGNE US) – Expect a Productive 2024 for Early Pipeline Assets

Strong sales momentum of zanubrutinib eased market concerns. In 4Q23, BeiGene recorded total product sales of US$631mn (+6% QoQ or +86% YoY).

CMB International

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)

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Quiddity Leaderboard HSCEI Mar 25: China Resources Power (836 HK) Could Replace Li Ning (2331 HK)

The 12-month reference period used for index selection rankings is now complete. We expect China Resources Power (836 HK) to replace Li Ning (2331...

Janaghan Jeyakumar, CFA

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 (BGNE US) – Expect a Productive 2024 for Early Pipeline Assets

Strong sales momentum of zanubrutinib eased market concerns. In 4Q23, BeiGene recorded total product sales of US$631mn (+6% QoQ or +86% YoY).

CMB International

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) - Pain Points Behind the High Growth

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