HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

Ping An Healthcare and Technol / Equity Bottom-Up

<ul>
<li>Fang Weihao's departure means PAGD's strategic transformation failed. The business model of being a "vassal" of Ping An Group seems hard to bring high valuation due to “discounted” growth potential.</li>
<li>PAGD is at a crossroads. The question is which development path will the new CEO choose - Follow Fang Weihao's strategy or return to the traditional Internet healthcare business model?</li>
<li>Both directions have painful costs that investors will not be happy with. Therefore, we recommend that investors remain sober and rational in the face of the bullish view on PAGD.</li>
</ul>


Fang Weihao's departure means PAGD's strategic transformation failed. The business model of being a "vassal" of Ping An Group seems hard to bring high valuation due to “discounted” growth potential.
PAGD is at a crossroads. The question is which development path will the new CEO choose - Follow Fang Weihao's strategy or return to the traditional Internet healthcare business model?
Both directions have painful costs that investors will not be happy with. Therefore, we recommend that investors remain sober and rational in the face of the bullish view on PAGD.


Ping An Healthcare and Technology (1833.HK) - Valuation Logic May Completely Change Due to New Path

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 analyze the weekly Hong Kong Connect flows with our data engine for holding position as of February 23rd.</li>
<li>The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.</li>
<li>We highlight the weekly Hong Kong Connect flows for CNOOC, China Mobile.</li>
</ul>


We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of February 23rd.
The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.
We highlight the weekly Hong Kong Connect flows for CNOOC, China Mobile.


Hong Kong Connect Flows (Feb 23rd): CNOOC, China Mobile

APAC IPOs & Placements, Aequitas Research

Ethan Aw

APAC IPOs & Placements

Equity Capital Markets

Xiaocaiyuan International Holding / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/xiaocaiyuan-international-holding-ltd" target="_blank" data-smartkarma-citation="entities:40688:1" rel="noopener">Xiaocaiyuan International Holding (XCY HK)</a> is looking to raise up to US$200m in its upcoming HK IPO.</li>
<li>Xiaocaiyuan is a Chinese home-style cuisine restaurant operator. It prices its menus’ items to achieve average spending per consumer between RMB50 and RMB70 for its dine-in customers at its restaurants. </li>
<li>In this note, we talk about the company’s historical performance.</li>
</ul>



Xiaocaiyuan International Holding (XCY HK) is looking to raise up to US$200m in its upcoming HK IPO.
Xiaocaiyuan is a Chinese home-style cuisine restaurant operator. It prices its menus’ items to achieve average spending per consumer between RMB50 and RMB70 for its dine-in customers at its restaurants. 
In this note, we talk about the company’s historical performance.


Xiaocaiyuan International Holding Pre-IPO - Strong Network Expansion and Same Store Sales Growth

<ul>
<li>
<a href="https://www.smartkarma.com/entities/orica-ltd" target="_blank" data-smartkarma-citation="entities:895:1" rel="noopener">Orica Ltd (ORI AU)</a> is looking to raise up to A$400m (US$260m) in its primary placement. The proceeds will be used to partially fund the acquisition of Cyanco. </li>
<li>The deal is a large one to digest, representing 21.3 days of three month ADV and 5.2% dilution. </li>
<li>In this note, we'll run the deal through our ECM framework and comment on deal dynamics.</li>
</ul>



Orica Ltd (ORI AU) is looking to raise up to A$400m (US$260m) in its primary placement. The proceeds will be used to partially fund the acquisition of Cyanco. 
The deal is a large one to digest, representing 21.3 days of three month ADV and 5.2% dilution. 
In this note, we'll run the deal through our ECM framework and comment on deal dynamics.


Orica Placement - Keeping the Acquisition Momentum Going

Beijing Yuanxin Technology Group Co Ltd / Equity Capital Markets

<ul>
<li>The essence of Yuanxin's business is selling drugs.Although Yuanxin is backed by Tencent, it’s difficult to come up with more outstanding advantages to compete with Alibaba Health and JD Health.</li>
<li>We have doubts about Yuanxin’s core competitiveness and sustainable profitability, which are also far behind its peers. In our view, the market/investors may find it difficult to accept such stories.</li>
<li>Pre-IPO valuation level of Yuanxin has greatly exceeded the valuation of its drugstore business model. Yuanxin’s valuation should be lower than peers, or for example, P/S ratio of below 1x.</li>
</ul>


The essence of Yuanxin's business is selling drugs.Although Yuanxin is backed by Tencent, it’s difficult to come up with more outstanding advantages to compete with Alibaba Health and JD Health.
We have doubts about Yuanxin’s core competitiveness and sustainable profitability, which are also far behind its peers. In our view, the market/investors may find it difficult to accept such stories.
Pre-IPO valuation level of Yuanxin has greatly exceeded the valuation of its drugstore business model. Yuanxin’s valuation should be lower than peers, or for example, P/S ratio of below 1x.


Pre-IPO Beijing Yuanxin Technology Group (PHIP Update) - Risk of Overvaluation and Poor Profit Model

China

JD Health International Inc. operates drug stores. The Company retails Chinese and Western medicines, nutrition products, health care products, and other products. JD Health International markets its products throughout China.

Yonghui Superstores Company Limited operates supermarket franchises . The Company mainly operates hypermarkets, marketplace and supermarkets.

Beijing Hualian Hypermarket Co., Ltd. operates supermarkets and department stores.  The Company sells groceries, knitting products, medical instruments, hardware, chemical materials, food, beverages, construction materials, arts and crafts, jewelry, furniture, computers, air-conditioning equipment, metal materials, and other merchandise.

Beijing Hualian Hypermarket Co, Ltd. (600361 CH)

Laobaixing Pharmacy Chain JSC wholesales and distributes medical products. The Company provides Chinese herbal medicines, antibiotic preparations, biochemical drugs, and other products. Laobaixing Pharmacy Chain also provides medical equipment.

Ping An Healthcare and Technology Company Limited provides health care software solutions. The Company offers mobile platform for online consultation, hospital referral and appointment, health management, and wellness interaction services, as well as connects consumers and patients with health care resources. Ping An Healthcare and Technology serves customers in China.

Shanghai Bailian Group Co.,Ltd. operates as a supermarket. The Company retails vegetables, fruits, meats, seafood, delicatessen products, sweets, snacks, and other related products. Shanghai Bailian Group also operates department store business.

Shenzhen Agricultural Products Co., Ltd. operates chain supermarkets and wholesale markets for agricultural products.  The Company also provides agricultural products processing and other related services.

Shenzhen Agricultural Products Co, Ltd. (000061 CH)

Yixintang Pharmaceutical Group Co., Ltd. operates pharmaceutical stores. The Company retails Chinese medicines, western medicines, and other products. Yixintang Pharmaceutical Group also provides medical equipment.

Yixintang Pharmaceutical Group (002727 CH)

COFCO Joycome Foods Limited engages in animal meat production. The Company produces, processes, distributes, and sells fresh pork, pork products, and animal feeds. COFCO Joycome Foods also operates and manages slaughterhouse throughout China.

Sanjiang Shopping Club Company Limited operates community budget supermarket franchises. The Company provides customers with retail services.

LAWSON, INC. operates a chain of convenience stores in Japan. The Company sells a variety of products including fast food, beverages, snacks, magazines, newspapers, and sundry goods.

KOBE BUSSAN CO., LTD. is a supermarket franchise store operator which mainly deals in foods stuffs.  The Company also has direct-run stores.

CP Axtra Public Company Limited operates a retail discount store chain. The Company sells food and consumer products to its registered customers including wholesalers, retailers, small businesses, caterers, and private individuals who hold its member cards. CP Axtra serves customers in Thailand.

PT Sumber Alfaria Trijaya Tbk operates a chain of retail supermarkets.

Sprouts Farmers Market, Inc. operates a chain of retail grocery stores. The Company offers meats, cheese, dairy products, bakery, beer and wine, bulk foods, vitamins, and supplements. Sprouts Farmers Market serves customers throughout the United States.

Colruyt SA retails goods and offers computer and printing services.  The Company retails food and non-food items through Colruyt supermarkets, and Coccinelle, UGA, and Codi Cash supermarkets and cash and carry stores.  It retails toys, baby products, and school supplies through Dreamland stores. Colruyt markets computers and offers programming services.

J Sainsbury plc retails food.  The Company operates Sainsbury supermarkets in the United Kingdom, convenience stores, an Internet-based home delivery service, and Sainsbury Bank.  The Bank offers saving accounts, credit cards, mortgages, insurance products, and consumer loans.

Axfood AB is a food retailer and wholesaler.  The Company owns and operates supermarkets, food discount stores, distribution centers, and warehouses. Axfood owns Hemkop, Willys, Willys Hemma, and Dagab, and supports the Spar, Tempo, and Vivo stores, which are privately owned and operated through franchise agreements, in Sweden.

Cencosud SA is a multi-brand retailer in South America.  The Company operates through a  number of formats, including supermarkets, home improvement stores, shopping  centers and department stores.  Cencosud is headquartered in Chile and has  operations in Chile, Argentina, Brazil, Colombia and Peru.

Shoprite Holdings Limited operates as a investment holding company with subsidiaries operating in the supermarket, produce distribution, furniture retailing, and property holding industries.

Alibaba Health Information Technology Limited is an integrated healthcare information and content service provider. The Company uses product identification, authentication, and tracking system data for its healthcare information.

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Alibaba Health Information Tec (241 HK)

Ping An Healthcare and Technology (1833.HK) - Valuation Logic May Completely Change Due to New Path

The core of future development of PAGD is not who the CEO is, but what kind of development path it will take. Valuation logic would change...

Xinyao (Criss) Wang

Hong Kong Connect Flows (Feb 23rd): CNOOC, China Mobile

We analyzed southbound Hong Kong connect flows in the past week and highlighted the weekly flows for CNOOC, China Mobile.

Ke Yan, CFA, FRM

Xiaocaiyuan International Holding Pre-IPO - Strong Network Expansion and Same Store Sales Growth

Xiaocaiyuan International Holding (XCY HK) is looking to raise up to US$200m in its upcoming HK IPO. In this note, we talk about the company’s...

Ethan Aw

Orica Placement - Keeping the Acquisition Momentum Going

Orica Ltd (ORI AU) is looking to raise up to A$400m (US$260m) in its primary placement. The proceeds will be used to to partially fund the...

Ethan Aw

Pre-IPO Beijing Yuanxin Technology Group (PHIP Update) - Risk of Overvaluation and Poor Profit Model

The dilemma of single revenue model and excessive reliance on drug sales is hard to overcome.Due to low gross margin, it's difficult to generate...

Xinyao (Criss) Wang

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