HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

<ul>
<li>23Q3 revenue would increase by 15% QoQ/over 40% YoY. 23Q4 revenue would increase 8-10% QoQ/over 45% YoY. 2023 full-year revenue growth would be 42-43%.Profit growth is more optimistic than revenue.</li>
<li>In the first week of January 2024, YoY high growth momentum continued from December 2023, without any impact of consumption downgrades so far.In 2024, Gushengtang would accelerate pace of M&amp;A.</li>
<li>Gushengtang’s business model has been successfully validated. Different from Aier, Gushengtang is still in a period of rapid expansion. The Company remains our top pick in China’s medical service sector.</li>
</ul>


23Q3 revenue would increase by 15% QoQ/over 40% YoY. 23Q4 revenue would increase 8-10% QoQ/over 45% YoY. 2023 full-year revenue growth would be 42-43%.Profit growth is more optimistic than revenue.
In the first week of January 2024, YoY high growth momentum continued from December 2023, without any impact of consumption downgrades so far.In 2024, Gushengtang would accelerate pace of M&amp;A.
Gushengtang’s business model has been successfully validated. Different from Aier, Gushengtang is still in a period of rapid expansion. The Company remains our top pick in China’s medical service sector.


Gushengtang (2273.HK) - Some New Business Updates and Positive Performance Forecasts

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>The review period for the next rebalance of a global index kicks off this week and that is where a lot of eyes will be focused.</li>
<li>There were big inflows to ETFs tracking the <a href="https://www.smartkarma.com/entities/shanghai-shenzhen-csi-300-inde" target="_blank" data-smartkarma-citation="entities:22906:1" rel="noopener">Shanghai Shenzhen CSI 300 Inde (SHSZ300 INDEX)</a> while there were redemptions from the <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>. </li>
<li>Inflows continue for <a href="https://www.smartkarma.com/entities/ishares-msci-emerging-markets-223f5da3-7054-4e4f-bc55-b7f0852c2581" target="_blank" data-smartkarma-citation="entities:31998:1" rel="noopener">iShares Emerging Markets ex China (EMXC US)</a> while there were outflows from <a href="https://www.smartkarma.com/entities/ishares-msci-acwi-etf" target="_blank" data-smartkarma-citation="entities:24402:1" rel="noopener">iShares ACWI ETF (ACWI US)</a>. </li>
</ul>


The review period for the next rebalance of a global index kicks off this week and that is where a lot of eyes will be focused.
There were big inflows to ETFs tracking the Shanghai Shenzhen CSI 300 Inde (SHSZ300 INDEX) while there were redemptions from the Hang Seng H Share Index ETF (2828 HK). 
Inflows continue for iShares Emerging Markets ex China (EMXC US) while there were outflows from iShares ACWI ETF (ACWI US). 


Index Rebalance & ETF Flow Recap: HSI, LQ45, FXI, 2823 HK, SENSEX

China Everbright Bank Co A / Event-Driven

<ul>
<li>Based on the close of 8 January, there could be two changes for the <a href="https://www.smartkarma.com/entities/ishares-ftse-a50-china-index-etf" target="_blank" data-smartkarma-citation="entities:249:1" rel="noopener">iShares A50 China (2823 HK)</a>/ <a href="https://www.smartkarma.com/entities/csop-ftse-china-a50-etf-26e3b671-fa47-4165-a12e-bf841640c5a3" target="_blank" data-smartkarma-citation="entities:23664:1" rel="noopener">CSOP A50 (HKD) (2822 HK)</a> in March.</li>
<li>
<a href="https://www.smartkarma.com/entities/shaanxi-coal-industry-co-ltd" target="_blank" data-smartkarma-citation="entities:11254:1" rel="noopener">Shaanxi Coal Industry (601225 CH)</a> and <a href="https://www.smartkarma.com/entities/china-everbright-bank-co-ltd-675cb9b4-f4fb-4317-9df7-75e3849a2f5a" target="_blank" data-smartkarma-citation="entities:885:1" rel="noopener">China Everbright Bank Co A (601818 CH)</a> could replace <a href="https://www.smartkarma.com/entities/bank-of-ningbo-co-ltd-a" target="_blank" data-smartkarma-citation="entities:4452:1" rel="noopener">Bank Of Ningbo Co Ltd A (002142 CH)</a> and <a href="https://www.smartkarma.com/entities/aier-eye-hospital-group-co-ltd" target="_blank" data-smartkarma-citation="entities:1103:1" rel="noopener">Aier Eye Hospital Group (300015 CH)</a>. </li>
<li>The impact of passive trading will be higher on the inclusions compared to the deletions. Then there are cash and carry positions that will be rebalanced, adding to flow.</li>
</ul>


Based on the close of 8 January, there could be two changes for the iShares A50 China (2823 HK)/ CSOP A50 (HKD) (2822 HK) in March.

Shaanxi Coal Industry (601225 CH) and China Everbright Bank Co A (601818 CH) could replace Bank Of Ningbo Co Ltd A (002142 CH) and Aier Eye Hospital Group (300015 CH). 
The impact of passive trading will be higher on the inclusions compared to the deletions. Then there are cash and carry positions that will be rebalanced, adding to flow.


Offshore China ETFs Rebalance Preview: Two Changes Expected in March

Hygeia Healthcare Group / Equity Bottom-Up

<ul>
<li>Hygeia’s asset-heavy model leads to a situation of expense “front-loading” and profit “back-loading”.Management's attitude towards profit is “thought-provoking”.It’s best for investors not to have high hope for Hygeia's profit margin.</li>
<li>Hygeia can maintain 30%+ growth in short term, but revenue growth could fall to 15-20% in the future due to lack of high-quality M&amp;A targets and uncertainties brought by anti-corruption.</li>
<li>Revenue forecast is about RMB4 billion in 2023 and RMB5-5.5 billion in 2024. P/E of 30-40 is reasonable range at this stage, which would drop afterwards. Current valuation is expensive. </li>
</ul>


Hygeia’s asset-heavy model leads to a situation of expense “front-loading” and profit “back-loading”.Management's attitude towards profit is “thought-provoking”.It’s best for investors not to have high hope for Hygeia's profit margin.
Hygeia can maintain 30%+ growth in short term, but revenue growth could fall to 15-20% in the future due to lack of high-quality M&amp;A targets and uncertainties brought by anti-corruption.
Revenue forecast is about RMB4 billion in 2023 and RMB5-5.5 billion in 2024. P/E of 30-40 is reasonable range at this stage, which would drop afterwards. Current valuation is expensive. 


Hygeia Healthcare Group (6078.HK) - A Decline in Growth Is Inevitable

Huaxia Eye Hospital Group / Equity Bottom-Up

<ul>
<li>Against the backdrop of China’s reopen after the pandemic is under control, the performance comparison of the four major ophthalmic hospitals in the A-share market has attracted investors’ attention.</li>
<li>Aier Eye Hospital is already going downhill. Bright Eye Hospital leads Huaxia Eye Hospital in national layout/growth rate. He Eye Hospital has a big gap compared to the rest three.</li>
<li>The “weaknesses” of Huaxia and He Eye Hospital in business layout isn’t obvious currently.But in good times, the impact of businesses with strong consumption attributes on performance would be amplified.</li>
</ul>


Against the backdrop of China’s reopen after the pandemic is under control, the performance comparison of the four major ophthalmic hospitals in the A-share market has attracted investors’ attention.
Aier Eye Hospital is already going downhill. Bright Eye Hospital leads Huaxia Eye Hospital in national layout/growth rate. He Eye Hospital has a big gap compared to the rest three.
The “weaknesses” of Huaxia and He Eye Hospital in business layout isn’t obvious currently.But in good times, the impact of businesses with strong consumption attributes on performance would be amplified.


China’s Ophthalmic Hospital Market – The Major Players, the Business Logic and the Outlook

China

Aier Eye Hospital Group Co., Ltd provides ophthalmological services.  The Company's services include ophthalmological diagnosis and treatments.

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Aier Eye Hospital Group (300015 CH)

Gushengtang (2273.HK) - Some New Business Updates and Positive Performance Forecasts

In addition to higher-than-expected 2023 results, strong growth would continue in 2024 and the next 5-10 years.Gushengtang's active share...

Xinyao (Criss) Wang

Index Rebalance & ETF Flow Recap: HSI, LQ45, FXI, 2823 HK, SENSEX

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

Brian Freitas

Offshore China ETFs Rebalance Preview: Two Changes Expected in March

There could be two changes for the 2823HK/2822HK ETFs in March. There is bunching among some of the adds; that needs to be monitored. Impact on one...

Brian Freitas

Hygeia Healthcare Group (6078.HK) - A Decline in Growth Is Inevitable

In the insight, we expressed concerns that Hygeia's 2023 results would fall short of expectation, and they did - The management has lowered...

Xinyao (Criss) Wang

China’s Ophthalmic Hospital Market – The Major Players, the Business Logic and the Outlook

Ophthalmic hospital sector in China is one of the sectors that investors are interested in. We mainly analyzed the business logic/performance...

Xinyao (Criss) Wang

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