HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

<ul>
<li>We saw some rebounds of <a href="https://www.smartkarma.com/entities/microport-scientific-corp" target="_blank" data-smartkarma-citation="entities:4487:1" rel="noopener">Microport Scientific (853 HK)</a>’s share price recently, which was mainly driven by the catalysts from the policy side. However, such rebounds would not last. </li>
<li>Microport’s development mode is unfavorable to investors. It’s not surprising for Microport to underperform or its valuation to be lower than expected. We recommend investors to focus more on Microport's subsidiaries.</li>
<li>The communication between Microport and investors has a problem, leading investors to think the management's no longer credible. How to repay the US$700 million convertible bond is also a problem.</li>
</ul>


We saw some rebounds of Microport Scientific (853 HK)’s share price recently, which was mainly driven by the catalysts from the policy side. However, such rebounds would not last. 
Microport’s development mode is unfavorable to investors. It’s not surprising for Microport to underperform or its valuation to be lower than expected. We recommend investors to focus more on Microport's subsidiaries.
The communication between Microport and investors has a problem, leading investors to think the management's no longer credible. How to repay the US$700 million convertible bond is also a problem.


Microport Scientific (853.HK) - Underperformance Would Be the Norm

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.

AK Medical Holdings Limited / Equity Bottom-Up

<div><div><div><div><ul><li>1H22 earnings beat. AK Medical reported 1H22 revenue of RMB531.2mn, up 18.7% YoY, primarily driven by the revenue growth in revision replacement implants and ICOS customised products as well as significant sales volume growth of artificial joints post the implementation of national joint VBP.</li><li>Gross profit was RMB338.5mn, up 9.8% YoY. Gross profit margin was 63.7%, higher than the previous guidance of 55-60%, thanks to the delayed implementation of VBP and the decline in raw material costs.</li><li>Attributable net profit was RMB126.0mn, up 13.1%YoY, accounting for 77.8% of our previous full-year forecast mainly driven by higher-than-expected revenue growth and better-than- expected operating margins.</li></ul></div></div></div></div><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>

1H22 earnings beat. AK Medical reported 1H22 revenue of RMB531.2mn, up 18.7% YoY, primarily driven by the revenue growth in revision replacement implants and ICOS customised products as well as significant sales volume growth of artificial joints post the implementation of national joint VBP.Gross profit was RMB338.5mn, up 9.8% YoY. Gross profit margin was 63.7%, higher than the previous guidance of 55-60%, thanks to the delayed implementation of VBP and the decline in raw material costs.Attributable net profit was RMB126.0mn, up 13.1%YoY, accounting for 77.8% of our previous full-year forecast mainly driven by higher-than-expected revenue growth and better-than- expected operating margins.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.

AK Medical (1789 HK) – Net Profit Beat Due to Significant Volume Growth Post VBP

Thematic (Sector/Industry)

<ul>
<li>Jiangsu Provincial Medical Insurance Bureau organized the 7th round of centralized procurement of medical consumables, mainly including spring coil, endoscopic stapler, ultrasound knife and vacuum blood collection tube.</li>
<li>
<a href="https://www.smartkarma.com/entities/cstone-pharmaceuticals" target="_blank" data-smartkarma-citation="entities:27882:1" rel="noopener">CStone Pharmaceuticals (2616 HK)</a> is considering a potential sale of the business. We analyzed the logic behind this deal.</li>
<li>For biotech, Mr Market can never be rational enough to see the big picture. Maybe we should be "dumb". Buy low and sell high works for all investors.</li>
</ul>


Jiangsu Provincial Medical Insurance Bureau organized the 7th round of centralized procurement of medical consumables, mainly including spring coil, endoscopic stapler, ultrasound knife and vacuum blood collection tube.

CStone Pharmaceuticals (2616 HK) is considering a potential sale of the business. We analyzed the logic behind this deal.
For biotech, Mr Market can never be rational enough to see the big picture. Maybe we should be "dumb". Buy low and sell high works for all investors.


China Healthcare Weekly (July22)-Jiangsu Province VBP, CStone's Potential Sale, Irrational Mr Market

Global Healthcare Analyst

Tina Banerjee

Equity Capital Markets

OrbusNeich Medical Group Holdings / Equity Capital Markets

<ul>
<li>OrbusNeich Medical Group focuses on coronary and peripheral interventional instruments, such as balloons and stents used in PCI (coronary)/PTA (peripheral) procedures.</li>
<li>Comprehensive and innovative product portfolio for endovascular interventional procedures, established global sales network, and robust pipeline are the major strength of OrbusNeich.</li>
<li>Fierce competition, commoditized nature of the offering, centralized procurement leading to substantial price drop are some of the concerns for the company.</li>
</ul>


OrbusNeich Medical Group focuses on coronary and peripheral interventional instruments, such as balloons and stents used in PCI (coronary)/PTA (peripheral) procedures.
Comprehensive and innovative product portfolio for endovascular interventional procedures, established global sales network, and robust pipeline are the major strength of OrbusNeich.
Fierce competition, commoditized nature of the offering, centralized procurement leading to substantial price drop are some of the concerns for the company.


Pre-IPO OrbusNeich Medical Group: A Scale Player, With Comprehensive Portfolio in PCI Balloon Market

Beijing Chunlizhengda Medical Instruments / Equity Bottom-Up

Beijing Chunlizhengda Medical Instruments

<ul>
<li>Last year end, <a href="https://www.smartkarma.com/entities/beijing-chunlizhengda-medical-instruments-co-ltd" target="_blank" data-smartkarma-citation="entities:7568:1" rel="noopener">Beijing Chunlizhengda Medical Instruments (1858 HK)</a> was listed on the SSE STAR Market, but fell on debut. </li>
<li>The major concerns include performance slowdown, loss of bidding in centralized procurement, problematic sales model, poor gross profit margin, single products risk and weak innovation capability and international business.</li>
<li>Our view is that there is no immediate prospect of significant improvement. With too many uncertainties and concerns, we are conservative about Chunlizhengda's outlook despite the large A/H premium.</li>
</ul>


Last year end, Beijing Chunlizhengda Medical Instruments (1858 HK) was listed on the SSE STAR Market, but fell on debut. 
The major concerns include performance slowdown, loss of bidding in centralized procurement, problematic sales model, poor gross profit margin, single products risk and weak innovation capability and international business.
Our view is that there is no immediate prospect of significant improvement. With too many uncertainties and concerns, we are conservative about Chunlizhengda's outlook despite the large A/H premium.


Chunlizhengda Medical Instruments (1858.HK) - Conservative About the Outlook

China

AK Medical Holdings Limited manufactures medical devices. The Company produces and sells orthopedic implants, spinal interbody cages, artificial vertebral bodies, and other products. AK Medical Holdings markets its products throughout Hong Kong.

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AK Medical Holdings Limited (1789 HK)

Microport Scientific (853.HK) - Underperformance Would Be the Norm

Microport’s development model is unfavorable to investors, leading to underperformance of share price. Investors may no longer trust the management...

Xinyao (Criss) Wang

AK Medical (1789 HK) – Net Profit Beat Due to Significant Volume Growth Post VBP

Accelerated hospital coverage thanks to VBP tender wins. Since Apr 2022, joint VBP has been implemented in most provinces except Shanghai and Anhui.

CMB International

China Healthcare Weekly (July22)-Jiangsu Province VBP, CStone's Potential Sale, Irrational Mr Market

Jiangsu Province released VBP results on medical consumables. CStone proposed a potential sale of the business.We analyzed the logic behind. Maybe...

Xinyao (Criss) Wang

Pre-IPO OrbusNeich Medical Group: A Scale Player, With Comprehensive Portfolio in PCI Balloon Market

This insight has analyzed the product offerings, strength, and weakness of OrbusNeich Medical Group ahead of its IPO. The company intends to raise...

Tina Banerjee

Chunlizhengda Medical Instruments (1858.HK) - Conservative About the Outlook

The insight analyzed Chunlizhengda about the concerns on performance slowdown, centralized procurement, low gross profit margin, weak innovation...

Xinyao (Criss) Wang

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