HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Thematic (Sector/Industry)

<ul>
<li>Ukraine "miraculously" turned the tide of war, making Russia to consider whether they’re facing Ukraine or the Pentagon/NATO? There could be "entry of new members". The balance could tilt again.</li>
<li>The Russia-Ukraine war is also a cruel world economic war. We analyzed the impact on healthcare industry (both opportunities and challenges).</li>
<li>Overall, the first episode of the Russia-Ukraine war has ended and entered a serious new phase. The game between the US and Russia would last for a long time.</li>
</ul>


Ukraine "miraculously" turned the tide of war, making Russia to consider whether they’re facing Ukraine or the Pentagon/NATO? There could be "entry of new members". The balance could tilt again.
The Russia-Ukraine war is also a cruel world economic war. We analyzed the impact on healthcare industry (both opportunities and challenges).
Overall, the first episode of the Russia-Ukraine war has ended and entered a serious new phase. The game between the US and Russia would last for a long time.


Russia-Ukraine War Episode 2 - The Balance Could Tilt Again and Its Impact on Healthcare Industry

<ul>
<li>It is estimated that a large number of biotech companies will be liquidated or willing to be acquired at low prices starting from the second half of 2023.</li>
<li>If strictly speaking, the so-called import substitution is not really good logic, but investors need to know "when to participate in this story" and "when to exit".</li>
<li>Economic downturn would lead to consumption downgrade. We suggest that investors temporarily avoid medical companies with consumption attributes, since we have concerns on their performance.</li>
</ul>


It is estimated that a large number of biotech companies will be liquidated or willing to be acquired at low prices starting from the second half of 2023.
If strictly speaking, the so-called import substitution is not really good logic, but investors need to know "when to participate in this story" and "when to exit".
Economic downturn would lead to consumption downgrade. We suggest that investors temporarily avoid medical companies with consumption attributes, since we have concerns on their performance.


China Healthcare Weekly (Oct.7)- Biotech Accept Reality, Import Substitution Logic, Consumer Medical

Equity Bottom-Up

Angelalign Technology  / Equity Bottom-Up

<ul>
<li>Due to declining performance, lack of core competitiveness and increasing competition, the market has to re-examine the growth potential and outlook of Angelalign.The era of high margin is fading away.</li>
<li>Angelalign’s low-price strategy is easily hit by similar products with lower prices. Once its price loses advantage, it will directly lead to a rapid and substantial decline in overall performance.</li>
<li>Due to its worse-than-expected 2022H1 performance and economic downturn, we lowered our 2022 forecast of Angelalign. Angelalign shouldn't be valued that much higher than Align Technology, expecting more downside ahead. </li>
</ul>


Due to declining performance, lack of core competitiveness and increasing competition, the market has to re-examine the growth potential and outlook of Angelalign.The era of high margin is fading away.
Angelalign’s low-price strategy is easily hit by similar products with lower prices. Once its price loses advantage, it will directly lead to a rapid and substantial decline in overall performance.
Due to its worse-than-expected 2022H1 performance and economic downturn, we lowered our 2022 forecast of Angelalign. Angelalign shouldn't be valued that much higher than Align Technology, expecting more downside ahead. 


Angelalign Technology (6699.HK) 22H1 - Still “Bubble” in Valuation; The Era of High Margin Is Over

Global Healthcare Analyst

Tina Banerjee

<ul>
<li>
<a href="https://www.smartkarma.com/entities/angelalign-technology-inc" target="_blank" data-smartkarma-citation="entities:31480:1" rel="noopener">Angelalign Technology (6699 HK)</a> has reported muted H1 2022 results, which were negatively impacted by the resurgence of the COVID-19 pandemic in China and the corresponding restrictions.</li>
<li>Revenue from core business of clear aligner treatment grew just 3% y/y. However, lower ASP and higher cost of sales, pulled down the gross profit margin by 930bps to 60.2%.</li>
<li>Thus far in H2 2022, China has imposed lockdowns in multiple major cities. With the uncertainty over the duration of COVID, no immediate respite is seen in Angelalign’s business.</li>
</ul>



Angelalign Technology (6699 HK) has reported muted H1 2022 results, which were negatively impacted by the resurgence of the COVID-19 pandemic in China and the corresponding restrictions.
Revenue from core business of clear aligner treatment grew just 3% y/y. However, lower ASP and higher cost of sales, pulled down the gross profit margin by 930bps to 60.2%.
Thus far in H2 2022, China has imposed lockdowns in multiple major cities. With the uncertainty over the duration of COVID, no immediate respite is seen in Angelalign’s business.


Angelalign Technology (6699 HK): 1H22 Profit Drops As Challenging Operating Environment Continued

<ul>
<li>Due to better-than-expected VBP results, we saw a decent rally of MDG’s share price last Friday. However, all the medical products that are covered by VBP begin to lose logic. </li>
<li>Backwardness in R&amp;D is a bottleneck restricting MDG's future growth. MDG is more like a manufacturing/processing plant relying on labor dividends than a technology company with high product added value.</li>
<li>Multiple risks (e.g.pandemic, depreciation of exchange rate against US dollar, economic downturn, etc.) will add more uncertainties to MDG's 2022 performance. MDG’s share price could remain tepid after temporary rally. </li>
</ul>


Due to better-than-expected VBP results, we saw a decent rally of MDG’s share price last Friday. However, all the medical products that are covered by VBP begin to lose logic. 
Backwardness in R&amp;D is a bottleneck restricting MDG's future growth. MDG is more like a manufacturing/processing plant relying on labor dividends than a technology company with high product added value.
Multiple risks (e.g.pandemic, depreciation of exchange rate against US dollar, economic downturn, etc.) will add more uncertainties to MDG's 2022 performance. MDG’s share price could remain tepid after temporary rally. 


Modern Dental Group (3600.HK) 22H1- Share Price May Remain Tepid Due to Lack of Core Competitiveness

China

Angelalign Technology Inc. produces and sells medical devices. The Company manufactures and sells Invisible orthodontic without brackets aligner and other products. Angelalign Technology markets its products throughout China.

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Angelalign Technology (6699 HK)

Russia-Ukraine War Episode 2 - The Balance Could Tilt Again and Its Impact on Healthcare Industry

The first episode of Russia-Ukraine war has ended and entered a new phase.As it becomes "small world war",the balance may tilt again. It's also a...

Xinyao (Criss) Wang

China Healthcare Weekly (Oct.7)- Biotech Accept Reality, Import Substitution Logic, Consumer Medical

Although unwilling, biotech will face the harshest truth in 2023; Import substitution isn't good logic. Investors should know "when to join" &...

Xinyao (Criss) Wang