China/Asia TMT

Shawn Yang

China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

Thematic (Sector/Industry)

<ul>
<li>9950HK/BGNE: BioNTech signed another ADC from Durality, negative to RemeGen and BeiGene（-）</li>
<li>9926HK/BGNE/9995HK/ZLAB/1801HK/1877HK: National Audit Office's special audit on auditing Guangdong's pharmaceutical consumables showed breadth and depth of the current anti-corruption probe（+/+/-/-/-/-）</li>
<li>BABA/SE:TikTok is in early talks with regulators to obtain a payments license in Indonesia.(-)</li>
</ul>


9950HK/BGNE: BioNTech signed another ADC from Durality, negative to RemeGen and BeiGene（-）
9926HK/BGNE/9995HK/ZLAB/1801HK/1877HK: National Audit Office's special audit on auditing Guangdong's pharmaceutical consumables showed breadth and depth of the current anti-corruption probe（+/+/-/-/-/-）
BABA/SE:TikTok is in early talks with regulators to obtain a payments license in Indonesia.(-)


China/Asian TMT Update-9950HK/BGNE/9926HK/BGNE/9995HK/ZLAB/1801HK/1877HK/BABA/SE-Special Audit

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

<ul>
<li>BeiGene maintained strong product sales in 23H1 and its net loss continued to narrow. This means that BeiGene has realized the cost control problem and entered a healthy growth phase.</li>
<li>Our revenue forecast indicates BeiGene is approaching the minimum threshold for turning losses into profits. A more likely scenario is revenue need to reach over US$4 billion to be breakeven</li>
<li>However, regardless of the calculation, BeiGene ‘s valuation is still unreasonably high. Its potential/certainty is nowhere near that of Alnylam. Maintaining sustained high growth is not easy because "accidents" remain.</li>
</ul>


BeiGene maintained strong product sales in 23H1 and its net loss continued to narrow. This means that BeiGene has realized the cost control problem and entered a healthy growth phase.
Our revenue forecast indicates BeiGene is approaching the minimum threshold for turning losses into profits. A more likely scenario is revenue need to reach over US$4 billion to be breakeven
However, regardless of the calculation, BeiGene ‘s valuation is still unreasonably high. Its potential/certainty is nowhere near that of Alnylam. Maintaining sustained high growth is not easy because "accidents" remain.


BeiGene (6160.HK/​BGNE.US) 23H1 - "Accidents" Behind the Strong Growth

<ul>
<li>The anti-corruption campaign has significantly accelerated since the beginning of this year. After Central Commission for Discipline Inspection has been involved, the anti-corruption efforts in pharmaceutical/device sectors would be unprecedented.</li>
<li>The main targets are leaders of hospitals/governments. The impact of anti-corruption on companies is indirect. As long as senior management are not investigated/arrested, the impact on stock price isn’t significant.</li>
<li>However, investors not only need to consider the problem of sales growth slowing down in the context of anti-corruption, but also consider whether companies is engaging in financial fraud. </li>
</ul>


The anti-corruption campaign has significantly accelerated since the beginning of this year. After Central Commission for Discipline Inspection has been involved, the anti-corruption efforts in pharmaceutical/device sectors would be unprecedented.
The main targets are leaders of hospitals/governments. The impact of anti-corruption on companies is indirect. As long as senior management are not investigated/arrested, the impact on stock price isn’t significant.
However, investors not only need to consider the problem of sales growth slowing down in the context of anti-corruption, but also consider whether companies is engaging in financial fraud. 


Anti-Corruption in China Healthcare – the Impact and the Outlook

<ul>
<li>Baba: Alibaba's annual report, Chinese media discussions and our thoughts</li>
<li>BGNE/9926HK/9995HK/1801HK/1877HK/LGNE/ZLAB: NHSA issued new rule to protect drug pricing (-)</li>
<li>BEKE: China reinforce the city village reconstruction policy, which is different with Shantytown Renovation project（+)</li>
</ul>


Baba: Alibaba's annual report, Chinese media discussions and our thoughts
BGNE/9926HK/9995HK/1801HK/1877HK/LGNE/ZLAB: NHSA issued new rule to protect drug pricing (-)
BEKE: China reinforce the city village reconstruction policy, which is different with Shantytown Renovation project（+)


China TMT Update-BABA/BGNE/9926HK/9995HK/1801HK/1877HK/LGNE/ZLAB/BEKE-Baba's Annual Report/NHSA Rule

<ul>
<li>Novartis’s forfeit of option to license BeiGene’s (BGNE) Ociperlimab (TIGIT) likely suggested pessimism towards its year-end read-out.  </li>
<li>The priority of Tislelizumab in Novartis’s pipeline may also be sidelined; With Chinese innovative drug sales subdued under NDRL, the global biotech model is gaining superiority over local biopharma model.</li>
<li>BGNE’s pipeline faces an aging problem, which must be mitigated by smart licensing. We downgrade BGNE to SELL and ZLAB to BUY.</li>
</ul>


Novartis’s forfeit of option to license BeiGene’s (BGNE) Ociperlimab (TIGIT) likely suggested pessimism towards its year-end read-out.  
The priority of Tislelizumab in Novartis’s pipeline may also be sidelined; With Chinese innovative drug sales subdued under NDRL, the global biotech model is gaining superiority over local biopharma model.
BGNE’s pipeline faces an aging problem, which must be mitigated by smart licensing. We downgrade BGNE to SELL and ZLAB to BUY.


[Blue Lotus Innovative Drugs Sector Update]: Biotech-Biopharma Ecosystem Is Coming of Age in China

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 (BGNE US)

China/Asian TMT Update-9950HK/BGNE/9926HK/BGNE/9995HK/ZLAB/1801HK/1877HK/BABA/SE-Special Audit

9926HK/BGNE/9995HK/ZLAB/1801HK/1877HK: National Audit Office's special audit on auditing Guangdong's pharmaceutical consumables showed breadth and...

Blue Lotus Research Institute

BeiGene (6160.HK/BGNE.US) 23H1 - "Accidents" Behind the Strong Growth

BeiGene's financial performance starts to become healthier in 23H1. As BeiGene approaches breakeven, it's particularly crucial to avoid "accidents"...

Xinyao (Criss) Wang

Anti-Corruption in China Healthcare – the Impact and the Outlook

The share prices of China healthcare are now plummeting due to anti-corruption campaign, which will reach a climax in 23H2 (We'll post updates in...

Xinyao (Criss) Wang

China TMT Update-BABA/BGNE/9926HK/9995HK/1801HK/1877HK/LGNE/ZLAB/BEKE-Baba's Annual Report/NHSA Rule

Baba: Alibaba's annual report;BGNE/9926HK/9995HK/1801HK/1877HK/LGNE/ZLAB: NHSA issued new rule to protect drug pricing;BEKE: China reinforce the...

Blue Lotus Research Institute

[Blue Lotus Innovative Drugs Sector Update]: Biotech-Biopharma Ecosystem Is Coming of Age in China

With Chinese innovative drug sales subdued under NDRL, the global biotech model is gaining superiority over local biopharma model. We downgrade...

Blue Lotus Research Institute

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

China/Asian TMT Update-9950HK/BGNE/9926HK/BGNE/9995HK/ZLAB/1801HK/1877HK/BABA/SE-Special Audit

9926HK/BGNE/9995HK/ZLAB/1801HK/1877HK: National Audit Office's special audit on auditing Guangdong's pharmaceutical consumables showed breadth and...

Blue Lotus Research Institute

BeiGene (6160.HK/​BGNE.US) 23H1 - "Accidents" Behind the Strong Growth

BeiGene's financial performance starts to become healthier in 23H1. As BeiGene approaches breakeven, it's particularly crucial to avoid "accidents"...

Xinyao (Criss) Wang

Anti-Corruption in China Healthcare – the Impact and the Outlook

The share prices of China healthcare are now plummeting due to anti-corruption campaign, which will reach a climax in 23H2 (We'll post updates in...

Xinyao (Criss) Wang

China TMT Update-BABA/BGNE/9926HK/9995HK/1801HK/1877HK/LGNE/ZLAB/BEKE-Baba's Annual Report/NHSA Rule

Baba: Alibaba's annual report;BGNE/9926HK/9995HK/1801HK/1877HK/LGNE/ZLAB: NHSA issued new rule to protect drug pricing;BEKE: China reinforce the...

Blue Lotus Research Institute

[Blue Lotus Innovative Drugs Sector Update]: Biotech-Biopharma Ecosystem Is Coming of Age in China

With Chinese innovative drug sales subdued under NDRL, the global biotech model is gaining superiority over local biopharma model. We downgrade...

Blue Lotus Research Institute

BeiGene (6160.HK/BGNE.US) 23H1 - "Accidents" Behind the Strong Growth