HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Thematic (Sector/Industry)

<ul>
<li>The Statement of Protocol signed between PCAOB and CSRC/MOF is good for China concept stocks in the short term, but it doesn’t mean the risk of delisting is completely eliminated.</li>
<li>From the statements of the two sides, there are still some differences. What the US side emphasizes is "full authority", but China requires "principle of reciprocity" of regulatory cooperation.</li>
<li>It’s difficult to reach final agreement.The trend of China concept stocks delisting from US and relisting on HKEX/A-share would not change. Investors are advised to prepare for Black Swan event.</li>
</ul>


The Statement of Protocol signed between PCAOB and CSRC/MOF is good for China concept stocks in the short term, but it doesn’t mean the risk of delisting is completely eliminated.
From the statements of the two sides, there are still some differences. What the US side emphasizes is "full authority", but China requires "principle of reciprocity" of regulatory cooperation.
It’s difficult to reach final agreement.The trend of China concept stocks delisting from US and relisting on HKEX/A-share would not change. Investors are advised to prepare for Black Swan event.


PCAOB and CSRC‘s Agreement on Audit Terms Could Fail - The Real Test of China ADRs Lies Ahead

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

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.

Event-Driven

<ul>
<li>On 26th Aug 2022, PCAOB and CSRC announced that they had entered into an agreement granting US authorities access to investigate public accounting firms headquartered in China and HK.</li>
<li>On 2nd Apr 2022, CSRC put out a draft for public comments on the revision of certain provisions which would allow easier access by overseas regulators to China ADRs audits.</li>
<li>In this note, we'll talk about the latest developments and its implications.</li>
</ul>


On 26th Aug 2022, PCAOB and CSRC announced that they had entered into an agreement granting US authorities access to investigate public accounting firms headquartered in China and HK.
On 2nd Apr 2022, CSRC put out a draft for public comments on the revision of certain provisions which would allow easier access by overseas regulators to China ADRs audits.
In this note, we'll talk about the latest developments and its implications.


China ADRs Delisting - Tide Is Turning - Non-HK Listed ADRs Are Already Outperforming

<ul>
<li>Next, domestic policy may shift from easing the pressure on medical insurance to focusing on the concerns about people's livelihood, the pressure of public opinion, people's demands, and old-age care.</li>
<li>The endogenous demand will be stepped downward based on current economic situation. The performance/valuation of HPV vaccine/growth hormones/eye care companies will gradually decline if just based on domestic markets.</li>
<li>The second half of 2022 to 2023 will gradually enter the outbreak period of medical equipment procurement for newly built hospitals. Related companies will usher in a "honeymoon period".</li>
</ul>


Next, domestic policy may shift from easing the pressure on medical insurance to focusing on the concerns about people's livelihood, the pressure of public opinion, people's demands, and old-age care.
The endogenous demand will be stepped downward based on current economic situation. The performance/valuation of HPV vaccine/growth hormones/eye care companies will gradually decline if just based on domestic markets.
The second half of 2022 to 2023 will gradually enter the outbreak period of medical equipment procurement for newly built hospitals. Related companies will usher in a "honeymoon period".


China Healthcare Weekly (Aug.26) - Policy Trend, Aier Eye Hospital, Hospital Project Construction

Equity Bottom-Up

<ul>
<li>BeiGene’s product sales in 2022H1 more than doubled YoY, which was a positive sign for commercialization. However, net loss further widened, mainly due to significantly high R&amp;D and SG&amp;A expenses.</li>
<li>Tislelizumab and zanubrutinib are not enough to support BeiGene’s high valuation. The success or failure of TIGIT project will be the key to determine how far BeiGene will go.</li>
<li>So far, it is still an indisputable fact that BeiGene has profitability issues. That's why it's hard for us to be optimistic about this company. </li>
</ul>


BeiGene’s product sales in 2022H1 more than doubled YoY, which was a positive sign for commercialization. However, net loss further widened, mainly due to significantly high R&amp;D and SG&amp;A expenses.
Tislelizumab and zanubrutinib are not enough to support BeiGene’s high valuation. The success or failure of TIGIT project will be the key to determine how far BeiGene will go.
So far, it is still an indisputable fact that BeiGene has profitability issues. That's why it's hard for us to be optimistic about this company. 


BeiGene (6160.HK/BGNE.US) 22H1- It Is an Indisputable Fact that BeiGene Is Difficult to Make Profits

<ul>
<li>The NHSA issued a Notice on the investigation and registration of dental implant charges and service fees, paving ways for the subsequent centralized procurement, which would affect companies’ profit model.</li>
<li>As the pioneer of commercial insurance,Huimin Insurance is showing a decreasing marginal effect on improving the ability to pay the bills out of NRDL and improving bargaining power of companies.</li>
<li>To improve internationalization, China Biotech can choose to “Fast Follow” differentiated BIC candidates and also start MRCT in Phase I trials. This could be a path to strive for.</li>
</ul>


The NHSA issued a Notice on the investigation and registration of dental implant charges and service fees, paving ways for the subsequent centralized procurement, which would affect companies’ profit model.
As the pioneer of commercial insurance,Huimin Insurance is showing a decreasing marginal effect on improving the ability to pay the bills out of NRDL and improving bargaining power of companies.
To improve internationalization, China Biotech can choose to “Fast Follow” differentiated BIC candidates and also start MRCT in Phase I trials. This could be a path to strive for.


China Healthcare Weekly (Aug19)-Dental Implant VBP,Commercial Insurance,Biotech Internationalization

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)

PCAOB and CSRC‘s Agreement on Audit Terms Could Fail - The Real Test of China ADRs Lies Ahead

China ADRs are only a part of Sino-US game, which shouldn't be looked at alone. It’s hard to reach final agreement. The trend of relisting on HKEX...

Xinyao (Criss) Wang

China ADRs Delisting - Tide Is Turning - Non-HK Listed ADRs Are Already Outperforming

On 26th Aug 2022, PCAOB and CSRC announced that they had entered into an agreement granting US authorities access to investigate public accounting...

Sumeet Singh

China Healthcare Weekly (Aug.26) - Policy Trend, Aier Eye Hospital, Hospital Project Construction

Policy may shift from easing medical insurance pressure to improving people's livelihood. Low endogenous demand will affect company's valuation....

Xinyao (Criss) Wang

BeiGene (6160.HK/BGNE.US) 22H1- It Is an Indisputable Fact that BeiGene Is Difficult to Make Profits

Despite improved product sales, BeiGene’s future still depends on TIGIT project. It's hard to make profits due to high R&D and SG&A expenses....

Xinyao (Criss) Wang

China Healthcare Weekly (Aug19)-Dental Implant VBP,Commercial Insurance,Biotech Internationalization

Dental implant VBP will affect companies' profit model/valuation elasticity. Commercial medical insurance faces challenges. China Biotech's...

Xinyao (Criss) Wang

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