HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Thematic (Sector/Industry)

<ul>
<li>Last week, we saw some rebounds in the healthcare sector, and many investors begin to believe that a complete reversal is imminent. </li>
<li>Our view is that this is <strong>a temporary rebound</strong> after continuous pull-back due to the broken logic, rather than <strong>a complete reversal</strong>.We recommend investors to see the rebound rationally.</li>
<li>In terms of the future direction of stock price, we analyze it based on three scenarios.</li>
</ul>


Last week, we saw some rebounds in the healthcare sector, and many investors begin to believe that a complete reversal is imminent. 
Our view is that this is a temporary rebound after continuous pull-back due to the broken logic, rather than a complete reversal.We recommend investors to see the rebound rationally.
In terms of the future direction of stock price, we analyze it based on three scenarios.


The Insecure Rebound in Healthcare Sector and the Future Direction of Stock Price (2022)

Equity Bottom-Up

Shanghai Junshi Biosciences  / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/shanghai-junshi-bioscience-h" target="_blank" data-smartkarma-citation="entities:27760:1" rel="noopener">Shanghai Junshi Bioscience Co. Ltd. (1877 HK)</a> announced that it has terminated its PD-1 commercialization partnership with AstraZeneca. Lower-than-expected sales performance is seen as the key reason.</li>
<li>Junshi's commercialization team is the weakest among the domestic Top Four.As the FDA's attitude may have changed, the logic of exporting innovative domestic drugs to foreign markets could be shaken.</li>
<li>Given the poor financing environment,it's challenging for Junshi to afford large investment in R&amp;D and licensing deals by just relying on cash in hand and cashflow generating from commercialized products.</li>
</ul>



Shanghai Junshi Bioscience Co. Ltd. (1877 HK) announced that it has terminated its PD-1 commercialization partnership with AstraZeneca. Lower-than-expected sales performance is seen as the key reason.
Junshi's commercialization team is the weakest among the domestic Top Four.As the FDA's attitude may have changed, the logic of exporting innovative domestic drugs to foreign markets could be shaken.
Given the poor financing environment,it's challenging for Junshi to afford large investment in R&amp;D and licensing deals by just relying on cash in hand and cashflow generating from commercialized products.


Shanghai Junshi Bioscience (1877.HK/688180.CH) - Behind the “break Up” with AstraZeneca

<ul>
<li>Based on our analysis, the growth rate of China's drug spending is linked to GDP, and it would not be a high growth rate, but a stable growth rate.</li>
<li>The logic behind China and US biotech companies is different. To some extent, the lower the domestic biotech’s share price, the greater the risk.</li>
<li>In the current policy environment, the risks of VBP on anesthetics could be low because of their high barriers, strict control and potential social risks.</li>
</ul>


Based on our analysis, the growth rate of China's drug spending is linked to GDP, and it would not be a high growth rate, but a stable growth rate.
The logic behind China and US biotech companies is different. To some extent, the lower the domestic biotech’s share price, the greater the risk.
In the current policy environment, the risks of VBP on anesthetics could be low because of their high barriers, strict control and potential social risks.


China Healthcare Weekly (Jan.7)-China's Drug Spending,Logic Behind China/US Biotech, Anesthetics VBP

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

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.

Quantitative Analysis

<ul>
<li>We analyzed the latest HK SFC report for aggregate short position as of Dec 24.</li>
<li>Top short increases and decreases were tabulated for one week and four week period.</li>
<li>We highlight short interest increases in GCL-Poly, XPeng, and Beigene.</li>
</ul>


We analyzed the latest HK SFC report for aggregate short position as of Dec 24.
Top short increases and decreases were tabulated for one week and four week period.
We highlight short interest increases in GCL-Poly, XPeng, and Beigene.


HK Short Interest: GCL-Poly, XPeng, Beigene

<ul>
<li>With both strong innovation and internationalization capability, Lifetech is more resistant to risks and have greater development space and long-term value, which is not common in China healthcare industry. </li>
<li>The biggest concerns currently are the policy risks and the potential deterioration of international relations.</li>
<li>But overall, Lifetech is a still company worth investor’s attention. Our view is that its future valuation would be higher than that of <a href="https://www.smartkarma.com/entities/shanghai-microport-endovas-a" target="_blank" data-smartkarma-citation="entities:30310:1" rel="noopener">Shanghai Microport Endovascular MedTech (688016 CH)</a>.</li>
</ul>


With both strong innovation and internationalization capability, Lifetech is more resistant to risks and have greater development space and long-term value, which is not common in China healthcare industry. 
The biggest concerns currently are the policy risks and the potential deterioration of international relations.
But overall, Lifetech is a still company worth investor’s attention. Our view is that its future valuation would be higher than that of Shanghai Microport Endovascular MedTech (688016 CH).


Lifetech Scientific (1302.HK) - A “dark Horse” in China Innovative Device Industry

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)

The Insecure Rebound in Healthcare Sector and the Future Direction of Stock Price (2022)

The rebound in China healthcare sector last week was a temporary rebound rather than a complete reversal. In terms of future direction of stock...

Xinyao (Criss) Wang

Shanghai Junshi Bioscience (1877.HK/688180.CH) - Behind the “break Up” with AstraZeneca

The insight analyzed Junshi in terms of the potential reasons behind the termination of PD-1 commercialization partnership with AstraZeneca, the...

Xinyao (Criss) Wang

China Healthcare Weekly (Jan.7)-China's Drug Spending,Logic Behind China/US Biotech, Anesthetics VBP

The insight mainly analyzed the relationship of drug spending with GDP growth, different logic behind China/US biotech companies and related risks...

Xinyao (Criss) Wang

HK Short Interest: GCL-Poly, XPeng, Beigene

We highlight week-on-week short interest increases in GCL-Poly (3800 HK), XPeng (9868 HK), and Beigene (6160 HK) in the latest HK SFC short...

Ke Yan, CFA, FRM

Lifetech Scientific (1302.HK) - A “dark Horse” in China Innovative Device Industry

This insight analyzed Lifetech in terms of its three main product lines, the growth points and the outlook in the future, short-term catalysts and...

Xinyao (Criss) Wang

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