HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Capital Markets

ADICON Holdings Limited / Equity Capital Markets

<ul>
<li>The revenue generated from COVID-19 business would not be sustainable in the long term. The lower price of COVID-19 tests, DRGs, centralized procurement and fierce competition would drag down margins.</li>
<li>ADICON hasn’t established enough advantage and moat to secure its leading position and could be overtaken by competitors.The weak R&amp;D makes ADICON difficult to gain an edge in esoteric tests.</li>
<li>Considering the fierce competition, lower margins, the decline of COVID-19 business revenue, and poor liquidity and IPO market sentiment in HKEX, the PE could be below 10.</li>
</ul>


The revenue generated from COVID-19 business would not be sustainable in the long term. The lower price of COVID-19 tests, DRGs, centralized procurement and fierce competition would drag down margins.
ADICON hasn’t established enough advantage and moat to secure its leading position and could be overtaken by competitors.The weak R&amp;D makes ADICON difficult to gain an edge in esoteric tests.
Considering the fierce competition, lower margins, the decline of COVID-19 business revenue, and poor liquidity and IPO market sentiment in HKEX, the PE could be below 10.


Pre-IPO ADICON Holdings Limited - Uncertain Growth and Outlook in Post-COVID Era

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

<ul>
<li>We expect the maximum permitted 30 changes at a single review to take place at the June rebalance. Most changes are high probability.</li>
<li>We estimate a one-way turnover of 4.25% at the rebalance leading to a one-way trade of CNY 10.677bn.</li>
<li>Industrials, Information Technology and Materials sectors are expected to have the most net inclusions, while Health Care and Financials are expected to have the most net deletions.</li>
</ul>


We expect the maximum permitted 30 changes at a single review to take place at the June rebalance. Most changes are high probability.
We estimate a one-way turnover of 4.25% at the rebalance leading to a one-way trade of CNY 10.677bn.
Industrials, Information Technology and Materials sectors are expected to have the most net inclusions, while Health Care and Financials are expected to have the most net deletions.


CSI300 Index Rebalance Preview: 30 Potential Changes as Sector Rotation Continues

<ul>
<li>With a few weeks to the end of the review period, we see 30 potential changes (the maximum allowed at a review) to the index in June.</li>
<li>Most of the changes are high probability ones. We estimate a one-way turnover of 4.48% at the June rebalance leading to a one-way trade of CNY 7.86bn.</li>
<li>The potential inclusions have outperformed the potential deletions over the last couple of months. There could be more to go here as positions are built in the next few weeks.</li>
</ul>


With a few weeks to the end of the review period, we see 30 potential changes (the maximum allowed at a review) to the index in June.
Most of the changes are high probability ones. We estimate a one-way turnover of 4.48% at the June rebalance leading to a one-way trade of CNY 7.86bn.
The potential inclusions have outperformed the potential deletions over the last couple of months. There could be more to go here as positions are built in the next few weeks.


CSI300 Index Rebalance Preview (June): Maxing Out the 30 Changes

<ul>
<li>Nearly midway through the review period for the June rebalance of the <a href="https://www.smartkarma.com/entities/shanghai-shenzhen-csi-300-index" target="_blank" data-smartkarma-citation="entities:22906:1" rel="noopener">Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX)</a>, we see 29 potential changes to the index.</li>
<li>There are a lot of high and medium probability changes that could result in a one-way turnover of 4.2% and a one-way trade of CNY 10.17bn at the June rebalance.</li>
<li>The potential inclusions have underperformed the potential deletions by c.15% over the last month and this provides a good entry point into a long short/trade.</li>
</ul>


Nearly midway through the review period for the June rebalance of the Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX), we see 29 potential changes to the index.
There are a lot of high and medium probability changes that could result in a one-way turnover of 4.2% and a one-way trade of CNY 10.17bn at the June rebalance.
The potential inclusions have underperformed the potential deletions by c.15% over the last month and this provides a good entry point into a long short/trade.


CSI300 Index Rebalance Preview (June 2022): Changes Near the Midway Mark

Thematic (Sector/Industry)

Industry viewpoints:<ul>
<li>A new round of rebalancing may still take some time.</li>
<li>Last week, the results of centralized procurement of artificial joints was released.</li>
<li>The added value of consumer genetic testing is that it could be a reference rather than an essential treatment or evidence.</li>
</ul>Company news:News about the updated progress on new drugs and cooperation agreement of <a href="https://www.smartkarma.com/entities/beigene-ltd" target="_blank" data-smartkarma-citation="entities:27352:1" rel="noopener">BeiGene Ltd (6160 HK)</a>, <a href="https://www.smartkarma.com/entities/cstone-pharmaceuticals" target="_blank" data-smartkarma-citation="entities:27882:1" rel="noopener">CStone Pharmaceuticals (2616 HK)</a> and <a href="https://www.smartkarma.com/entities/everest-medicines-ltd" target="_blank" data-smartkarma-citation="entities:29224:1" rel="noopener">Everest Medicines (1952 HK)</a>.Market review: Last week, stock price for healthcare sector in A share increased 2.63%, while CSI 300 decreased 3.14% over the same period of time. Risk disclosure:Policy risk, R&amp;D risk, Company risk and COVID-19 risk.

Industry viewpoints:
A new round of rebalancing may still take some time.
Last week, the results of centralized procurement of artificial joints was released.
The added value of consumer genetic testing is that it could be a reference rather than an essential treatment or evidence.
Company news:News about the updated progress on new drugs and cooperation agreement of BeiGene Ltd (6160 HK), CStone Pharmaceuticals (2616 HK) and Everest Medicines (1952 HK).Market review: Last week, stock price for healthcare sector in A share increased 2.63%, while CSI 300 decreased 3.14% over the same period of time. Risk disclosure:Policy risk, R&amp;D risk, Company risk and COVID-19 risk.

China Healthcare Weekly (Sep17) - A New Round of Rebalancing, Artificial Joints VBP, Genetic Testing

China

BGI Genomics Co., Ltd offers researching and testing services. The Company provides deoxyribonucleic acid sequencing, food science, health care researching, cancer prevention, drug discovery, and DNA sequencing. BGI Genomics offers services to medical and scientific research institutions worldwide.

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BGI Genomics (300676 CH)

Pre-IPO ADICON Holdings Limited - Uncertain Growth and Outlook in Post-COVID Era

The unsustainable COVID-19 related revenue will put pressure on ADICON's performance in post-COVID era. It's difficult to make breakthrough due to...

Xinyao (Criss) Wang

CSI300 Index Rebalance Preview: 30 Potential Changes as Sector Rotation Continues

We forecast 30 changes at the June rebalance for the CSI300 Index - most high probability. Industrials, IT and Materials sectors will have net...

Brian Freitas

CSI300 Index Rebalance Preview (June): Maxing Out the 30 Changes

We estimate 30 changes at the June rebalance with a one-way turnover of 4.48% leading to a one-way trade of CNY 7.86bn. The potential adds have...

Brian Freitas

CSI300 Index Rebalance Preview (June 2022): Changes Near the Midway Mark

Nearly midway through the review period for the June rebalance of the CSI300 index, we see 29 potential changes resulting in a one-way turnover of...

Brian Freitas

China Healthcare Weekly (Sep17) - A New Round of Rebalancing, Artificial Joints VBP, Genetic Testing

The article mainly analyzed the logic of volume-based purchase (VBP) and healthcare sector rebalancing, the results of centralized procurement of...

Xinyao (Criss) Wang

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