HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Thematic (Sector/Industry)

<ul>
<li>PCR dominates the hospital market, but as targeted drug prices fall, PCR cannot have high pricing,indicating compressing market space. The whole logic goes from "To C " to "To B”.</li>
<li>NGS has advantages in new demand of individualized diagnosis and treatment of difficult diseases and drug efficacy prediction in response to complex mechanisms. It will seize market share from PCR.</li>
<li>A “good story” for related companies should not just focus on PCR (current fundamental), but NGS (long term potential) and may also cover early screening products (multidimensional growth).  </li>
</ul>


PCR dominates the hospital market, but as targeted drug prices fall, PCR cannot have high pricing,indicating compressing market space. The whole logic goes from "To C " to "To B”.
NGS has advantages in new demand of individualized diagnosis and treatment of difficult diseases and drug efficacy prediction in response to complex mechanisms. It will seize market share from PCR.
A “good story” for related companies should not just focus on PCR (current fundamental), but NGS (long term potential) and may also cover early screening products (multidimensional growth).  


Industry Report - Insights on China Companion Diagnostics Market (Business Logic and Outlook)

Global Healthcare Analyst

Tina Banerjee

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/burning-rock-biotech-ltd" target="_blank" data-smartkarma-citation="entities:28970:1" rel="noopener">Burning Rock Biotech (BNR US)</a> reported strong Q1 2022 results, with accelerated double-digit revenue growth of 27% y/y, higher than full year 2022 revenue growth guidance of 22%.</li>
<li>Operating loss widened due to 41% y/y surge in opex, primarily attributed to higher staff cost, which resulted from an increase in headcount.</li>
<li>Management reiterated 2022 revenue growth guidance of 22% y/y. With Shanghai re-opening, this seems to be achievable.</li>
</ul>



Burning Rock Biotech (BNR US) reported strong Q1 2022 results, with accelerated double-digit revenue growth of 27% y/y, higher than full year 2022 revenue growth guidance of 22%.
Operating loss widened due to 41% y/y surge in opex, primarily attributed to higher staff cost, which resulted from an increase in headcount.
Management reiterated 2022 revenue growth guidance of 22% y/y. With Shanghai re-opening, this seems to be achievable.


Burning Rock Biotech (BNR US) 1Q22: Double-Digit Revenue Growth; China Re-Opening to Boost Recovery

<ul>
<li>
<a href="https://www.smartkarma.com/entities/burning-rock-biotech-ltd" target="_blank" data-smartkarma-citation="entities:28970:1" rel="noopener">Burning Rock Biotech (BNR US)</a> shares plunged 35% since I published bearish insight on the company in November. Weak Q3 results, slower recovery, and the U.S.-China conflict remained major overhangs.</li>
<li>However, the shares are now trading at two-week high, as the company received approval for its second NGS kit in China and reported slightly better-than-expected Q4 results.</li>
<li>Investors should continue to avoid Burning Rock shares for near-term and wait for COVID cases to subside in China and resolution of the U.S.-China conflict.</li>
</ul>



Burning Rock Biotech (BNR US) shares plunged 35% since I published bearish insight on the company in November. Weak Q3 results, slower recovery, and the U.S.-China conflict remained major overhangs.
However, the shares are now trading at two-week high, as the company received approval for its second NGS kit in China and reported slightly better-than-expected Q4 results.
Investors should continue to avoid Burning Rock shares for near-term and wait for COVID cases to subside in China and resolution of the U.S.-China conflict.


Burning Rock Biotech (BNR US): Attractive Growth Story Outshined by Surging COVID Cases in China

<ul>
<li>
<a href="https://www.smartkarma.com/entities/burning-rock-biotech-ltd" target="_blank" data-smartkarma-citation="entities:28970:1" rel="noopener">Burning Rock Biotech (BNR US) </a>is China’s leading NGS-based therapy selection testing company for late-stage cancer patients. Thus far, the company has completed more than 300,000 tissue and liquid-based tests.</li>
<li>The company is in a structural transition towards in-hospital business model, which is negatively impacting the blended ASP and profitability. Due to upcoming new product launch in next year and ongoing clinical studies, opex is now accounting for more than 230% of revenue, which is expected to continue.</li>
<li>Amid the recent spread of delta variant in China, this insight has analyzed near-term growth prospect of Burning Rock ahead of its Q3 results announcement on November 16.  </li>
</ul>



Burning Rock Biotech (BNR US) is China’s leading NGS-based therapy selection testing company for late-stage cancer patients. Thus far, the company has completed more than 300,000 tissue and liquid-based tests.
The company is in a structural transition towards in-hospital business model, which is negatively impacting the blended ASP and profitability. Due to upcoming new product launch in next year and ongoing clinical studies, opex is now accounting for more than 230% of revenue, which is expected to continue.
Amid the recent spread of delta variant in China, this insight has analyzed near-term growth prospect of Burning Rock ahead of its Q3 results announcement on November 16.  


Burning Rock Biotech (BNR US): Muted Near-Term Outlook on Resurgence of COVID-19 in China

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

Kindstar Globalgene Technology / Equity Capital Markets

<div><p><a href="https://www.smartkarma.com/entities/kindstar-globalgene-technology-inc" target="_blank" data-smartkarma-citation="entities:32175:1" rel="noopener">Kindstar Globalgene Technology (9960 HK)</a> is a leading independent esoteric clinical testing service provider in China. Kindstar provides full-spectrum testing services primarily to hospitals in various speciality areas, including hematology, genetic diseases and rare diseases, infectious diseases, oncology, neurology and maternity-related diseases. In 2020, Kindstar had a 4.1% revenue market share of the total esoteric testing market in China, according to Frost &amp; Sullivan. </p></div><div><p>At the proposed IPO price range of HK$8.60-9.78 per share, Kindstar will have a market cap of HK$7,788.3-8,857.0 ($1.0-1.1 billion). At the mid-point of the IPO price range, the total net proceeds are HK$1,931.1 million ($250 million). </p></div><div><p>Seven cornerstone investors will subscribe for $140 million of the offer shares (52.2% of the offer shares at the mid-point of the IPO price). The cornerstone investors include BlackRock, CPE, Snow Lake Capital, Carmignac Funds, Natixis Investment Managers, Athos Capital and IvyRock Asset Management.</p></div><div><div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/kindstar-globalgene-ipo-initiation-testing-testing" target="_blank" data-smartkarma-citation="insights:53731" rel="noopener">Kindstar Globalgene IPO Initiation: Testing, Testing</a>, we stated that the business has successfully overcome the negative impact of the COVID-19 pandemic, with most of its segments displaying either a return to growth or lower revenue declines in 4Q20 in comparison to 9M20. In combination, with solid operating leverage and cash generation, we think that the Kindstar IPO is worth a look. Overall, we would participate in the IPO due to an attractive IPO price range.</p></div></div></div>

Kindstar Globalgene Technology (9960 HK) is a leading independent esoteric clinical testing service provider in China. Kindstar provides full-spectrum testing services primarily to hospitals in various speciality areas, including hematology, genetic diseases and rare diseases, infectious diseases, oncology, neurology and maternity-related diseases. In 2020, Kindstar had a 4.1% revenue market share of the total esoteric testing market in China, according to Frost &amp; Sullivan. At the proposed IPO price range of HK$8.60-9.78 per share, Kindstar will have a market cap of HK$7,788.3-8,857.0 ($1.0-1.1 billion). At the mid-point of the IPO price range, the total net proceeds are HK$1,931.1 million ($250 million). Seven cornerstone investors will subscribe for $140 million of the offer shares (52.2% of the offer shares at the mid-point of the IPO price). The cornerstone investors include BlackRock, CPE, Snow Lake Capital, Carmignac Funds, Natixis Investment Managers, Athos Capital and IvyRock Asset Management.In Kindstar Globalgene IPO Initiation: Testing, Testing, we stated that the business has successfully overcome the negative impact of the COVID-19 pandemic, with most of its segments displaying either a return to growth or lower revenue declines in 4Q20 in comparison to 9M20. In combination, with solid operating leverage and cash generation, we think that the Kindstar IPO is worth a look. Overall, we would participate in the IPO due to an attractive IPO price range.

Kindstar Globalgene IPO: Valuation Insights

China

Burning Rock Biotech Limited operates as a biotech company. The Company discovers and develops diagnositcs solutions for precision medicine in oncology. Burning Rock Biotech serves customers in China.

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Burning Rock Biotech (BNR US)

Industry Report - Insights on China Companion Diagnostics Market (Business Logic and Outlook)

As targeted drug price fall, logic of companion diagnosis will go from "To C" to "To B".Despite challenges,NGS will be the future trend. A “good...

Xinyao (Criss) Wang