HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Thematic (Sector/Industry)

<ul>
<li>The 20th National Congress highlighted the importance of autonomy and controllability of key supply chains. So, the most obvious opportunity in China healthcare is import substitution.</li>
<li>For the investment logic of import substitution, we’re more inclined to focus on medical devices sector rather than pharmaceutical sector due to more obvious policy catalysts and higher certainty.</li>
<li>We analyzed our top picks (both medical device sector and others in 2023). After a challenging year, we think that China healthcare in 2023 would be very promising.</li>
</ul>


The 20th National Congress highlighted the importance of autonomy and controllability of key supply chains. So, the most obvious opportunity in China healthcare is import substitution.
For the investment logic of import substitution, we’re more inclined to focus on medical devices sector rather than pharmaceutical sector due to more obvious policy catalysts and higher certainty.
We analyzed our top picks (both medical device sector and others in 2023). After a challenging year, we think that China healthcare in 2023 would be very promising.


2023 High Conviction - China Healthcare: Recognize the Direction and Follow the Trend

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 analyse the changes of A-H premium on 142 stocks over the last week. The average A-H premium was 130.7% as of Nov 4th.</li>
<li>The average A-H premium changed by -4.4ppt weeok on week, led by health care, financials, utilities and offset by consumer staples, real estate, consumer discretionary.</li>
<li>We highlight weekly changes in A-H premium for First Tractor, Maanshan Iron, Datang Intl, Cansino, Jushi, Fudan Microelectronics.</li>
</ul>


We analyse the changes of A-H premium on 142 stocks over the last week. The average A-H premium was 130.7% as of Nov 4th.
The average A-H premium changed by -4.4ppt weeok on week, led by health care, financials, utilities and offset by consumer staples, real estate, consumer discretionary.
We highlight weekly changes in A-H premium for First Tractor, Maanshan Iron, Datang Intl, Cansino, Jushi, Fudan Microelectronics.


A-H Premium Weekly (Nov 4th): First Tractor, Maanshan Iron

Equity Bottom-Up

<ul>
<li>The fake news about China reopen and the COVID-19 vaccine business are the major driving force for the rally of CanSino’s share price. However, such rally would not last long.</li>
<li>CanSino didn’t perform well in Q3 and 2022 would be a difficult year for CanSino. The major turning point of CanSino performance still lies in MCV4, not COVID-19 vaccines. </li>
<li>CanSino's H-share valuation has become more reasonable,but the downside risk in HKEX is hard to predict. Investors could consider offload and secure the gains. There’s better opportunity to long ahead.</li>
</ul>


The fake news about China reopen and the COVID-19 vaccine business are the major driving force for the rally of CanSino’s share price. However, such rally would not last long.
CanSino didn’t perform well in Q3 and 2022 would be a difficult year for CanSino. The major turning point of CanSino performance still lies in MCV4, not COVID-19 vaccines. 
CanSino's H-share valuation has become more reasonable,but the downside risk in HKEX is hard to predict. Investors could consider offload and secure the gains. There’s better opportunity to long ahead.


CanSino Biologics (6185.HK/688185.CH) - Time to Offload; the Rally May Not Last Long

<ul>
<li>
<a href="https://www.smartkarma.com/entities/cansino-biologics-inc-cc0c90b7-e854-4ba3-929b-914be1bd0d89" target="_blank" data-smartkarma-citation="entities:32181:1" rel="noopener">CanSino Biologics Inc (688185 CH)'</a>s business has made some positive progress recently, including the launch of COVID-19 Vaccine for Inhalation, commercialization and development progress of MCV4/PCV13i, etc. </li>
<li>CanSino's technology platforms are very valuable and are above average level. Currently, there’re little potential domestic competitors, because CanSino’s products are newer, better and safer than domestic homogenized products.</li>
<li>Even based on conservative forecast, CanSino’s valuation in HKEX is “ridiculously low”. Considering the downside risk in HKEX, CanSino A-share could be better option before valuation in HKEX becomes reasonable.</li>
</ul>



CanSino Biologics Inc (688185 CH)'s business has made some positive progress recently, including the launch of COVID-19 Vaccine for Inhalation, commercialization and development progress of MCV4/PCV13i, etc. 
CanSino's technology platforms are very valuable and are above average level. Currently, there’re little potential domestic competitors, because CanSino’s products are newer, better and safer than domestic homogenized products.
Even based on conservative forecast, CanSino’s valuation in HKEX is “ridiculously low”. Considering the downside risk in HKEX, CanSino A-share could be better option before valuation in HKEX becomes reasonable.


CanSino Biologics Inc (688185.CH/6185.HK) - Some Positive Progress in Business

<ul>
<li>The recent rally in healthcare is mainly driven by medical device sector. But investors are advised to exit in time before the truth is revealed.</li>
<li>For pharmaceutical sector, it may not be as lucky as medical device sector.Even if it has followed the positive momentum of medical device sector, stock price would diverge after that.</li>
<li>We won't take any chances on CXO due to geographical conflicts and overseas policy risks, with "no reversal signal". We updated our top picks in various sectors. </li>
</ul>


The recent rally in healthcare is mainly driven by medical device sector. But investors are advised to exit in time before the truth is revealed.
For pharmaceutical sector, it may not be as lucky as medical device sector.Even if it has followed the positive momentum of medical device sector, stock price would diverge after that.
We won't take any chances on CXO due to geographical conflicts and overseas policy risks, with "no reversal signal". We updated our top picks in various sectors. 


About the Recent Rebound in China Healthcare and the Future Direction (Updated Top Picks)

China

CanSino Biologics Inc. develops and manufactures biological vaccine products. The Company discovers quadrivalence meningococcal conjugate, pneumococcal polysaccharide, and adenovirus vector-based tuberculosis vaccines for human use. CanSino Biologics serves customers worldwide.

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CanSino Biologics (688185 CH)

2023 High Conviction - China Healthcare: Recognize the Direction and Follow the Trend

The most obvious opportunity in China healthcare is import substitution,based on which companies in medical device sector are expected to have good...

Xinyao (Criss) Wang

A-H Premium Weekly (Nov 4th): First Tractor, Maanshan Iron

We analyzed A-H premium changes in the past week and highlight A-H premium changes for First Tractor, Maanshan Iron, Datang Intl, Cansino, Jushi,...

Ke Yan, CFA, FRM

CanSino Biologics (6185.HK/688185.CH) - Time to Offload; the Rally May Not Last Long

The fake news about China reopen and COVID-19 vaccine business are major driving force for the rally of CanSino’s share price, but such rally would...

Xinyao (Criss) Wang

CanSino Biologics Inc (688185.CH/6185.HK) - Some Positive Progress in Business

Cansino has made positive progress in commercialization and R&D recently. We look forward to the performance of MCV4 in H2. Its valuation in HKEX...

Xinyao (Criss) Wang

About the Recent Rebound in China Healthcare and the Future Direction (Updated Top Picks)

There's catalyst in medical device sector, leading to the recent rebound, but investors should exit in time before the truth is revealed. After the...

Xinyao (Criss) Wang

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Market Cap (USDm)

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