Pan-Asia Index Flows & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Pan-Asia Index Flows & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Event-Driven

China Resources Pharmaceutical / Event-Driven

<ul>
<li>In this insight, we take a look at a group of names with reasonably high likelihood of being involved in index changes for the Hang Seng Index in September 2024.</li>
<li>The index changes for the September 2024 index rebal will be announced on 16th August 2024.</li>
<li>The HSI selection process is highly subjective and does not follow clear-cut rules. This insight is simply an attempt to provide readers with an overall understanding of the possible scenarios.</li>
</ul>


In this insight, we take a look at a group of names with reasonably high likelihood of being involved in index changes for the Hang Seng Index in September 2024.
The index changes for the September 2024 index rebal will be announced on 16th August 2024.
The HSI selection process is highly subjective and does not follow clear-cut rules. This insight is simply an attempt to provide readers with an overall understanding of the possible scenarios.


Quiddity Leaderboard for Hang Seng Index Sep 24: New Economy? Clean Energy? or Shipping?

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

China Resources Pharmaceutical / Equity Bottom-Up

<ul>
<li>The NHSA issued a Notice on “improving the quality and expanding the scope of VBP”. The trend of full coverage of VBP of conventional drugs/consumables is determined.TCM is under pressure.</li>
<li>We analyzed the potential demand growth rate of the glove industry, which is already better than most cyclical stocks. Therefore, we see no need to remain pessimistic about this industry.</li>
<li>Holding platform companies have valuation discounts.HK$50-60 billion is reasonable market value for China Resources Pharmaceutical.Better to go long when share price is below HK$5 and then hold to receive dividends.</li>
</ul>


The NHSA issued a Notice on “improving the quality and expanding the scope of VBP”. The trend of full coverage of VBP of conventional drugs/consumables is determined.TCM is under pressure.
We analyzed the potential demand growth rate of the glove industry, which is already better than most cyclical stocks. Therefore, we see no need to remain pessimistic about this industry.
Holding platform companies have valuation discounts.HK$50-60 billion is reasonable market value for China Resources Pharmaceutical.Better to go long when share price is below HK$5 and then hold to receive dividends.


China Healthcare Weekly (May.26)-VBP Scope Expands, Optimistic About Glove Industry, China Resources

<ul>
<li>As more and more China’s drugs successfully obtained FDA approval, we analyzed the “style” of the US FDA, aiming to help investors understand the prospects of domestic companies' internationalization strategies.</li>
<li>For mature pharmaceutical companies, we analyzed the benchmarks for some key financial indicators in terms of both revenue and cost. On these basis, companies’ profit performance would be decent. </li>
<li>As a top pharmaceutical SOE, <a href="https://www.smartkarma.com/entities/china-resources-pharmaceutical-group" target="_blank" data-smartkarma-citation="entities:22928:1" rel="noopener">China Resources Pharmaceutical (CRP)</a> wouldn’t go bankrupt.This is the bottom line.Together with stable dividends, CRP is a worthwhile investment target to hold in bear market.</li>
</ul>


As more and more China’s drugs successfully obtained FDA approval, we analyzed the “style” of the US FDA, aiming to help investors understand the prospects of domestic companies' internationalization strategies.
For mature pharmaceutical companies, we analyzed the benchmarks for some key financial indicators in terms of both revenue and cost. On these basis, companies’ profit performance would be decent. 
As a top pharmaceutical SOE, China Resources Pharmaceutical (CRP) wouldn’t go bankrupt.This is the bottom line.Together with stable dividends, CRP is a worthwhile investment target to hold in bear market.


China Healthcare Weekly (Jan.19) - Bottom Fish A-Share?/“Style” of FDA/Pharma's Key Benchmark/3320HK

<ul>
<li>Retail pharmacies experienced performance decline in April and May. Due to negative policies, retail pharmacies will experience industry clearance. Therefore, we do not recommend investors to bottom-fish related stocks now.</li>
<li>There is a logic to biotech's performance from 2023 to present.The clearer the path of sustainable development, the better the stock price performance. They can be divided into three types.</li>
<li>YSB faces big risks and the outlook is not optimistic. If the final valuation of the Company is lower than <a href="https://www.smartkarma.com/entities/china-resources-pharmaceutical-group" target="_blank" data-smartkarma-citation="entities:22928:1" rel="noopener">China Resources Pharmaceutical</a> and <a href="https://www.smartkarma.com/entities/shanghai-pharmaceuticals-holding" target="_blank" data-smartkarma-citation="entities:228:1" rel="noopener">Shanghai Pharmaceuticals</a>, we wouldn't be too surprised.</li>
</ul>


Retail pharmacies experienced performance decline in April and May. Due to negative policies, retail pharmacies will experience industry clearance. Therefore, we do not recommend investors to bottom-fish related stocks now.
There is a logic to biotech's performance from 2023 to present.The clearer the path of sustainable development, the better the stock price performance. They can be divided into three types.
YSB faces big risks and the outlook is not optimistic. If the final valuation of the Company is lower than China Resources Pharmaceutical and Shanghai Pharmaceuticals, we wouldn't be too surprised.


China Healthcare Weekly (Jun23)-Retail Pharmacy's Dilemma, Logic to Biotech's Stock Price,YSB's Risk

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

<ul>
<li>Post market close tomorrow, Hang Seng Indexes will announce the changes for the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hang Seng Index (HSI INDEX)</a> that will be implemented at the close on 7 June.</li>
<li>There were no constituent changes to the index in March. We highlight ten profitable and eligible stocks that could be added to the index in June.</li>
<li>Changes to the Hang Seng Industry Classification System (HSICS) could lead to inclusions for the Information Technology industry while there could also be inclusions for the underweighted Healthcare industry.</li>
</ul>


Post market close tomorrow, Hang Seng Indexes will announce the changes for the Hang Seng Index (HSI INDEX) that will be implemented at the close on 7 June.
There were no constituent changes to the index in March. We highlight ten profitable and eligible stocks that could be added to the index in June.
Changes to the Hang Seng Industry Classification System (HSICS) could lead to inclusions for the Information Technology industry while there could also be inclusions for the underweighted Healthcare industry.


Hang Seng Index (HSI) Rebalance Preview: Inclusion Candidates for June

China

Guangzhou Baiyunshan Pharmaceutical Holdings Co., Ltd. manufactures and sells Chinese patent medicine. The Company also wholesales, retails, imports, and exports Western and Chinese pharmaceutical products and various medical apparatus.

Guangzhou Baiyunshan Pharmaceutical Holdings (874 HK)

Guangzhou Baiyunshan Pharmaceutical Holdings

Changchun High & New Technology Industry (Group) Inc. is an investment holding company.  Through its subsidiaries, the Company manufactures biopharmaceuticals and Chinese traditional medicines, constructs infrastructure facilities, manufactures electrolytic condensers, and develops and manages real estate.

Xizang Haisco Pharmaceutical Group Company Limited develops, manufactures and sells drug formulations and active pharmaceutical ingredients. The Company's main products include hepatobiliary disease medication, anti-infective drugs, parenteral nutrition drugs, invert sugar for injection, and other related products.

Xizang Haisco Pharmaceutical Group Co (002653 CH)

Shenzhen Salubris Pharmaceuticals Co., Ltd. develops, manufactures, and distributes pharmaceutical and healthcare products such as tablets, capsules, injection formulations and active pharmaceutical ingredients.

Shenzhen Salubris Pharmaceuticals A (002294 CH)

Dong-E-E-Jiao Co., Ltd. primarily manufactures and sells traditional Chinese medicine, health care products, health foods, and bio-medicine. The company also engages in gelatin products manufacturing.

Jiangsu Nhwa Pharmaceutical Co Ltd integrates science, industry and trade into one Group.  The Group engages in producing medications for central nervous system and preparation of raw materials.

Jiangsu Nhwa Pharmaceutical Co., (002262 CH)

Kangmei Pharmaceutical Co., Ltd. develops, produces, and sells medicines that are used for the treatment of high blood pressure and cold.  The Company also pr oduces antibiotic drugs and health care products. Kangmei also sells other manufacturers' medical products through its wholesale and retail chain.

Kangmei Pharmaceutical Co Ltd (600518 CH)

Shanghai Fosun Pharmaceutical (Group) Co., Ltd. is a pharmaceutical company. Through its subsidiaries, the Company manufactures genetic medicines, Chinese traditional medicines, diagnostic products, and medical instruments, provides technology, marketing, and advertising services, as well as invests in import and export trading.

Shanghai Fosun Pharmaceutical (Group) (600196 CH)

Humanwell Healthcare (Group) Co., Ltd specializes in the R&D and sales of pharmaceuticals, biotechnology, and chemical products, in addition to the import and export of goods and technology. The company, through its subsidiaries, also operate in real estate development and sales, industrial investment and management, and education projects.

Tianjin Zhongxin Pharmaceutical Group Corporation Limited produces and sells traditional Chinese medicine, western medicine, health products, and healthcare instruments.  The Group also manufactures gene-related biopharmaceutical products.  Tianjin Zhongxin markets its products under the Great Wall, Cypress, and Health brand names.

Tianjin Zhongxin Phrmctl Gp Cp (600329 CH)

Perrigo Company PLC is a global healthcare supplier that develops, manufactures, and distributes OTC and generic prescription pharmaceuticals, infant formulas, nutritional products, active pharmaceutical ingredients and pharmaceutical and medical diagnostic products. The Company's primary markets and locations of manufacturing and logistics operations are the US, UK, Mexico, and Australia.

ROHTO PHARMACEUTICAL CO., LTD. manufactures and markets pharmaceuticals and cosmetics products.  The Company's products include eyewash, bath soaps, gastrointestinal medicine, and hand cream.  Rohto Pharmaceutical also has a license agreement with its subsidiary, Mentholatum (US) to sell their brand products.  The Company also manufactures contact lenses and health foods.

PT Kalbe Farma Tbk produces and develops pharmaceutical products for human and animal healthcare.  Through its subsidiaries, the Company also operates in the pharmaceutical, health food, and packaging industries.

Corcept Therapeutics Inc. is a pharmaceutical company that discovers and develops drugs for the treatment of severe metabolic and psychiatric disorders. The Company's lead product modulates the effect of cortisol, also known as the "stress hormone", by selectively blocking the binding of cortisol to one of its two known receptors, the GR-II receptor.

SANTEN PHARMACEUTICAL CO., LTD. produces and sells ophthalmic medicine.  The Company manufactures a variety of products including eye drops and ointments. Santen Pharmaceutical also imports lenses and tools and equipment used by optometrists and produces anti-rheumatic drugs.

Glaxosmithkline Pharmaceuticals Ltd. manufactures and distributes a wide variety of pharmaceutical drugs, veterinary products and laboratory chemicals. The Company's products include "Phexin" capsules, "Betnesol" tablets and injections, "Becoride" asthma treatment, "Betnovate" ointment, "Cetzine" antihistamine, "Zucox" and "Rizap" anti-tuberculosis products.

Glaxosmithkline Pharmaceuticals (GLXO IN)

Ajanta Pharma Limited is a pharmaceutical company involved in the areas of product research, manufacturing, and marketing. The Company's manufacturing capabilities include segments such as antiretrovirals, antimalarials, cardiovascular, dermatology, and ophthalmology. The Company also markets over the counter products that include some nature-based remedies.

Glenmark Pharmaceuticals Ltd., is a pharmaceutical company. The Company develops generic drugs for inflammation, metabolic disorders, and pain.

Yuhan Corporation manufactures and markets various pharmaceutical products on its own and through joint ventures with other global pharmaceutical companies. The Company also produces personal care products, dietary supplements, and veterinary medicines.

Prestige Brands Holdings, Inc. distributes over-the-counter healthcare and household cleaning products to retail stores in the United States, Canada and other international markets.  The Company distributes oral, eye and skin care; cough, cold, allergy and sinus; and household cleansers, sponges, scrubbers and cleaning pads.

China Resources Pharmaceutical Group Ltd. operates as a pharmaceutical company. The Company researches and develops, manufactures, and distributes pharmaceuticals. China Resources Pharmaceutical Group provides products and services involving chemicals, biologics, health products, medical appliances, and others. 

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China Resources Pharmaceutical (3320 HK)

Quiddity Leaderboard for Hang Seng Index Sep 24: New Economy? Clean Energy? or Shipping?

We see IT, Healthcare, Materials, and Industrials as the High-conviction industries and we have identified four top picks from these industries as...

Janaghan Jeyakumar, CFA

China Healthcare Weekly (May.26)-VBP Scope Expands, Optimistic About Glove Industry, China Resources

Due to VBP scope expansion, TCM will face more pressure.Time to be optimistic about glove industry, which is better than expected.China Resources...

Xinyao (Criss) Wang

China Healthcare Weekly (Jun23)-Retail Pharmacy's Dilemma, Logic to Biotech's Stock Price,YSB's Risk

Retail pharmacies facing industry clearance due to negative policies.Biotech stock performance tied to sustainable development path. YSB faces...

Xinyao (Criss) Wang

Hang Seng Index (HSI) Rebalance Preview: Inclusion Candidates for June

The move to 100 constituents is expected to drag on into 2025. We highlight 10 stocks that could be considered for inclusion in the HSI in June....

Brian Freitas

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52-week Range

Market Cap (USDm)

P/E

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Quiddity Leaderboard for Hang Seng Index Sep 24: New Economy? Clean Energy? or Shipping?

We see IT, Healthcare, Materials, and Industrials as the High-conviction industries and we have identified four top picks from these industries as...

Janaghan Jeyakumar, CFA

China Healthcare Weekly (May.26)-VBP Scope Expands, Optimistic About Glove Industry, China Resources

Due to VBP scope expansion, TCM will face more pressure.Time to be optimistic about glove industry, which is better than expected.China Resources...

Xinyao (Criss) Wang

China Healthcare Weekly (Jan.19) - Bottom Fish A-Share?/“Style” of FDA/Pharma's Key Benchmark/3320HK

The more A-share fall, the more excited we are. CR Pharmaceutical won't go bankrupt. It's a good investment in bear mkt. FDA's approval style gives...

Xinyao (Criss) Wang

China Healthcare Weekly (Jun23)-Retail Pharmacy's Dilemma, Logic to Biotech's Stock Price,YSB's Risk

​Retail pharmacies facing industry clearance due to negative policies.Biotech stock performance tied to sustainable development path. YSB faces...

Xinyao (Criss) Wang

Hang Seng Index (HSI) Rebalance Preview: Inclusion Candidates for June

The move to 100 constituents is expected to drag on into 2025. We highlight 10 stocks that could be considered for inclusion in the HSI in June....

Brian Freitas

Retail pharmacies facing industry clearance due to negative policies.Biotech stock performance tied to sustainable development path. YSB faces...