HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Event-Driven

China Resources Sanjiu Medical & Pharma / Event-Driven

<ul>
<li>China Resources Sanjiu plans to acquire 28% stake in Tasly for RMB6.21 billion at RMB14.85/share. The acquisition of Tasly is in line with the strategic direction of 14th Five-Year Plan.</li>
<li>China Resources is positioned as a leading enterprise in modern industrial chain of TCM by the SASAC.Due to policy support, TCM assets are more likely to be favored by SOEs.</li>
<li>The deal is positive for Tasly, whose valuation has room to rise further, but the market seems "skeptical" about China Resources Sanjiu's decision, leading to a lackluster share price reaction. </li>
</ul>


China Resources Sanjiu plans to acquire 28% stake in Tasly for RMB6.21 billion at RMB14.85/share. The acquisition of Tasly is in line with the strategic direction of 14th Five-Year Plan.
China Resources is positioned as a leading enterprise in modern industrial chain of TCM by the SASAC.Due to policy support, TCM assets are more likely to be favored by SOEs.
The deal is positive for Tasly, whose valuation has room to rise further, but the market seems "skeptical" about China Resources Sanjiu's decision, leading to a lackluster share price reaction. 


CR Sanjiu (000999.CH) To Acquire Tasly Pharma (600535.CH) - SOEs Have High Enthusiasm for TCM Assets

Jiangxi Boya Bio Pharmaceutical / Event-Driven

<ul>
<li>The new round of national TCM decoction pieces VBP has started. We think the overall price reduction would be relatively mild, and the impact on related TCM enterprises is limited.</li>
<li>The NHSA will vigorously promote the expansion of TCM VBP, which is another challenge for TCM injections. But the impact on exclusive TCM varieties and innovative TCM injections is smaller.</li>
<li>CR Boya has completed the acquisition of 100% equity of Green Cross and has included it in the scope of consolidated financial statements starting from November. Future M&amp;As will continue.</li>
</ul>


The new round of national TCM decoction pieces VBP has started. We think the overall price reduction would be relatively mild, and the impact on related TCM enterprises is limited.
The NHSA will vigorously promote the expansion of TCM VBP, which is another challenge for TCM injections. But the impact on exclusive TCM varieties and innovative TCM injections is smaller.
CR Boya has completed the acquisition of 100% equity of Green Cross and has included it in the scope of consolidated financial statements starting from November. Future M&amp;As will continue.


China Healthcare Weekly (Nov.17) - TCM VBP New Updates, CR Boya Completes Acquisition of Green Cross

Equity Bottom-Up

China Resources Sanjiu Medical & Pharma / Equity Bottom-Up

<ul>
<li>Sanjiu’s 2023 performance was below expectations, mainly due to the VBP of TCM formula granules and the anti-corruption since 23Q3. But dividend payout ratio reached 51.96%, the highest since 2001.</li>
<li>The prescription drug business would be the core of Sanjiu’s performance changes in next two years, especially TCM injection business, which would be benefit from favorable medical insurance reimbursement policy.</li>
<li>Sanjiu’s management expects to achieve double-digit revenue growth in 2024, with net profit matching the level of revenue growth.We think 2024 performance growth would be lower than that in 2023.</li>
</ul>


Sanjiu’s 2023 performance was below expectations, mainly due to the VBP of TCM formula granules and the anti-corruption since 23Q3. But dividend payout ratio reached 51.96%, the highest since 2001.
The prescription drug business would be the core of Sanjiu’s performance changes in next two years, especially TCM injection business, which would be benefit from favorable medical insurance reimbursement policy.
Sanjiu’s management expects to achieve double-digit revenue growth in 2024, with net profit matching the level of revenue growth.We think 2024 performance growth would be lower than that in 2023.


China Resources Sanjiu (000999.CH) - 2023 Results Below Expectations; Short-Term Headwinds Remain

<ul>
<li>It is the upfront payment rather than the total or subsequent milestone payments that indicates the gold content of license-out collaborations. We analyzed our criteria.</li>
<li>Investors actually don't need to worry too much about the NRDL negotiation results, because the NRDL price of domestic innovative drugs has become relatively stable. There are basically three levels.</li>
<li>We analyzed key points about <a href="https://www.smartkarma.com/entities/china-resources-sanju-mdcl-phrm-co-ltd" target="_blank" data-smartkarma-citation="entities:6218:1" rel="noopener">China Resources Sanju. </a>Considering the impact of anti-corruption in 23Q3 and the weak performance of TCM formula granules business, 23H2 performance could be under pressure. </li>
</ul>


It is the upfront payment rather than the total or subsequent milestone payments that indicates the gold content of license-out collaborations. We analyzed our criteria.
Investors actually don't need to worry too much about the NRDL negotiation results, because the NRDL price of domestic innovative drugs has become relatively stable. There are basically three levels.
We analyzed key points about China Resources Sanju. Considering the impact of anti-corruption in 23Q3 and the weak performance of TCM formula granules business, 23H2 performance could be under pressure. 


China Healthcare Weekly (Nov.24) - Gold Content Of License-Out Deals, NRDL Pricing Levels, CR Sanjiu

Shenyang Xingqi Pharmaceutical / Equity Bottom-Up

<ul>
<li>A document titled "<em>Soliciting Opinions on the Implementation Plan for Supporting the Development of Innovative Drugs throughout the Whole Chain</em>" would completely change the outlook/investment logic of China's innovative drugs.</li>
<li>We predict that due to the early opening of TCM formula granules VBP in some provinces and intensifying competition, the market pattern of TCM formula granules would face reshaping.</li>
<li>After the atropine eye drops is approved by the NMPA, Xingqi’s performance growth will accelerate. Supported by favorable policies, its market value is expected to reach above RMB30 billion.</li>
</ul>


A document titled "Soliciting Opinions on the Implementation Plan for Supporting the Development of Innovative Drugs throughout the Whole Chain" would completely change the outlook/investment logic of China's innovative drugs.
We predict that due to the early opening of TCM formula granules VBP in some provinces and intensifying competition, the market pattern of TCM formula granules would face reshaping.
After the atropine eye drops is approved by the NMPA, Xingqi’s performance growth will accelerate. Supported by favorable policies, its market value is expected to reach above RMB30 billion.


China Healthcare Weekly (Mar.15)- New Policy of Innovative Drug, TCM Formula Granules, Xingqi Pharma

China

China Resources Sanjiu Medical & Pharmaceutical Co., Ltd. manufactures and markets medicines, healthcare products, and medical instruments.  Through its subsidiaries, the Company also operates in pharmaceutical trading, printing, food manufacturing, real estate development, and provides medical services.

China Resources Sanjiu Medical & Pharma (000999 CH)

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China Resources Sanjiu Medical & Pharma (000999 CH)

CR Sanjiu (000999.CH) To Acquire Tasly Pharma (600535.CH) - SOEs Have High Enthusiasm for TCM Assets

China Resources Sanjiu to acquire 28% stake in Tasly for RMB6.21 billion, aligning with strategic goals of 14th Five-Year Plan. Market is...

Xinyao (Criss) Wang

China Healthcare Weekly (Nov.17) - TCM VBP New Updates, CR Boya Completes Acquisition of Green Cross

New national TCM VBP round begins with mild price reduction. NHSA to expand TCM VBP with less impact on exclusive varieties/innovative injections....

Xinyao (Criss) Wang

China Resources Sanjiu (000999.CH) - 2023 Results Below Expectations; Short-Term Headwinds Remain

Sanjiu’s 2023 results was below expectations. Growth in 2024 would be lower than that in 2023. Whether the performance would turnaround depends on...

Xinyao (Criss) Wang

China Healthcare Weekly (Nov.24) - Gold Content Of License-Out Deals, NRDL Pricing Levels, CR Sanjiu

Only a direct/non-refundable upfront payment represent the true value of licensing deal.NRDL price of innovative drug becomes stable, with three...

Xinyao (Criss) Wang

China Healthcare Weekly (Mar.15)- New Policy of Innovative Drug, TCM Formula Granules, Xingqi Pharma

New policy of innovative drug is a big deal. We've reasons to start being optimistic.The market pattern of TCM formula granules will face...

Xinyao (Criss) Wang

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

CR Sanjiu (000999.CH) To Acquire Tasly Pharma (600535.CH) - SOEs Have High Enthusiasm for TCM Assets

​China Resources Sanjiu to acquire 28% stake in Tasly for RMB6.21 billion, aligning with strategic goals of 14th Five-Year Plan. Market is...

Xinyao (Criss) Wang

China Healthcare Weekly (Nov.17) - TCM VBP New Updates, CR Boya Completes Acquisition of Green Cross

​New national TCM VBP round begins with mild price reduction. NHSA to expand TCM VBP with less impact on exclusive varieties/innovative injections....

Xinyao (Criss) Wang

China Resources Sanjiu (000999.CH) - 2023 Results Below Expectations; Short-Term Headwinds Remain

Sanjiu’s 2023 results was below expectations. Growth in 2024 would be lower than that in 2023. Whether the performance would turnaround depends on...

Xinyao (Criss) Wang

China Healthcare Weekly (Nov.24) - Gold Content Of License-Out Deals, NRDL Pricing Levels, CR Sanjiu

Only a direct/non-refundable upfront payment represent the true value of licensing deal.NRDL price of innovative drug becomes stable, with three...

Xinyao (Criss) Wang

China Healthcare Weekly (Mar.15)- New Policy of Innovative Drug, TCM Formula Granules, Xingqi Pharma

New policy of innovative drug is a big deal. We've reasons to start being optimistic.The market pattern of TCM formula granules will face...

Xinyao (Criss) Wang

China Resources Sanjiu to acquire 28% stake in Tasly for RMB6.21 billion, aligning with strategic goals of 14th Five-Year Plan. Market is...

New national TCM VBP round begins with mild price reduction. NHSA to expand TCM VBP with less impact on exclusive varieties/innovative injections....