CEO, A. Stotz Investment Research

Dr. Andrew Stotz, CFA

Quantamental Investing to beat Benchmarks

A. Stotz Investment Research

We pick stocks. We construct portfolios. All our effort is focused on how to better pick stocks and construct portfolios. We serve fund management companies, family offices, and high net worth individuals.

Thematic (Sector/Industry)

<ul>
<li>We highlight 10 stocks in China that look interesting to us based on our FVMR Methodology</li>
<li>Portfolio changes: Three stocks remain, seven new join the fray</li>
<li>Since inception, it has gained 172% versus the CSI 300 Index’s return of 62%</li>
</ul>


We highlight 10 stocks in China that look interesting to us based on our FVMR Methodology
Portfolio changes: Three stocks remain, seven new join the fray
Since inception, it has gained 172% versus the CSI 300 Index’s return of 62%


HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Event-Driven

China Resources Pharmaceutical / Event-Driven

<ul>
<li>The 10th national VBP officially begins. Enterprises involved in this VBP include <a href="https://www.smartkarma.com/entities/shanghai-fosun-pharmaceutical-group" target="_blank" data-smartkarma-citation="entities:8045:1" rel="noopener">Shanghai Fosun Pharmaceutical (2196 HK)</a><a href="https://www.smartkarma.com/entities/shanghai-pharmaceuticals-holding" target="_blank" data-smartkarma-citation="entities:228:1" rel="noopener">Shanghai Pharmaceuticals (2607 HK), </a><a href="https://www.smartkarma.com/entities/sichuan-kelun-pharmaceutical-co-ltd" target="_blank" data-smartkarma-citation="entities:3625:1" rel="noopener">Sichuan Kelun Pharmaceutical (002422 CH), </a><a href="https://www.smartkarma.com/entities/cspc-pharmaceutical-group-ltd" target="_blank" data-smartkarma-citation="entities:229:1" rel="noopener">CSPC (1093 HK)</a>, etc..</li>
<li>We analyzed Chinese Biotech companies’ P/S range based on different product revenue growth. Due to low profitability, there is “a valuation discount” if they are included in global valuation system.</li>
<li>KPC has agreed to acquire 51% interest in CR Shenghuo from CR Sanjiu. Due to good performance, we are full of expectations for the future acquisition/integration within China Resources.</li>
</ul>


The 10th national VBP officially begins. Enterprises involved in this VBP include Shanghai Fosun Pharmaceutical (2196 HK)Shanghai Pharmaceuticals (2607 HK), Sichuan Kelun Pharmaceutical (002422 CH), CSPC (1093 HK), etc..
We analyzed Chinese Biotech companies’ P/S range based on different product revenue growth. Due to low profitability, there is “a valuation discount” if they are included in global valuation system.
KPC has agreed to acquire 51% interest in CR Shenghuo from CR Sanjiu. Due to good performance, we are full of expectations for the future acquisition/integration within China Resources.


China Healthcare Weekly (Nov.24) - 10th VBP, Biotech Valuation Logic, China Resources Reorganization

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

Innovent Biologics Inc / Equity Bottom-Up

<ul>
<li>The third batch of TCM VBP expansion and successive price reduction will continue to be implemented. The price dominance of exclusive TCM patent medicines may collapse based on this VBP.</li>
<li>Since 2019, the ADC drug market has entered a period of rapid growth, the significance of which is that the good story of ADC CXO is able to continue.</li>
<li>Innovent divested important subsidiary at low price, which apparently "irritated" investors. Valuation of Innovent will move towards traditional enterprise such as CSPC. Time to offload Innovent as investment logic changes.</li>
</ul>


The third batch of TCM VBP expansion and successive price reduction will continue to be implemented. The price dominance of exclusive TCM patent medicines may collapse based on this VBP.
Since 2019, the ADC drug market has entered a period of rapid growth, the significance of which is that the good story of ADC CXO is able to continue.
Innovent divested important subsidiary at low price, which apparently "irritated" investors. Valuation of Innovent will move towards traditional enterprise such as CSPC. Time to offload Innovent as investment logic changes.


China Healthcare Weekly (Nov.3) - TCM VBP Update, ADC CXO's Logic Is Solid, "Ugly Move" Of Innovent

Tasly Pharmaceutical Group / Event-Driven

<ul>
<li>Since Tasly's performance growth has long stagnated and Yan Kaijing has no better way to turn the situation around, selling Tasly to SOE and cashing out becomes a good choice.</li>
<li>Upon completion of all approvals (e.g. the SASAC, SAMR, shareholders' meeting of CR Sanjiu, etc.), the deal aims to be completed in 25Q1. We think the deal will get up.</li>
<li>Tasly’s share price should be at least higher than RMB14.85/share based on the cash transfer price. Its P/E would reach 30 in the future after the integration with CR Sanjiu.</li>
</ul>


Since Tasly's performance growth has long stagnated and Yan Kaijing has no better way to turn the situation around, selling Tasly to SOE and cashing out becomes a good choice.
Upon completion of all approvals (e.g. the SASAC, SAMR, shareholders' meeting of CR Sanjiu, etc.), the deal aims to be completed in 25Q1. We think the deal will get up.
Tasly’s share price should be at least higher than RMB14.85/share based on the cash transfer price. Its P/E would reach 30 in the future after the integration with CR Sanjiu.


CR Sanjiu (000999.CH) To Acquire Tasly (600535.CH) Update - This Is Already a Done Deal

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)

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

China Resources Sanjiu Medical & Pharma (000999 CH)

The Stocks to Own in China – Vol. 34

We highlight 10 China A stocks that look interesting to us based on our FVMR Methodology. Portfolio changes: Three stocks remain, seven new join...

A. Stotz Investment Research

China Healthcare Weekly (Nov.24) - 10th VBP, Biotech Valuation Logic, China Resources Reorganization

The 10th national VBP kicks off. Chinese Biotech face valuation discount when included in global valuation system. China Resources is undergoing...

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 Healthcare Weekly (Nov.3) - TCM VBP Update, ADC CXO's Logic Is Solid, "Ugly Move" Of Innovent

The 3rd batch of TCM VBP will hit the performance of exclusive TCM varieties.Due to the "ugly move" of Innovent's management, we advise investors...

Xinyao (Criss) Wang

CR Sanjiu (000999.CH) To Acquire Tasly (600535.CH) Update - This Is Already a Done Deal

Tasly's stagnant growth prompts Yan Kaijing to sell it to SOE.This is a done deal, which aims to be completed in 25Q1. Tasly's valuation is...

Xinyao (Criss) Wang

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

The Stocks to Own in China – Vol. 34

We highlight 10 China A stocks that look interesting to us based on our FVMR Methodology. Portfolio changes: Three stocks remain, seven new join...

A. Stotz Investment Research

China Healthcare Weekly (Nov.24) - 10th VBP, Biotech Valuation Logic, China Resources Reorganization

The 10th national VBP kicks off. Chinese Biotech face valuation discount when included in global valuation system. China Resources is undergoing...

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 Healthcare Weekly (Nov.3) - TCM VBP Update, ADC CXO's Logic Is Solid, "Ugly Move" Of Innovent

The 3rd batch of TCM VBP will hit the performance of exclusive TCM varieties.Due to the "ugly move" of Innovent's management, we advise investors...

Xinyao (Criss) Wang

CR Sanjiu (000999.CH) To Acquire Tasly (600535.CH) Update - This Is Already a Done Deal

​Tasly's stagnant growth prompts Yan Kaijing to sell it to SOE.This is a done deal, which aims to be completed in 25Q1. Tasly's valuation is...

Xinyao (Criss) Wang

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

Tasly's stagnant growth prompts Yan Kaijing to sell it to SOE.This is a done deal, which aims to be completed in 25Q1. Tasly's valuation is...