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.

Event-Driven

China Traditional Chinese Medicine / Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-traditional-chinese-medicine" target="_blank" data-smartkarma-citation="entities:351:1" rel="noopener">China Traditional Chinese Medicine (570 HK)</a> profit warning notes that the 1H24 net profit would decrease by 60%-70% YoY due to pricing pressure, higher impairment losses and remedial taxes. </li>
<li>The profit warning could pose a risk to the scheme, as the consortium can withdraw if there is an adverse material change in China TCM's profits or prospects.</li>
<li>If there were a danger of triggering the MAC clause, the consortium would not have made the regulatory submissions. The flip side is that the warning helps the shareholders vote. </li>
</ul>



China Traditional Chinese Medicine (570 HK) profit warning notes that the 1H24 net profit would decrease by 60%-70% YoY due to pricing pressure, higher impairment losses and remedial taxes. 
The profit warning could pose a risk to the scheme, as the consortium can withdraw if there is an adverse material change in China TCM's profits or prospects.
If there were a danger of triggering the MAC clause, the consortium would not have made the regulatory submissions. The flip side is that the warning helps the shareholders vote. 


China Traditional Chinese Medicine (570 HK): Never a Dull Moment as Profit Warning Lands

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

Livzon Pharmaceutical Group In / Equity Bottom-Up

<ul>
<li>With rising COVID-19 cases, a pandemic outbreak in late 2024 is likely. Investors should focus on related sectors and stocks again.</li>
<li>Due to BIOSECURE Act, US companies are leaving Chinese partners.If Trump is elected, his sanctions on China's supply chain may intensify. So, there should be “valuation discount” for China CXOs.</li>
<li>Livzon may have negative YoY revenue growth in 24H1, but full-year revenue may have positive low single-digit YoY growth. Due to good dividend/repurchase policy, Livzon deserves more patience from investors.</li>
</ul>


With rising COVID-19 cases, a pandemic outbreak in late 2024 is likely. Investors should focus on related sectors and stocks again.
Due to BIOSECURE Act, US companies are leaving Chinese partners.If Trump is elected, his sanctions on China's supply chain may intensify. So, there should be “valuation discount” for China CXOs.
Livzon may have negative YoY revenue growth in 24H1, but full-year revenue may have positive low single-digit YoY growth. Due to good dividend/repurchase policy, Livzon deserves more patience from investors.


China Healthcare Weekly (Aug.18)- COVID Is Here, BIOSECURE Act Update, Livzon Deserves More Patience

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-traditional-chinese-medicine" target="_blank" data-smartkarma-citation="entities:351:1" rel="noopener">China Traditional Chinese Medicine (570 HK)</a>’s monthly update reinforces the bull case. The gross spread has remained uncomfortably high since falling on no news on 26 June. </li>
<li>The monthly update will relieve the bulls, as the consortium has finally made the regulatory submissions. The update stresses that the filing delay is due to an unwieldy consortium. </li>
<li>Potential stumbling blocks remain, which should not be an issue. Nevertheless, the risk (17.7% downside to the undisturbed price)/reward (21.4% gross spread) remains attractive. </li>
</ul>



China Traditional Chinese Medicine (570 HK)’s monthly update reinforces the bull case. The gross spread has remained uncomfortably high since falling on no news on 26 June. 
The monthly update will relieve the bulls, as the consortium has finally made the regulatory submissions. The update stresses that the filing delay is due to an unwieldy consortium. 
Potential stumbling blocks remain, which should not be an issue. Nevertheless, the risk (17.7% downside to the undisturbed price)/reward (21.4% gross spread) remains attractive. 


China Traditional Chinese Medicine (570 HK): Relief as Update Favours the Bulls

Chongqing Taiji Industry (Group) A / Event-Driven

<ul>
<li>TCM formula granules VBP would cause some disturbance to related enterprises’ performance, but the substitution of TCM formula granules for TCM decoction pieces is a trend, indicating long-term optimistic growth.</li>
<li>Keymed’s CM310 would probably miss the NRDL negotiation this year, which will put the Company in passive situation. Based on competitive landscape, we are worried about the performance of Keymed.</li>
<li>Unsatisfactory performance of Taiji’s shares is related to concerns on China TCM’s privatization/24H1 results.However, even without the integration with China TCM, Taiji's market value should be more than RMB20 billion.</li>
</ul>


TCM formula granules VBP would cause some disturbance to related enterprises’ performance, but the substitution of TCM formula granules for TCM decoction pieces is a trend, indicating long-term optimistic growth.
Keymed’s CM310 would probably miss the NRDL negotiation this year, which will put the Company in passive situation. Based on competitive landscape, we are worried about the performance of Keymed.
Unsatisfactory performance of Taiji’s shares is related to concerns on China TCM’s privatization/24H1 results.However, even without the integration with China TCM, Taiji's market value should be more than RMB20 billion.


China Healthcare Weekly (Aug.4)- Taiji Group & China TCM, TCM Formula Granules VBP, Keymed's Trouble

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-traditional-chinese-medicine" target="_blank" data-smartkarma-citation="entities:351:1" rel="noopener">China Traditional Chinese Medicine (570 HK)</a>’s monthly update provides ammunition to both the bulls and bears. Since falling on no news on 26 June, the spread has widened to 31.8%. </li>
<li>The bull view is that while the timelines are delayed, the privatisation remains on track as the update shows ongoing progress in satisfying the pre-condition. </li>
<li>The bear view is that progress remains glacial, as the consortium wants to withdraw from a binding offer by failing to satisfy the pre-condition before the long stop date.</li>
</ul>



China Traditional Chinese Medicine (570 HK)’s monthly update provides ammunition to both the bulls and bears. Since falling on no news on 26 June, the spread has widened to 31.8%. 
The bull view is that while the timelines are delayed, the privatisation remains on track as the update shows ongoing progress in satisfying the pre-condition. 
The bear view is that progress remains glacial, as the consortium wants to withdraw from a binding offer by failing to satisfy the pre-condition before the long stop date.


China Traditional Chinese Medicine (570 HK): Update Provides Fodder for Bulls and Bears

China

China Shineway Pharmaceutical (2877.HK) is the largest manufacturer of Chinese medicine injections, soft capsules, and granules in China.

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China Shineway Pharmaceutical (2877 HK)

China Traditional Chinese Medicine (570 HK): Never a Dull Moment as Profit Warning Lands

According to the Beijing Municipal Government website, China TCM has received unconditional approval from SAMR. This news was largely expected and...

Arun George

China Healthcare Weekly (Aug.18)- COVID Is Here, BIOSECURE Act Update, Livzon Deserves More Patience

COVID is coming again. So investors can focus on related stocks. US companies leaving Chinese partners due to BIOSECURE Act. Livzon is still worth...

Xinyao (Criss) Wang

China Traditional Chinese Medicine (570 HK): Relief as Update Favours the Bulls

The monthly update will relieve the bulls, but there remain potential stumbling blocks. Nevertheless, the risk vs. reward remains attractive.

Arun George

China Healthcare Weekly (Aug.4)- Taiji Group & China TCM, TCM Formula Granules VBP, Keymed's Trouble

Substitution of TCM formula granules for decoction pieces is a trend despite the VBP. Keymed will face difficulties without NRDL negotiation....

Xinyao (Criss) Wang

China Traditional Chinese Medicine (570 HK): Update Provides Fodder for Bulls and Bears

It is rare for the market to misprice an HKEx merger arb to this extent, suggesting something is amiss. Nevertheless, the risk (10.6% downside) vs...

Arun George

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52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

China Traditional Chinese Medicine (570 HK): Never a Dull Moment as Profit Warning Lands

According to the Beijing Municipal Government website, China TCM has received unconditional approval from SAMR. This news was largely expected and...

Arun George

China Healthcare Weekly (Aug.18)- COVID Is Here, BIOSECURE Act Update, Livzon Deserves More Patience

COVID is coming again. So investors can focus on related stocks. US companies leaving Chinese partners due to BIOSECURE Act. Livzon is still worth...

Xinyao (Criss) Wang

China Traditional Chinese Medicine (570 HK): Relief as Update Favours the Bulls

The monthly update will relieve the bulls, but there remain potential stumbling blocks. Nevertheless, the risk vs. reward remains attractive.

Arun George

China Healthcare Weekly (Aug.4)- Taiji Group & China TCM, TCM Formula Granules VBP, Keymed's Trouble

​Substitution of TCM formula granules for decoction pieces is a trend despite the VBP. Keymed will face difficulties without NRDL negotiation....

Xinyao (Criss) Wang

China Traditional Chinese Medicine (570 HK): Update Provides Fodder for Bulls and Bears

It is rare for the market to misprice an HKEx merger arb to this extent, suggesting something is amiss. Nevertheless, the risk (10.6% downside) vs...

Arun George

Substitution of TCM formula granules for decoction pieces is a trend despite the VBP. Keymed will face difficulties without NRDL negotiation....