Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>In principle, <a href="https://www.smartkarma.com/entities/jafco-co-ltd" target="_blank" data-smartkarma-citation="entities:8848:1" rel="noopener">Jafco Co Ltd (8595 JP)</a> still wants to be greenmailed to get Murakami-san out. </li>
<li>
<a href="https://www.smartkarma.com/entities/jardine-cycle-carriage-ltd" target="_blank" data-smartkarma-citation="entities:347:1" rel="noopener">Jardine Cycle &amp; Carriage (JCNC SP)</a>i is expensive here - relative to historical values -  and from an implied stub perspective. And the MSCI inclusion event has now passed.</li>
<li>If you think this is a "risk", then you want to be long when the discount is wide and <a href="https://www.smartkarma.com/entities/softbank-group-corp" target="_blank" data-smartkarma-citation="entities:315:1" rel="noopener">Softbank Group (9984 JP)</a> is monetising assets in some way. </li>
</ul>


In principle, Jafco Co Ltd (8595 JP) still wants to be greenmailed to get Murakami-san out. 

Jardine Cycle &amp; Carriage (JCNC SP)i is expensive here - relative to historical values -  and from an implied stub perspective. And the MSCI inclusion event has now passed.
If you think this is a "risk", then you want to be long when the discount is wide and Softbank Group (9984 JP) is monetising assets in some way. 


Last Week in Event SPACE: JAFCO, Jardine Cycle, Softbank, Star Health

China Traditional Chinese Medicine / Event-Driven

<ul>
<li>There are 45 - mostly firm, mostly Asia-Pac - transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.</li>
<li>One new deal was discussed on Smartkarma: <a href="https://www.smartkarma.com/entities/xingda-international-holdings" target="_blank" data-smartkarma-citation="entities:17836:1" rel="noopener">Xingda International (1899 HK)</a>'s partial MBO.</li>
<li>Key updates took place for: <a href="https://www.smartkarma.com/entities/nitro-software-ltd" target="_blank" data-smartkarma-citation="entities:30943:1" rel="noopener">Nitro Software Ltd (NTO AU)</a> , <a href="https://www.smartkarma.com/entities/chip-eng-seng-corp-ltd" target="_blank" data-smartkarma-citation="entities:6441:1" rel="noopener">Chip Eng Seng Corp (CHIP SP)</a> and <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>.</li>
</ul>


There are 45 - mostly firm, mostly Asia-Pac - transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
One new deal was discussed on Smartkarma: Xingda International (1899 HK)'s partial MBO.
Key updates took place for: Nitro Software Ltd (NTO AU) , Chip Eng Seng Corp (CHIP SP) and China Traditional Chinese Medicine (570 HK).


(Mostly) Asia-Pac Weekly Risk Arb Wrap: Xingda, Nitro, Chip Eng Seng, Traditional Chinese Medicine

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

China Shineway Pharmaceutical / Equity Bottom-Up

<ul>
<li>Shineway showed good performance growth in 22H1, which was mainly driven by outstanding growth of TCM formula granules business. We think such positive momentum would continue in the short term.  </li>
<li>The implementation of national standards is actually paving the way for future VBP. Together with increasing competition, Shineway could be difficult to maintain over 70% gross margin in long run.</li>
<li>Shineway is cash rich and is undervalued. Obviously, the unfriendly macro environment provides a buying opportunity, but investors may need to consider the downside risks, which is hard to control.  </li>
</ul>


Shineway showed good performance growth in 22H1, which was mainly driven by outstanding growth of TCM formula granules business. We think such positive momentum would continue in the short term.  
The implementation of national standards is actually paving the way for future VBP. Together with increasing competition, Shineway could be difficult to maintain over 70% gross margin in long run.
Shineway is cash rich and is undervalued. Obviously, the unfriendly macro environment provides a buying opportunity, but investors may need to consider the downside risks, which is hard to control.  


China Shineway Pharmaceutical (2877HK)-Shineway Is Undervalued, but Downside Risk Is Hard to Control

<ul>
<li>After a downturn in 2019,Consun has turned things around and achieved amazing results in 2021. Its core business was not affected by VBP. Consun will continue to make further progress.</li>
<li>Consun is undervalued if compared with industry average, the peers and considering its large cash balance. Share prices have decent upside potential, driven by fundamentals, promising outlook and favorable policies.</li>
<li>Wanbangde’s intention to acquire Consun’s shares at high price would also be a catalyst. We recommended investors to follow Consun closely, which has certain investment value based on our analysis.</li>
</ul>


After a downturn in 2019,Consun has turned things around and achieved amazing results in 2021. Its core business was not affected by VBP. Consun will continue to make further progress.
Consun is undervalued if compared with industry average, the peers and considering its large cash balance. Share prices have decent upside potential, driven by fundamentals, promising outlook and favorable policies.
Wanbangde’s intention to acquire Consun’s shares at high price would also be a catalyst. We recommended investors to follow Consun closely, which has certain investment value based on our analysis.


Consun Pharmaceutical (1681HK)- High-Priced Acquisition & Good Performance Show Big Upside Potential

China Traditional Chinese Medicine / Equity Bottom-Up

<ul>
<li>China Traditional Chinese Medicine released unsatisfactory 2022H1 profit warning, which was mainly due to the poor performance on both revenue and cost side of its core business concentrated TCM granules.</li>
<li>We analyzed the policy impact and business outlook. The Company’s performance would be under pressure in 2022. The VBP impact on concentrated TCM granules hasn’t shown up in financial reports.</li>
<li>Overall, we are skeptical of the Company's profitability in the long term, and its profit margin will struggle to support a significant expansion in valuation.</li>
</ul>


China Traditional Chinese Medicine released unsatisfactory 2022H1 profit warning, which was mainly due to the poor performance on both revenue and cost side of its core business concentrated TCM granules.
We analyzed the policy impact and business outlook. The Company’s performance would be under pressure in 2022. The VBP impact on concentrated TCM granules hasn’t shown up in financial reports.
Overall, we are skeptical of the Company's profitability in the long term, and its profit margin will struggle to support a significant expansion in valuation.


China Traditional Chinese Medicine (570.HK) - Short-Term Performance Pressure Is Hard to Avoid

Hong Kong

China Traditional Chinese Medicine Co. Limited, through its subsidiaries, manufactures and sells medicine and pharmaceutical products in China.

China Traditional Chinese Medicine (570 HK)

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China Traditional Chinese Medicine (570 HK)

Last Week in Event SPACE: JAFCO, Jardine Cycle, Softbank, Star Health

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Xingda, Nitro, Chip Eng Seng, Traditional Chinese Medicine

This insight provides a summary of gross/annualised spreads (on deals discussed on Smartkarma) across Asia-Pacific as at the last trading date, and...

David Blennerhassett

China Shineway Pharmaceutical (2877HK)-Shineway Is Undervalued, but Downside Risk Is Hard to Control

Shineway showed solid growth in 22H1 driven by TCM formula granules business. Such positive momentum will continue. Shineway is also cash rich and...

Xinyao (Criss) Wang

Consun Pharmaceutical (1681HK)- High-Priced Acquisition & Good Performance Show Big Upside Potential

Consun achieved amazing 2021 results and is undervalued. Wanbangde’s intention to acquire Consun at high price is a catalyst. Shares have big...

Xinyao (Criss) Wang

China Traditional Chinese Medicine (570.HK) - Short-Term Performance Pressure Is Hard to Avoid

For poor performance of concentrated TCM granule, China TCM's net profit decreased 50%-60% in 2022H1.Future VBP will further drag...

Xinyao (Criss) Wang

Price Gauge

52-week Range

Market Cap (USDm)

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