Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

The weight of the evidence continues to support our mixed, but overall constructive outlook. Below we outline the basis for our outlook, and we also highlight opportunities within Real Estate and Health Care.

The weight of the evidence continues to support our mixed, but overall constructive outlook. Below we outline the basis for our outlook, and we also highlight opportunities within Real Estate and Health Care.

Global Equity Strategy: Opportunities In Real Estate and Health Care

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Thematic (Sector/Industry)

Industry viewpoints:
<ul class="">
<li>China released a new policy to support couples having a third child as the population ages.</li>
<li>A joint procurement office on behalf of medical institutions in 12 provinces was formed to carry out centralized procurement of orthopedic trauma medical consumables.</li>
<li>With the increasing incidence of diseases that directly cause skull defects, the skull defect repair material industry in China has developed rapidly.</li>
</ul>
Company news:
News about the updated license-in agreement and new progress on drugs of <a href="https://www.smartkarma.com/entities/innovent-biologics-inc" target="_blank" data-smartkarma-citation="entities:27452:1" rel="noopener">Innovent Biologics Inc (1801 HK), </a><a href="https://www.smartkarma.com/entities/zai-lab-ltd" target="_blank" data-smartkarma-citation="entities:25877:1" rel="noopener">Zai Lab Ltd (ZLAB US)</a>, <a href="https://www.smartkarma.com/entities/cspc-pharmaceutical-group-ltd" target="_blank" data-smartkarma-citation="entities:229:1" rel="noopener">CSPC Pharmaceutical Group (1093 HK),</a> and <a href="https://www.smartkarma.com/entities/jiangsu-hengrui-medicine-co-ltd" target="_blank" data-smartkarma-citation="entities:14128:1" rel="noopener">Jiangsu Hengrui Medicine (600276 CH)</a>.
Market review: 
Last week, stock price for healthcare sector in A share increased 0.69%, while CSI 300 decreased 0.73% over the same period of time.
Risk disclosure:
Policy risk, R&amp;D risk, Company risk and COVID-19 risk.

Industry viewpoints:

China released a new policy to support couples having a third child as the population ages.
A joint procurement office on behalf of medical institutions in 12 provinces was formed to carry out centralized procurement of orthopedic trauma medical consumables.
With the increasing incidence of diseases that directly cause skull defects, the skull defect repair material industry in China has developed rapidly.

Company news:
News about the updated license-in agreement and new progress on drugs of Innovent Biologics Inc (1801 HK), Zai Lab Ltd (ZLAB US), CSPC Pharmaceutical Group (1093 HK), and Jiangsu Hengrui Medicine (600276 CH).
Market review: 
Last week, stock price for healthcare sector in A share increased 0.69%, while CSI 300 decreased 0.73% over the same period of time.
Risk disclosure:
Policy risk, R&amp;D risk, Company risk and COVID-19 risk.

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

Smoore International Holdings / Event-Driven

Hang Seng Indexes should announce the results of the September 2021 review of the Hang Seng Family of Indexes on 13 August. The constituent changes will be effective after the close of trading on 3 September.The review period for the September rebalance ends on 30 June and stocks that have at least 3 month of trading history by the review meeting date are eligible for inclusion in the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hong Kong Hang Seng Index (HSI INDEX)</a>.With the major capping changes scheduled to be completed at the June rebalance tomorrow, there could be up to 8 inclusions at the September review while still keeping the one-way index turnover lower than 5%. The actual number of inclusions could be lower to spread the turnover over the next few reviews.We see <a href="https://www.smartkarma.com/entities/jd-health-international-inc" target="_blank" data-smartkarma-citation="entities:29677:1" rel="noopener">JD Health (6618 HK)</a>, <a href="https://www.smartkarma.com/entities/hansoh-pharmaceutical-group" target="_blank" data-smartkarma-citation="entities:23675:1" rel="noopener">Hansoh Pharmaceutical (3692 HK)</a>, <a href="https://www.smartkarma.com/entities/smoore-international" target="_blank" data-smartkarma-citation="entities:28241:1" rel="noopener">Smoore International (6969 HK)</a>, <a href="https://www.smartkarma.com/entities/fosun-international-ltd" target="_blank" data-smartkarma-citation="entities:433:1" rel="noopener">Fosun International (656 HK)</a> and <a href="https://www.smartkarma.com/entities/evergrande-property-services" target="_blank" data-smartkarma-citation="entities:30921:1" rel="noopener">Evergrande Property Services (6666 HK)</a> as higher probability inclusions in the index, while there is a lower probability of <a href="https://www.smartkarma.com/entities/jd-com-inc" target="_blank" data-smartkarma-citation="entities:29043:1" rel="noopener">JD.com Inc. (9618 HK)</a>, <a href="https://www.smartkarma.com/entities/nongfu-spring" target="_blank" data-smartkarma-citation="entities:28955:1" rel="noopener">Nongfu Spring (9633 HK)</a> and <a href="https://www.smartkarma.com/entities/xinyi-glass-holdings-ltd" target="_blank" data-smartkarma-citation="entities:11940:1" rel="noopener">Xinyi Glass Holdings (868 HK)</a> being included in the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hong Kong Hang Seng Index (HSI INDEX)</a>.<a href="https://www.smartkarma.com/entities/china-gas-holdings-ltd" target="_blank" data-smartkarma-citation="entities:14315:1" rel="noopener">China Gas Holdings (384 HK)</a> could be added to increase the coverage of Group 5 where Utilities are a part. This is less of a priority though with the market cap coverage of the group in excess of 60% as compared to the other groups that are much lower.There may not be any deletions at the current time. If the Index Committee decides to delete stocks, the two names most at risk are <a href="https://www.smartkarma.com/entities/china-life-insurance-co-ltd-9f877d22-7cf7-4b00-b525-cec71139f369" target="_blank" data-smartkarma-citation="entities:5794:1" rel="noopener">China Life Insurance Co H (2628 HK)</a> and <a href="https://www.smartkarma.com/entities/hengan-intl-group-co-ltd" target="_blank" data-smartkarma-citation="entities:29:1" rel="noopener">Hengan Intl Group (1044 HK)</a>.These changes will increase the market cap coverage of the index from 60.1% to 64.3% and the turnover coverage from 53.75% to 57.75%. One-way index turnover is estimated at 4.79% and would result in a one-way trade of HK$9.2bn.

Hang Seng Indexes should announce the results of the September 2021 review of the Hang Seng Family of Indexes on 13 August. The constituent changes will be effective after the close of trading on 3 September.The review period for the September rebalance ends on 30 June and stocks that have at least 3 month of trading history by the review meeting date are eligible for inclusion in the Hong Kong Hang Seng Index (HSI INDEX).With the major capping changes scheduled to be completed at the June rebalance tomorrow, there could be up to 8 inclusions at the September review while still keeping the one-way index turnover lower than 5%. The actual number of inclusions could be lower to spread the turnover over the next few reviews.We see JD Health (6618 HK), Hansoh Pharmaceutical (3692 HK), Smoore International (6969 HK), Fosun International (656 HK) and Evergrande Property Services (6666 HK) as higher probability inclusions in the index, while there is a lower probability of JD.com Inc. (9618 HK), Nongfu Spring (9633 HK) and Xinyi Glass Holdings (868 HK) being included in the Hong Kong Hang Seng Index (HSI INDEX).China Gas Holdings (384 HK) could be added to increase the coverage of Group 5 where Utilities are a part. This is less of a priority though with the market cap coverage of the group in excess of 60% as compared to the other groups that are much lower.There may not be any deletions at the current time. If the Index Committee decides to delete stocks, the two names most at risk are China Life Insurance Co H (2628 HK) and Hengan Intl Group (1044 HK).These changes will increase the market cap coverage of the index from 60.1% to 64.3% and the turnover coverage from 53.75% to 57.75%. One-way index turnover is estimated at 4.79% and would result in a one-way trade of HK$9.2bn.

HSI Index Rebalance Preview: Potential Inclusions in September

Industry viewpoints:<ul>
<li>Medical institutions in 10 provinces (municipalities and autonomous regions) have implemented the alliance volume-based purchase (VBP) of commonly used drugs and drugs that in short supply.</li>
<li>The COVID-19 vaccine has entered the second half of development.</li>
<li>From January to April this year, the number of CDE acceptance increased significantly compared with the same period last year</li>
</ul>Company news:News about the updated M&amp;A deal and new progress on drugs of <a href="https://www.smartkarma.com/entities/hygeia-healthcare-group" target="_blank" data-smartkarma-citation="entities:28875:1" rel="noopener">Hygeia Healthcare Group (6078 HK)</a>, <a href="https://www.smartkarma.com/entities/innovent-biologics-inc" target="_blank" data-smartkarma-citation="entities:27452:1" rel="noopener">Innovent Biologics Inc (1801 HK)</a>, <a href="https://www.smartkarma.com/entities/luye-pharma-group-ltd" target="_blank" data-smartkarma-citation="entities:488:1" rel="noopener">Luye Pharma (2186 HK)</a> and <a href="https://www.smartkarma.com/entities/cspc-pharmaceutical-group-ltd" target="_blank" data-smartkarma-citation="entities:229:1" rel="noopener">CSPC Pharmaceutical Group (1093 HK)</a>.Market review:Last week, stock price for healthcare sector in A share increased 0.9%, while CSI 300 increased 3.64% over the same period of time. Risk disclosure:Policy risk, R&amp;D risk, Company risk and COVID-19 risk.

Industry viewpoints:
Medical institutions in 10 provinces (municipalities and autonomous regions) have implemented the alliance volume-based purchase (VBP) of commonly used drugs and drugs that in short supply.
The COVID-19 vaccine has entered the second half of development.
From January to April this year, the number of CDE acceptance increased significantly compared with the same period last year
Company news:News about the updated M&amp;A deal and new progress on drugs of Hygeia Healthcare Group (6078 HK), Innovent Biologics Inc (1801 HK), Luye Pharma (2186 HK) and CSPC Pharmaceutical Group (1093 HK).Market review:Last week, stock price for healthcare sector in A share increased 0.9%, while CSI 300 increased 3.64% over the same period of time. Risk disclosure:Policy risk, R&amp;D risk, Company risk and COVID-19 risk.

Industry viewpoints:<ul>
<li>The National Health Care Security Administration issued relevant guidance to include designated retail pharmacies in the medical insurance drug supply guarantee scope at the national level. </li>
<li>Last week, news released that the information collection of the 5th national volume-based purchase (VBP) is about to start.</li>
<li>To get a good night's sleep, young people in China are happy to spend money on related products and services.</li>
</ul> Company news:News about the updated progress on drugs of <a href="https://www.smartkarma.com/entities/antengene-corp-ltd" target="_blank" data-smartkarma-citation="entities:29705:1" rel="noopener">Antengene (6996 HK)</a>, <a href="https://www.smartkarma.com/entities/harbour-biomed-holdings-limited" target="_blank" data-smartkarma-citation="entities:29717:1" rel="noopener">Harbour Biomed Holdings Limited (2142 HK)</a>, <a href="https://www.smartkarma.com/entities/everest-medicines-ltd" target="_blank" data-smartkarma-citation="entities:29224:1" rel="noopener">Everest Medicines (1952 HK)</a> and <a href="https://www.smartkarma.com/entities/shanghai-junshi-bioscience-h" target="_blank" data-smartkarma-citation="entities:27760:1" rel="noopener">Shanghai Junshi Bioscience Co. Ltd. (1877 HK)</a>.Market review:Last week, stock price for healthcare sector in A share increased 7.58%, while CSI 300 increased 2.29% over the same period of time. Risk disclosure:Policy risk, R&amp;D risk, Company risk and COVID-19 risk.

Industry viewpoints:
The National Health Care Security Administration issued relevant guidance to include designated retail pharmacies in the medical insurance drug supply guarantee scope at the national level. 
Last week, news released that the information collection of the 5th national volume-based purchase (VBP) is about to start.
To get a good night's sleep, young people in China are happy to spend money on related products and services.
 Company news:News about the updated progress on drugs of Antengene (6996 HK), Harbour Biomed Holdings Limited (2142 HK), Everest Medicines (1952 HK) and Shanghai Junshi Bioscience Co. Ltd. (1877 HK).Market review:Last week, stock price for healthcare sector in A share increased 7.58%, while CSI 300 increased 2.29% over the same period of time. Risk disclosure:Policy risk, R&amp;D risk, Company risk and COVID-19 risk.

China

CSPC Pharmaceutical Group Limited, through its subsidiaries, manufactures and sells pharmaceutical products.  The Company's products include vitamin C, antibiotics and common generic drugs. The Company is also engages in the development of innovative drugs and antibiotics.

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CSPC Pharmaceutical Group (1093 HK)

Global Equity Strategy: Opportunities In Real Estate and Health Care

The weight of the evidence continues to support our mixed, but overall constructive outlook. We outline the basis for our outlook and also...

Vermilion Research

China Healthcare Weekly (Jun.4)

This insight mainly analyzed the three-child new policy, centralized procurement of orthopedic trauma medical consumables, skull defect repair...

Xinyao (Criss) Wang

HSI Index Rebalance Preview: Potential Inclusions in September

There could be 8 additions to the HSI at the September review to take the index members up to 66. Turnover will be less than 5% and there are a lot...

Brian Freitas

China Healthcare Weekly (May.28)

This article mainly analyzed the two new alliance volume-based purchase documents, COVID-19 vaccine development, CDE acceptance of biological...

Xinyao (Criss) Wang

China Healthcare Weekly (May.14)

This article analyzed new guidance on retail pharmacies in the medical insurance, information collection of the 5th national VBP, China's sleep...

Xinyao (Criss) Wang

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