HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

<ul>
<li>There’s an “insurmountable obstacle” to license-in business model. <a href="https://www.smartkarma.com/entities/antengene-corp-ltd" target="_blank" data-smartkarma-citation="entities:29705:1" rel="noopener">Antengene (6996 HK)</a> has to go all the way to the end. Otherwise, Antengene won't end up well.</li>
<li>Considering the pipeline quality/speed of clinical advancement/high cost of license-in/fierce competition/just APAC rights/limited cash balance, the biggest problem Antengene has to face is how to “survive this winter” .</li>
<li>Theoretically, Antengene is undervalued, so if willing to, investors could do short-term trade. However, due to the concerns, we are still bearish on Antengene’s outlook overall. </li>
</ul>


There’s an “insurmountable obstacle” to license-in business model. Antengene (6996 HK) has to go all the way to the end. Otherwise, Antengene won't end up well.
Considering the pipeline quality/speed of clinical advancement/high cost of license-in/fierce competition/just APAC rights/limited cash balance, the biggest problem Antengene has to face is how to “survive this winter” .
Theoretically, Antengene is undervalued, so if willing to, investors could do short-term trade. However, due to the concerns, we are still bearish on Antengene’s outlook overall. 


Antengene (6996.HK) 22H1-Defective Business Model and Uncompetitive Pipeline; Bearish on the Outlook

Thematic (Sector/Industry)

<ul>
<li>It is estimated that a large number of biotech companies will be liquidated or willing to be acquired at low prices starting from the second half of 2023.</li>
<li>If strictly speaking, the so-called import substitution is not really good logic, but investors need to know "when to participate in this story" and "when to exit".</li>
<li>Economic downturn would lead to consumption downgrade. We suggest that investors temporarily avoid medical companies with consumption attributes, since we have concerns on their performance.</li>
</ul>


It is estimated that a large number of biotech companies will be liquidated or willing to be acquired at low prices starting from the second half of 2023.
If strictly speaking, the so-called import substitution is not really good logic, but investors need to know "when to participate in this story" and "when to exit".
Economic downturn would lead to consumption downgrade. We suggest that investors temporarily avoid medical companies with consumption attributes, since we have concerns on their performance.


China Healthcare Weekly (Oct.7)- Biotech Accept Reality, Import Substitution Logic, Consumer Medical

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

Zhejiang Leapmotor Technologie / Event-Driven

<ul>
<li>We see three new listings as potential inclusions to the HSCI in December. One is already in Stock Connect, one will be added to Stock Connect while one will not.</li>
<li>Given the large market moves, there will be many changes to the HSCI in March 2023. Quite a few stocks could remain in the HSCI but drop out of Connect.</li>
<li>Some of the potential deletions/ Stock Connect drops have large Southbound holdings and some of these positions could be pared back over the next few months.</li>
</ul>


We see three new listings as potential inclusions to the HSCI in December. One is already in Stock Connect, one will be added to Stock Connect while one will not.
Given the large market moves, there will be many changes to the HSCI in March 2023. Quite a few stocks could remain in the HSCI but drop out of Connect.
Some of the potential deletions/ Stock Connect drops have large Southbound holdings and some of these positions could be pared back over the next few months.


HSCI Index Rebalance and Stock Connect: Potential Changes in December & March (There's a Lot!)

Global Healthcare Analyst

Tina Banerjee

Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/genuine-biotech-limited" target="_blank" data-smartkarma-citation="entities:36220:1" rel="noopener">Genuine Biotech (GBL HK)</a> has filed for HK listing. Its Azvudine received NMPA approval for the treatment of COVID-19 in July 2022 to become the first China-made oral COVID-19 drug.</li>
<li>Azvudine was conditionally approved by the NMPA for the treatment of HIV infection in July 2021. However, the drug is yet to be commercialized.</li>
<li>Genuine Biotech plans to use the IPO proceeds for the commercialization of Azvudine. The company’s current cash balance can maintain its financial viability for approximately 20 months.</li>
</ul>



Genuine Biotech (GBL HK) has filed for HK listing. Its Azvudine received NMPA approval for the treatment of COVID-19 in July 2022 to become the first China-made oral COVID-19 drug.
Azvudine was conditionally approved by the NMPA for the treatment of HIV infection in July 2021. However, the drug is yet to be commercialized.
Genuine Biotech plans to use the IPO proceeds for the commercialization of Azvudine. The company’s current cash balance can maintain its financial viability for approximately 20 months.


Genuine Biotech (GBL HK): COVID Pill No Longer Attractive Opportunity; Thin Pipeline Mars Conviction

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Quantitative Analysis

<ul>
<li>We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of September 16th.</li>
<li>The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.</li>
<li>We highlight inflows into Wuxi Biologics (Cayman) Inc and CNOOC. </li>
</ul>


We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of September 16th.
The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.
We highlight inflows into Wuxi Biologics (Cayman) Inc and CNOOC. 


Hong Kong Connect Flows (Sep 16th): Chinese Buying Wuxi Biologics After Biden's New Executive Order

China

Everest Medicines Limited operates as a late clinical-stage biopharmaceutical company. The Company engages in licensing, clinical development, and commercialization of therapies for oncology, immunology, cardio-renal disease, and infectious disease. Everest Medicines markets its products in China and other emerging Asia Pacific markets.

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Everest Medicines (1952 HK)

Antengene (6996.HK) 22H1-Defective Business Model and Uncompetitive Pipeline; Bearish on the Outlook

There’s an “insurmountable obstacle” to license-in business model.Antengene has to go all the way to the end. Otherwise, it won't end up well. The...

Xinyao (Criss) Wang

China Healthcare Weekly (Oct.7)- Biotech Accept Reality, Import Substitution Logic, Consumer Medical

Although unwilling, biotech will face the harshest truth in 2023; Import substitution isn't good logic. Investors should know "when to join" &...

Xinyao (Criss) Wang

HSCI Index Rebalance and Stock Connect: Potential Changes in December & March (There's a Lot!)

There could be 3 adds in December while there will be MANY more changes in March. The adds should outnumber the deletes, but there will be many...

Brian Freitas

Genuine Biotech (GBL HK): COVID Pill No Longer Attractive Opportunity; Thin Pipeline Mars Conviction

Genuine Biotech has filed for Hong Kong listing to raise funds to commercialize its newly approved drug. The company’s Azvudine is the first China...

Tina Banerjee

Hong Kong Connect Flows (Sep 16th): Chinese Buying Wuxi Biologics After Biden's New Executive Order

We analyzed Hong Connect flows last week and highlight Chinese purchase of Wuxi Biologics post new executive order signed on Monday.

Ke Yan, CFA, FRM

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