HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

China Resources Medical / Equity Bottom-Up

<ul>
<li>Investors should be aware of the increasing prices of TCM raw materials, which could lead to fluctuations in profit margins of TCM companies. Investors should prepare for these potential impacts.</li>
<li>After years of “fast-follow”, we’ve finally seen products from Chinese pharmaceutical companies stand at the center of the stage for the first time in the new generation of ADC.</li>
<li>China Resources Medical's profitability outlook is not promising due to issues within the Chinese healthcare system. The bottom line is P/B above 1 and P/E above 10x.</li>
</ul>


Investors should be aware of the increasing prices of TCM raw materials, which could lead to fluctuations in profit margins of TCM companies. Investors should prepare for these potential impacts.
After years of “fast-follow”, we’ve finally seen products from Chinese pharmaceutical companies stand at the center of the stage for the first time in the new generation of ADC.
China Resources Medical's profitability outlook is not promising due to issues within the Chinese healthcare system. The bottom line is P/B above 1 and P/E above 10x.


China Healthcare Weekly (Jun.30) - TCM Companies Witness Soaring Costs, Rising Stars in ADC, 1515.HK

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

Yichang HEC Changjiang Pharma / Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/yichang-hec-changjiang-pharmaceutical" target="_blank" data-smartkarma-citation="entities:21040:1" rel="noopener">Yichang HEC Changjiang Pharma (1558 HK)</a>'s pre-conditional privatisation from Sunshine Lake Pharma comprises scrip (0.263614 new offeror H Share per HEC CJ Pharma share) and cash (special dividend of HK$1.5).</li>
<li>The pre-condition is regulatory approvals from NDRC, MOFCOM, and SAFE. The key condition is approval by at least 75% of independent H Shareholders (&lt;10% of all independent H Shareholders rejection). </li>
<li>There is valuation uncertainty as the offeror is unlisted, and its valuation hinges on pipeline products. Nevertheless, with no shareholder close to a blocking stake, the deal should get up.   </li>
</ul>



Yichang HEC Changjiang Pharma (1558 HK)'s pre-conditional privatisation from Sunshine Lake Pharma comprises scrip (0.263614 new offeror H Share per HEC CJ Pharma share) and cash (special dividend of HK$1.5).
The pre-condition is regulatory approvals from NDRC, MOFCOM, and SAFE. The key condition is approval by at least 75% of independent H Shareholders (&lt;10% of all independent H Shareholders rejection). 
There is valuation uncertainty as the offeror is unlisted, and its valuation hinges on pipeline products. Nevertheless, with no shareholder close to a blocking stake, the deal should get up.   


HEC CJ Pharma (1558 HK): Pre-Conditional Share Exchange Offer from Largest Shareholder

HK/China Equity Long-Short

Osbert Tang, CFA

Thematic (Sector/Industry)

<ul>
<li>Many have missed out on the 14%, or 2,300 points, rally of the HSI in the last 9 trading days. There are still several stocks that look interesting now.</li>
<li>
<a href="https://www.smartkarma.com/entities/li-auto-inc-3dbe6187-544f-40dd-b9f9-72fba9c0110e" target="_blank" data-smartkarma-citation="entities:33811:1" rel="noopener">Li Auto (2015 HK)</a>, <a href="https://www.smartkarma.com/entities/link-reit" target="_blank" data-smartkarma-citation="entities:872:1" rel="noopener">Link REIT (823 HK)</a>, <a href="https://www.smartkarma.com/entities/china-mengniu-dairy-co" target="_blank" data-smartkarma-citation="entities:354:1" rel="noopener">China Mengniu Dairy Co (2319 HK)</a>, <a href="https://www.smartkarma.com/entities/hang-lung-properties-ltd" target="_blank" data-smartkarma-citation="entities:49:1" rel="noopener">Hang Lung Properties (101 HK)</a> and <a href="https://www.smartkarma.com/entities/galaxy-entertainment-group-limited" target="_blank" data-smartkarma-citation="entities:806:1" rel="noopener">Galaxy Entertainment Group (27 HK)</a> are massive laggards YTD.</li>
<li>As they have only experienced limited rebounds from the 19-Apr trough, they are set to catch up. Also, their earnings prospects look positive this year. </li>
</ul>


Many have missed out on the 14%, or 2,300 points, rally of the HSI in the last 9 trading days. There are still several stocks that look interesting now.

Li Auto (2015 HK), Link REIT (823 HK), China Mengniu Dairy Co (2319 HK), Hang Lung Properties (101 HK) and Galaxy Entertainment Group (27 HK) are massive laggards YTD.
As they have only experienced limited rebounds from the 19-Apr trough, they are set to catch up. Also, their earnings prospects look positive this year. 


HK Strategy: Where Are the Short-Term Opportunities?

Sino Biopharmaceutical / Equity Bottom-Up

<ul>
<li>The biggest changes in 2023 medical insurance catalog are the lifting of payment restrictions on TCM injections, which would drive rapid sales growth in the hospital market this year.</li>
<li>GLP-1s are not flawless, and patients will lose not only fat but also muscle during weight-loss process. Then, another noteworthy opportunity has emerged - reduce fat and increase muscle.</li>
<li>In 2024, Sino Biopharm is expected to achieve single-digit revenue growth. Deficiencies in corporate governance are one reason why the market is reluctant to offer Sino Biopharm high valuation.</li>
</ul>


The biggest changes in 2023 medical insurance catalog are the lifting of payment restrictions on TCM injections, which would drive rapid sales growth in the hospital market this year.
GLP-1s are not flawless, and patients will lose not only fat but also muscle during weight-loss process. Then, another noteworthy opportunity has emerged - reduce fat and increase muscle.
In 2024, Sino Biopharm is expected to achieve single-digit revenue growth. Deficiencies in corporate governance are one reason why the market is reluctant to offer Sino Biopharm high valuation.


China Healthcare Weekly (Apr.6) - Boom of TCM Injections Is Coming, Defects in GLP-1s, Sino Biopharm

Global Healthcare Analyst

Tina Banerjee

CSPC Pharmaceutical Group / Equity Bottom-Up

<ul>
<li>
<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> reported steady growth in finished drugs in 2023. New products including Mingfule, Yilouda, and Anfulike achieved rapid sales ramp-up due to inclusion in the NRDL.</li>
<li>The company expects to launch 50 innovative drugs in the next five years, which will provide continuous momentum. The company further aims for 17 common generic launches during 2024–2025.</li>
<li>CSPC Pharmaceutical shares are trading at a P/E of 11.3x, lowest level seen in last five years, and cheaper than peers. Dividend yield remains attractive at 4%+.</li>
</ul>



CSPC Pharmaceutical Group (1093 HK) reported steady growth in finished drugs in 2023. New products including Mingfule, Yilouda, and Anfulike achieved rapid sales ramp-up due to inclusion in the NRDL.
The company expects to launch 50 innovative drugs in the next five years, which will provide continuous momentum. The company further aims for 17 common generic launches during 2024–2025.
CSPC Pharmaceutical shares are trading at a P/E of 11.3x, lowest level seen in last five years, and cheaper than peers. Dividend yield remains attractive at 4%+.


CSPC Pharmaceutical (1093 HK): Deep Value High Dividend Yield Idea; New Launches to Drive Growth

China

Hansoh Pharmaceutical Group Company Limited operates as a pharmaceutical company. The Company manufactures and sells anti-infectives, anti-neoplastic agents, diabetes drugs, and other products. Hansoh Pharmaceutical Group markets its products throughout China.

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

Hansoh Pharmaceutical Group (3692 HK)

China Healthcare Weekly (Jun.30) - TCM Companies Witness Soaring Costs, Rising Stars in ADC, 1515.HK

Investors should watch for rising TCM raw material prices. Chinese pharmaceutical companies are rising in ADC.Caution with China Resources...

Xinyao (Criss) Wang

HK Strategy: Where Are the Short-Term Opportunities?

Li Auto, Link REIT, China Mengniu, Hang Lung Properties, and Galaxy Entertainment are massive laggards YTD but the recent rebound from the trough...

Osbert Tang, CFA

China Healthcare Weekly (Apr.6) - Boom of TCM Injections Is Coming, Defects in GLP-1s, Sino Biopharm

Payment policy relaxation will drive rapid sales growth of TCM injection.GLP-1 has defects-patients will lose not only fat but also muscle. Mr...

Xinyao (Criss) Wang

CSPC Pharmaceutical (1093 HK): Deep Value High Dividend Yield Idea; New Launches to Drive Growth

CSPC Pharmaceutical reported steady growth in finished drugs in 2023, with new products driving sales ramp-up. The company plans to launch 50...

Tina Banerjee

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

China Healthcare Weekly (Jun.30) - TCM Companies Witness Soaring Costs, Rising Stars in ADC, 1515.HK

​Investors should watch for rising TCM raw material prices. Chinese pharmaceutical companies are rising in ADC.Caution with China Resources...

Xinyao (Criss) Wang

HEC CJ Pharma (1558 HK): Pre-Conditional Share Exchange Offer from Largest Shareholder

There is scrip valuation uncertainty as the offeror is unlisted, and its valuation hinges on pipeline products. Nevertheless, the deal should get...

Arun George

HK Strategy: Where Are the Short-Term Opportunities?

Li Auto, Link REIT, China Mengniu, Hang Lung Properties, and Galaxy Entertainment are massive laggards YTD but the recent rebound from the trough...

Osbert Tang, CFA

China Healthcare Weekly (Apr.6) - Boom of TCM Injections Is Coming, Defects in GLP-1s, Sino Biopharm

Payment policy relaxation will drive rapid sales growth of TCM injection.GLP-1 has defects-patients will lose not only fat but also muscle. Mr...

Xinyao (Criss) Wang

CSPC Pharmaceutical (1093 HK): Deep Value High Dividend Yield Idea; New Launches to Drive Growth

​CSPC Pharmaceutical reported steady growth in finished drugs in 2023, with new products driving sales ramp-up. The company plans to launch 50...

Tina Banerjee

Investors should watch for rising TCM raw material prices. Chinese pharmaceutical companies are rising in ADC.Caution with China Resources...

CSPC Pharmaceutical reported steady growth in finished drugs in 2023, with new products driving sales ramp-up. The company plans to launch 50...