HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Thematic (Sector/Industry)

<ul>
<li>The assassination of Trump in July has greatly increased the probability of his election as president this year. However, a Trump presidency is not necessarily good for healthcare industry.</li>
<li>Trump's reform in the field of healthcare has two major propositions - One is to achieve the independence of US pharmaceutical supply chain. The other is to reduce drug prices.</li>
<li>From a US national security perspective, China's APIs/CXO would be the segments with the highest sanction risk. China Biotech may also face some headwinds. The risk of "decoupling" further increases.</li>
</ul>


The assassination of Trump in July has greatly increased the probability of his election as president this year. However, a Trump presidency is not necessarily good for healthcare industry.
Trump's reform in the field of healthcare has two major propositions - One is to achieve the independence of US pharmaceutical supply chain. The other is to reduce drug prices.
From a US national security perspective, China's APIs/CXO would be the segments with the highest sanction risk. China Biotech may also face some headwinds. The risk of "decoupling" further increases.


What Does a Trump Presidency Mean for China Healthcare?

Equity Bottom-Up

Hutchison China MediTech Ltd / Equity Bottom-Up

<ul>
<li>HUTCHMED’s 23H1 results were in line with expectation. We updated our forecast for the three core products. Its 2023 total revenue would achieve a high double-digit growth. HUTCHMED is undervalued. </li>
<li>Performance prospects for 2024 and beyond largely depend on whether fruquintinib can smoothly obtain FDA approval in 2023, which means significant progress in internationalization and possibility of breakeven in 2025.</li>
<li>Based on the performance so far, we think the clarity of HUTCHMED’s performance is high and the guidance given by management is reliable. The Company deserves more attention from investors.</li>
</ul>


HUTCHMED’s 23H1 results were in line with expectation. We updated our forecast for the three core products. Its 2023 total revenue would achieve a high double-digit growth. HUTCHMED is undervalued. 
Performance prospects for 2024 and beyond largely depend on whether fruquintinib can smoothly obtain FDA approval in 2023, which means significant progress in internationalization and possibility of breakeven in 2025.
Based on the performance so far, we think the clarity of HUTCHMED’s performance is high and the guidance given by management is reliable. The Company deserves more attention from investors.


Hutchmed China Ltd (13.HK/​HCM.US) 23H1 - This Company Is Becoming More Attractive

Event-Driven

<ul>
<li>Fosun's preferred arrangement for Henlius is to list the Company in A-shares.Since IPO in A-shares failed and Henlius has begun to generate profits, Fosun finally feels the need for privatization.</li>
<li>Due to its "flaws", undervaluation of Henlius in the Hong Kong stock market is difficult to fundamentally change. So, for conservative/cautious investors, Fosun's one-time acquisition at a 30% premium is attractive.</li>
<li>The Potential Share Alternative Offer seems a good option, but it is uncertain whether investors are still willing to believe in Fosun's "good story" - the future re-listing is uncertain.</li>
</ul>


Fosun's preferred arrangement for Henlius is to list the Company in A-shares.Since IPO in A-shares failed and Henlius has begun to generate profits, Fosun finally feels the need for privatization.
Due to its "flaws", undervaluation of Henlius in the Hong Kong stock market is difficult to fundamentally change. So, for conservative/cautious investors, Fosun's one-time acquisition at a 30% premium is attractive.
The Potential Share Alternative Offer seems a good option, but it is uncertain whether investors are still willing to believe in Fosun's "good story" - the future re-listing is uncertain.


Shanghai Henlius Biotech Update (2696.HK) - The Story Behind Privatization

Shanghai Junshi Biosciences  / Equity Bottom-Up

<ul>
<li>For all licensing cooperation with MNCs, we recommend that investors wait to see what MNCs' next move is before deciding whether the cooperation is really promising.</li>
<li>Topchoice showed good business growth in 24Q2. Our biggest concern for Topchoice is that the unit price per customer may further decrease in the future, thereby affecting revenue/profit growth.</li>
<li>Junshi’s sales growth picked up in 24Q1, but concerns on Junshi persist. We don't think Junshi is undervalued and its valuation should be lower than that of peers.</li>
</ul>


For all licensing cooperation with MNCs, we recommend that investors wait to see what MNCs' next move is before deciding whether the cooperation is really promising.
Topchoice showed good business growth in 24Q2. Our biggest concern for Topchoice is that the unit price per customer may further decrease in the future, thereby affecting revenue/profit growth.
Junshi’s sales growth picked up in 24Q1, but concerns on Junshi persist. We don't think Junshi is undervalued and its valuation should be lower than that of peers.


China Healthcare Weekly (July.7) - MNCs' Next Move In Licensing Deals, Topchoice, Junshi's Trouble

<ul>
<li>Retail pharmacies experienced performance decline in April and May. Due to negative policies, retail pharmacies will experience industry clearance. Therefore, we do not recommend investors to bottom-fish related stocks now.</li>
<li>There is a logic to biotech's performance from 2023 to present.The clearer the path of sustainable development, the better the stock price performance. They can be divided into three types.</li>
<li>YSB faces big risks and the outlook is not optimistic. If the final valuation of the Company is lower than <a href="https://www.smartkarma.com/entities/china-resources-pharmaceutical-group" target="_blank" data-smartkarma-citation="entities:22928:1" rel="noopener">China Resources Pharmaceutical</a> and <a href="https://www.smartkarma.com/entities/shanghai-pharmaceuticals-holding" target="_blank" data-smartkarma-citation="entities:228:1" rel="noopener">Shanghai Pharmaceuticals</a>, we wouldn't be too surprised.</li>
</ul>


Retail pharmacies experienced performance decline in April and May. Due to negative policies, retail pharmacies will experience industry clearance. Therefore, we do not recommend investors to bottom-fish related stocks now.
There is a logic to biotech's performance from 2023 to present.The clearer the path of sustainable development, the better the stock price performance. They can be divided into three types.
YSB faces big risks and the outlook is not optimistic. If the final valuation of the Company is lower than China Resources Pharmaceutical and Shanghai Pharmaceuticals, we wouldn't be too surprised.


China Healthcare Weekly (Jun23)-Retail Pharmacy's Dilemma, Logic to Biotech's Stock Price,YSB's Risk

Hong Kong

HUTCHMED (China) Limited develops, manufactures, and sells pharmaceutical products. The Company offers drugs for oncology and autoimmune diseases treatment. HUTCHMED (China) markets its products worldwide.

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Hutchmed China Ltd (13 HK)

What Does a Trump Presidency Mean for China Healthcare?

Assassination of Trump boosts his election chances, but his healthcare reform may not benefit industry.US national security concerns over China's...

Xinyao (Criss) Wang