Blue Lotus China New Economy Research, Blue Lotus Research Institute

Eric Wen

Blue Lotus China New Economy Research

China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

Equity Bottom-Up

<ul>
<li>China’s innovative drug sector remains a liquidity driven sector, as investible choices are limited, which include Akeso and BeiGene as our BUY ideas. </li>
<li>We also notice positive change in Innovent but opt to keep rating unchanged;</li>
<li>We upgrade BeiGene from SELL to BUY and maintain SELL on RemeGen, Innovent, JUNSHI and ZaiLab. We discontinued coverage on Legend Biotech.</li>
</ul>


China’s innovative drug sector remains a liquidity driven sector, as investible choices are limited, which include Akeso and BeiGene as our BUY ideas. 
We also notice positive change in Innovent but opt to keep rating unchanged;
We upgrade BeiGene from SELL to BUY and maintain SELL on RemeGen, Innovent, JUNSHI and ZaiLab. We discontinued coverage on Legend Biotech.


[Blue Lotus Sector Update]: Solid Companies Starting to Rise from the Ashes

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 monthly Hong Kong Connect flows with our data engine.</li>
<li>We tabulate the top stocks by inflows, outflows, and holding by mainland investors.</li>
<li>We highlight inflows into TraHK, Xpeng, SMIC, CSOP Hang Seng ETF, Ping An Insurance.</li>
</ul>


We analyze the monthly Hong Kong Connect flows with our data engine.
We tabulate the top stocks by inflows, outflows, and holding by mainland investors.
We highlight inflows into TraHK, Xpeng, SMIC, CSOP Hang Seng ETF, Ping An Insurance.


Hong Kong Connect Flows (November): Five Months of Inflows Despite New Low

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Zhejiang Orient Gene Biotech C / Equity Bottom-Up

<ul>
<li>The national centralized procurement of high-value medical consumables for intraocular lens (IOL) and medical consumables related to sports medicine released results, with lower than expected price reductions. </li>
<li>Despite anti-corruption campaign, the business/profit model validation process of Chinese Biotech has not slowed down. There’s a chance to see Chinese Biotech turn losses into profits in 2024-2025.</li>
<li>Zhejiang Orient Gene Biotech (688298 CH) once brought considerable returns to investors, but now the beautiful story is over.After deletion from CSI Medical Service Index, share price could remain weak.</li>
</ul>


The national centralized procurement of high-value medical consumables for intraocular lens (IOL) and medical consumables related to sports medicine released results, with lower than expected price reductions. 
Despite anti-corruption campaign, the business/profit model validation process of Chinese Biotech has not slowed down. There’s a chance to see Chinese Biotech turn losses into profits in 2024-2025.
Zhejiang Orient Gene Biotech (688298 CH) once brought considerable returns to investors, but now the beautiful story is over.After deletion from CSI Medical Service Index, share price could remain weak.


China Healthcare Weekly (Dec.1) - Medical Device VBP, Biotech to Breakeven Soon, Orient Gene Biotech

Equity Capital Markets

Qyuns Therapeutics / Equity Capital Markets

<ul>
<li>The sales scale of drugs for autoimmune diseases in China is much lower than that in overseas markets. So, internationalization is inevitable for companies in this industry.</li>
<li>Qyuns’s candidates have to face fierce competition, with no advantage in R&amp;D progress.Since Qyuns mainly do clinical trials in China, its future valuation is hard to have big expansion potential.</li>
<li>Many investors may still “live in the illusion” for China biotech. We think Qyuns would not finally transform into a biopharma. Its valuation should be lower than Keymed.</li>
</ul>


The sales scale of drugs for autoimmune diseases in China is much lower than that in overseas markets. So, internationalization is inevitable for companies in this industry.
Qyuns’s candidates have to face fierce competition, with no advantage in R&amp;D progress.Since Qyuns mainly do clinical trials in China, its future valuation is hard to have big expansion potential.
Many investors may still “live in the illusion” for China biotech. We think Qyuns would not finally transform into a biopharma. Its valuation should be lower than Keymed.


Pre-IPO Qyuns Therapeutics - Conservative About the Outlook

<ul>
<li>The real value of <a href="https://www.smartkarma.com/entities/sinocelltech-group-ltd" target="_blank" data-smartkarma-citation="entities:33456:1" rel="noopener">Sinocelltech Group (688520 CH)</a>’s pipeline will be greatly discounted because in the current context of fierce homogeneous competition, the commercialization performance of latecomers will be bleak.</li>
<li>Through frequent capital operations, in two and a half years, valuation of Sinocelltech was successfully raised by nearly 300 times. However, the Company's owner's equity is negative, with delisting risk. </li>
<li>The SSE STAR Market has been full of bubble if compared with HKEX. Sinocelltech has been severely overvalued. We think the reasonable market value of Sinocelltech is around RMB15-20 billion.</li>
</ul>


The real value of Sinocelltech Group (688520 CH)’s pipeline will be greatly discounted because in the current context of fierce homogeneous competition, the commercialization performance of latecomers will be bleak.
Through frequent capital operations, in two and a half years, valuation of Sinocelltech was successfully raised by nearly 300 times. However, the Company's owner's equity is negative, with delisting risk. 
The SSE STAR Market has been full of bubble if compared with HKEX. Sinocelltech has been severely overvalued. We think the reasonable market value of Sinocelltech is around RMB15-20 billion.


Sinocelltech Group (688520.CH) - Magical Leaps in Valuation Are Hard to Sustain

China

Innovent Biologics, Inc. operates as a biopharmaceutical company. The Company develops, manufactures, and distributes monoclonal antibody drug candidates for the treatment of oncology, ophthalmology, autoimmune, cardiovascular, and other diseases. Innovent Biologics serves customers in China.

Price Gauge
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Innovent Biologics Inc (1801 HK)

[Blue Lotus Sector Update]: Solid Companies Starting to Rise from the Ashes

China's drug sector is driven by liquidity, with limited investment choices. Akeso and BeiGene are recommended as buy options, while RemeGen,...

Blue Lotus Research Institute

Hong Kong Connect Flows (November): Five Months of Inflows Despite New Low

We analyzed the Hong Kong Connect Scheme for November and highlight flows for TraHK, Xpeng, SMIC, CSOP Hang Seng ETF, Ping An Insurance.

Ke Yan, CFA, FRM

China Healthcare Weekly (Dec.1) - Medical Device VBP, Biotech to Breakeven Soon, Orient Gene Biotech

VBP result for intraocular lens/sports medicine consumables is better than expected.There’s a chance to see Chinese Biotech turn loss into profits...

Xinyao (Criss) Wang

Pre-IPO Qyuns Therapeutics - Conservative About the Outlook

Qyuns’s pipeline lacks competitiveness, facing fierce competition.Together with bleak internationalization outlook, peak sales have obvious...

Xinyao (Criss) Wang

Sinocelltech Group (688520.CH) - Magical Leaps in Valuation Are Hard to Sustain

The management is clearly better at capital operations and achieved a huge leap in valuation in a very short period of time.But the pipeline...

Xinyao (Criss) Wang

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

[Blue Lotus Sector Update]: Solid Companies Starting to Rise from the Ashes

​China's drug sector is driven by liquidity, with limited investment choices. Akeso and BeiGene are recommended as buy options, while RemeGen,...

Blue Lotus Research Institute

Hong Kong Connect Flows (November): Five Months of Inflows Despite New Low

We analyzed the Hong Kong Connect Scheme for November and highlight flows for TraHK, Xpeng, SMIC, CSOP Hang Seng ETF, Ping An Insurance.

Ke Yan, CFA, FRM

China Healthcare Weekly (Dec.1) - Medical Device VBP, Biotech to Breakeven Soon, Orient Gene Biotech

VBP result for intraocular lens/sports medicine consumables is better than expected.There’s a chance to see Chinese Biotech turn loss into profits...

Xinyao (Criss) Wang

Pre-IPO Qyuns Therapeutics - Conservative About the Outlook

Qyuns’s pipeline lacks competitiveness, facing fierce competition.Together with bleak internationalization outlook, peak sales have obvious...

Xinyao (Criss) Wang

Sinocelltech Group (688520.CH) - Magical Leaps in Valuation Are Hard to Sustain

The management is clearly better at capital operations and achieved a huge leap in valuation in a very short period of time.But the pipeline...

Xinyao (Criss) Wang

China's drug sector is driven by liquidity, with limited investment choices. Akeso and BeiGene are recommended as buy options, while RemeGen,...