HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Capital Markets

<ul>
<li>Even if the biopharmaceutical enterprises become gradually mature in each part of the development process, they still have to face the final test - the commercialization.</li>
<li>If compare BeiGene’s product revenue from 2017 to 2021Q3 and the related investment during the same period, the situation was not satisfactory. The internationalization may also not meet the expectation.</li>
<li>We hope that the IPO in the SSE STAR Market would not be "the last hurrah" for BeiGene, because what BeiGene's future performance represents means a lot.</li>
</ul>


Even if the biopharmaceutical enterprises become gradually mature in each part of the development process, they still have to face the final test - the commercialization.
If compare BeiGene’s product revenue from 2017 to 2021Q3 and the related investment during the same period, the situation was not satisfactory. The internationalization may also not meet the expectation.
We hope that the IPO in the SSE STAR Market would not be "the last hurrah" for BeiGene, because what BeiGene's future performance represents means a lot.


Pre-IPO BeiGene Ltd - The Future Performance Means a Lot

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

<ul>
<li>The December rebalance of the HSI, HSCEI and HSTECH indices will use today's closing prices to cap the index constituents at 8%. This will lead to large flows.</li>
<li>The largest passive outflows as a result of capping will be on <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a> and <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> due to their weight exceeding 8% in all three indices.</li>
<li>There are large funding outflows (in terms of days of ADV to trade) on quite a few Hong Kong property stocks as well as stocks from the financials sector.</li>
</ul>


The December rebalance of the HSI, HSCEI and HSTECH indices will use today's closing prices to cap the index constituents at 8%. This will lead to large flows.
The largest passive outflows as a result of capping will be on Meituan (3690 HK) and Tencent (700 HK) due to their weight exceeding 8% in all three indices.
There are large funding outflows (in terms of days of ADV to trade) on quite a few Hong Kong property stocks as well as stocks from the financials sector.


HSI, HSCEI, HSTECH: December Rebalance Flows Post Capping

Thematic (Sector/Industry)

<ul>
<li>We reviewed the 2021 performance and summarized the 2022 outlook for China healthcare sector.</li>
<li>We listed the 2022 high conviction ideas and mainly analyzed the industry characteristics, the business, the core competitiveness, the forecast and the concerns of related companies.</li>
<li>Overall, there are still good investment opportunities in China healthcare industry in 2022.</li>
</ul>


We reviewed the 2021 performance and summarized the 2022 outlook for China healthcare sector.
We listed the 2022 high conviction ideas and mainly analyzed the industry characteristics, the business, the core competitiveness, the forecast and the concerns of related companies.
Overall, there are still good investment opportunities in China healthcare industry in 2022.


2022 High Conviction (China Healthcare) - Seek the Relative Certainties Out of the Uncertainties

Equity Bottom-Up

Jiangsu Hengrui Medicine / Equity Bottom-Up

<ul>
<li>We analyzed the logic and the potential impact of the deal with CStone for CS1002 as well as the accounting estimate change related to R&amp;D spending.</li>
<li>There could be some share price rebound due to the short-term catalyst, and investors could choose to take advantage of it.</li>
<li>However, Hengrui has not been in its best time yet, and the Company still needs time for rebalancing. So, we remain conservative about the outlook at the current stage.</li>
</ul>


We analyzed the logic and the potential impact of the deal with CStone for CS1002 as well as the accounting estimate change related to R&amp;D spending.
There could be some share price rebound due to the short-term catalyst, and investors could choose to take advantage of it.
However, Hengrui has not been in its best time yet, and the Company still needs time for rebalancing. So, we remain conservative about the outlook at the current stage.


Jiangsu Hengrui Medicine (600276.CH)-The Deal with Cstone,the Accounting Estimate Change and Outlook

<ul>
<li>As expected, <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> replaces <a href="https://www.smartkarma.com/entities/china-evergrande-group" target="_blank" data-smartkarma-citation="entities:479:1" rel="noopener">Evergrande (3333 HK)</a> in the <a href="https://www.smartkarma.com/entities/hang-seng-china-enterprises-index" target="_blank" data-smartkarma-citation="entities:22900:1" rel="noopener">Hang Seng China Enterprises Index (HSCEI INDEX)</a> after the close of trading on 3 December.</li>
<li>Using prices from the close on 19 November to cap the stocks, estimated one-way turnover at the rebalance is 4.50% and will result in a one-way trade of HK$3,208m.</li>
<li>Short interest on <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> is over 8 days of ADV and short covering could take the stock higher in the short-term versus its peers.</li>
</ul>


As expected, Innovent Biologics Inc (1801 HK) replaces Evergrande (3333 HK) in the Hang Seng China Enterprises Index (HSCEI INDEX) after the close of trading on 3 December.
Using prices from the close on 19 November to cap the stocks, estimated one-way turnover at the rebalance is 4.50% and will result in a one-way trade of HK$3,208m.
Short interest on Innovent Biologics Inc (1801 HK) is over 8 days of ADV and short covering could take the stock higher in the short-term versus its peers.


HSCEI Index Rebalance: No Surprises Here as Evergrande Is Deleted

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.

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Innovent Biologics Inc (1801 HK)

Pre-IPO BeiGene Ltd - The Future Performance Means a Lot

The article analyzed the commercialization performance vs the investment,the concerns on internationalization based on license-out mode and the...

Xinyao (Criss) Wang

HSI, HSCEI, HSTECH: December Rebalance Flows Post Capping

The Dec rebalance of the HK indices will use today's closing prices to cap the stocks at 8%. Meituan and Tencent will see large outflows due to...

Brian Freitas

2022 High Conviction (China Healthcare) - Seek the Relative Certainties Out of the Uncertainties

The article analyzed the 2021 review and 2022 high conviction ideas, including the industry characteristics, the business, the core...

Xinyao (Criss) Wang

Jiangsu Hengrui Medicine (600276.CH)-The Deal with Cstone,the Accounting Estimate Change and Outlook

The article analyzed Hengrui in terms of the logic and the potential impact of the deal with CStone and the accounting estimate change,the short...

Xinyao (Criss) Wang

HSCEI Index Rebalance: No Surprises Here as Evergrande Is Deleted

Innovent Bio will join the HSCEI after the close on 3 Dec while Evergrande will be deleted, no surprises. One-way turnover is 4.5% due to capping &...

Brian Freitas

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