HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

Recently, <a href="https://www.smartkarma.com/entities/innocare-pharma-ltd" target="_blank" data-smartkarma-citation="entities:28355:1" rel="noopener">InnoCare Pharma Ltd (9969 HK)</a> released 2021/1H financial results. The revenue was RMB102 million, up 13490.51% YoY, which was mainly due to the sales growth of orelabrutinib. Net loss was narrowed from RMB337 in 2020/1H to RMB213 million in 2021/1H, indicating improvement. Meanwhile, InnoCare is also going to be listed on the SSE STAR market, which is expected to be another biopharmaceutical company with "A+H" shares listing. This insight mainly analyzed the core product, pipeline and the concerns of the Company.

Recently, InnoCare Pharma Ltd (9969 HK) released 2021/1H financial results. The revenue was RMB102 million, up 13490.51% YoY, which was mainly due to the sales growth of orelabrutinib. Net loss was narrowed from RMB337 in 2020/1H to RMB213 million in 2021/1H, indicating improvement. Meanwhile, InnoCare is also going to be listed on the SSE STAR market, which is expected to be another biopharmaceutical company with "A+H" shares listing. This insight mainly analyzed the core product, pipeline and the concerns of the Company.

InnoCare Pharma Ltd (9969.HK) - Risk of Becoming Mediocre

Thematic (Sector/Industry)

Industry viewpoints:<ul>
<li>After all the companies in China healthcare industry released their 2021 interim reports, here are the summary and the enlightenment. </li>
<li>With the continuous advancement of medical reform, the reform of public hospital compensation system is an inevitable trend.</li>
<li>The regulated market represented by the United States is the main destination of export of China's varieties of injection.</li>
</ul>Company news:News about the updated progress on new drugs of <a href="https://www.smartkarma.com/entities/kintor-pharmaceutical" target="_blank" data-smartkarma-citation="entities:28884:1" rel="noopener">Kintor Pharmaceutical (9939 HK)</a>, <a href="https://www.smartkarma.com/entities/luye-pharma-group-ltd" target="_blank" data-smartkarma-citation="entities:488:1" rel="noopener">Luye Pharma (2186 HK)</a>, <a href="https://www.smartkarma.com/entities/brii-biosciences" target="_blank" data-smartkarma-citation="entities:33014:1" rel="noopener">Brii Biosciences (2137 HK)</a> and <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>. Market review:Last week, stock price for healthcare sector in A share increased 3.00%, while CSI 300 increased 3.52% over the same period of time.Risk disclosure: Policy risk, R&amp;D risk, Company risk and COVID-19 risk.

Industry viewpoints:
After all the companies in China healthcare industry released their 2021 interim reports, here are the summary and the enlightenment. 
With the continuous advancement of medical reform, the reform of public hospital compensation system is an inevitable trend.
The regulated market represented by the United States is the main destination of export of China's varieties of injection.
Company news:News about the updated progress on new drugs of Kintor Pharmaceutical (9939 HK), Luye Pharma (2186 HK), Brii Biosciences (2137 HK) and Innovent Biologics Inc (1801 HK). Market review:Last week, stock price for healthcare sector in A share increased 3.00%, while CSI 300 increased 3.52% over the same period of time.Risk disclosure: Policy risk, R&amp;D risk, Company risk and COVID-19 risk.

China Healthcare Weekly (Sep10)-2021H1 Results Summary,Hospital Compensation Reform,Injection Export

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

The Hang Seng Indexes Company Limited (HSIL) should announce the results of the December 2021 review of the Hang Seng Family of Indexes on 12 November. The constituent changes will be effective after the close of trading on 3 December.The review period for the December rebalance ends on 30 September and stocks that have at least 3 month of trading history by the review cut-off date are eligible for inclusion 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>.At the December review, we see a high probability of <a href="https://www.smartkarma.com/entities/xinyi-solar-holdings-ltd" target="_blank" data-smartkarma-citation="entities:318:1" rel="noopener">Xinyi Solar Holdings (968 HK)</a> being included in the index and of <a href="https://www.smartkarma.com/entities/china-evergrande-group" target="_blank" data-smartkarma-citation="entities:479:1" rel="noopener">Evergrande Real Estate Group (3333 HK)</a> being deleted.<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 a close add for now and its inclusion would put <a href="https://www.smartkarma.com/entities/china-pacific-insurance-group" target="_blank" data-smartkarma-citation="entities:6177:1" rel="noopener">China Pacific Insurance (2601 HK)</a> at risk of deletion from the index.<a href="https://www.smartkarma.com/entities/xpeng-inc-4cc65854-d10c-4d20-bf7e-ca0e016715ff" target="_blank" data-smartkarma-citation="entities:33772:1" rel="noopener">XPeng (9868 HK)</a> and <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> are unlikely to be included 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> at the December rebalance since they have failed the velocity test in August.With the one change, estimated one-way index turnover is 1.26% and will result in one-way turnover of HK$995m. This number will change over the next couple of months as stocks move around and the turnover increases due to capping changes on <a href="https://www.smartkarma.com/entities/alibaba-group" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group (9988 HK)</a>, <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> and <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a>.

The Hang Seng Indexes Company Limited (HSIL) should announce the results of the December 2021 review of the Hang Seng Family of Indexes on 12 November. The constituent changes will be effective after the close of trading on 3 December.The review period for the December rebalance ends on 30 September and stocks that have at least 3 month of trading history by the review cut-off date are eligible for inclusion in the Hang Seng China Enterprises Index (HSCEI INDEX).At the December review, we see a high probability of Xinyi Solar Holdings (968 HK) being included in the index and of Evergrande Real Estate Group (3333 HK) being deleted.Innovent Biologics Inc (1801 HK) is a close add for now and its inclusion would put China Pacific Insurance (2601 HK) at risk of deletion from the index.XPeng (9868 HK) and Li Auto (2015 HK) are unlikely to be included in the Hang Seng China Enterprises Index (HSCEI INDEX) at the December rebalance since they have failed the velocity test in August.With the one change, estimated one-way index turnover is 1.26% and will result in one-way turnover of HK$995m. This number will change over the next couple of months as stocks move around and the turnover increases due to capping changes on Alibaba Group (9988 HK), Tencent (700 HK) and Meituan (3690 HK).

HSCEI Index Rebalance Preview: Xinyi Solar Should Replace China Evergrande

The September rebalance of the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hong Kong Hang Seng Index (HSI INDEX)</a> was implemented at the close of trading on 3 September. Hang Seng Indexes should announce the results of the December 2021 review of the Hang Seng Family of Indexes on 12 November. The constituent changes will be effective after the close of trading on 3 December.The review period for the December rebalance ends on 30 September and stocks that have at least 3 month of trading history by the review meeting date are eligible for inclusion in the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hong Kong Hang Seng Index (HSI INDEX)</a>.There were 3 inclusions at the June rebalance and 3 inclusions and 1 exclusion at the September rebalance to take the number of index constituents to 60.With Hang Seng Indexes looking to get up to 80 <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hong Kong Hang Seng Index (HSI INDEX)</a> members by mid-2022, there could be 20 inclusions over the next 3 index rebalances.Stocks that are ranked towards the top of their Industry group and are potential inclusions are <a href="https://www.smartkarma.com/entities/smoore-international" target="_blank" data-smartkarma-citation="entities:28241:1" rel="noopener">Smoore International (6969 HK)</a>, <a href="https://www.smartkarma.com/entities/nongfu-spring" target="_blank" data-smartkarma-citation="entities:28955:1" rel="noopener">Nongfu Spring (9633 HK)</a>, <a href="https://www.smartkarma.com/entities/china-resources-beer-holdings" target="_blank" data-smartkarma-citation="entities:399:1" rel="noopener">China Resources Beer Holdings (291 HK)</a>, <a href="https://www.smartkarma.com/entities/china-resources-mixc-lifestyle-services" target="_blank" data-smartkarma-citation="entities:29285:1" rel="noopener">China Resources Mixc Lifestyle Services (1209 HK)</a>, <a href="https://www.smartkarma.com/entities/sunac-china-holdings-ltd" target="_blank" data-smartkarma-citation="entities:240:1" rel="noopener">Sunac China Holdings (1918 HK)</a>, <a href="https://www.smartkarma.com/entities/china-gas-holdings-ltd" target="_blank" data-smartkarma-citation="entities:14315:1" rel="noopener">China Gas Holdings (384 HK)</a>, <a href="https://www.smartkarma.com/entities/jd-health-international-inc" target="_blank" data-smartkarma-citation="entities:29677:1" rel="noopener">JD Health (6618 HK)</a>, <a href="https://www.smartkarma.com/entities/hansoh-pharmaceutical-group" target="_blank" data-smartkarma-citation="entities:23675:1" rel="noopener">Hansoh Pharmaceutical (3692 HK)</a>, <a href="https://www.smartkarma.com/entities/china-hongqiao-group-ltd" target="_blank" data-smartkarma-citation="entities:1909:1" rel="noopener">China Hongqiao (1378 HK)</a> and <a href="https://www.smartkarma.com/entities/fosun-international-ltd" target="_blank" data-smartkarma-citation="entities:433:1" rel="noopener">Fosun International (656 HK)</a>.Given that the index committee consciously avoided including stocks from sectors that were targeted by tightening regulations in China, this list will be revised closer to the index committee meeting in November. Another factor that will determine the number of inclusions is the turnover at the rebalance - while it is less than 4% now with the 10 inclusions, that number will move higher as stocks move around and there are capping changes on the largest constituents.

The September rebalance of the Hong Kong Hang Seng Index (HSI INDEX) was implemented at the close of trading on 3 September. Hang Seng Indexes should announce the results of the December 2021 review of the Hang Seng Family of Indexes on 12 November. The constituent changes will be effective after the close of trading on 3 December.The review period for the December rebalance ends on 30 September and stocks that have at least 3 month of trading history by the review meeting date are eligible for inclusion in the Hong Kong Hang Seng Index (HSI INDEX).There were 3 inclusions at the June rebalance and 3 inclusions and 1 exclusion at the September rebalance to take the number of index constituents to 60.With Hang Seng Indexes looking to get up to 80 Hong Kong Hang Seng Index (HSI INDEX) members by mid-2022, there could be 20 inclusions over the next 3 index rebalances.Stocks that are ranked towards the top of their Industry group and are potential inclusions are Smoore International (6969 HK), Nongfu Spring (9633 HK), China Resources Beer Holdings (291 HK), China Resources Mixc Lifestyle Services (1209 HK), Sunac China Holdings (1918 HK), China Gas Holdings (384 HK), JD Health (6618 HK), Hansoh Pharmaceutical (3692 HK), China Hongqiao (1378 HK) and Fosun International (656 HK).Given that the index committee consciously avoided including stocks from sectors that were targeted by tightening regulations in China, this list will be revised closer to the index committee meeting in November. Another factor that will determine the number of inclusions is the turnover at the rebalance - while it is less than 4% now with the 10 inclusions, that number will move higher as stocks move around and there are capping changes on the largest constituents.

HSI Index Rebalance Preview: Potential Inclusions in December

Industry Viewpoints:<ul>
<li>Eight departments jointly issued the pilot plan for deepening the price reform of medical services.</li>
<li>New document was released to regulate the medical beauty advertisement.</li>
<li>With labels such as "whitening", "keeping healthy" and "anti-aging", related functional food has captured the "health anxiety" of young people. </li>
</ul>Company News:News about the updated progress on new drugs of <a href="https://www.smartkarma.com/entities/jw-therapeutics" target="_blank" data-smartkarma-citation="entities:29679:1" rel="noopener">JW Therapeutics (2126 HK)</a>, <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>, Gloria Biosciences,<a href="https://www.smartkarma.com/entities/beigene-ltd" target="_blank" data-smartkarma-citation="entities:27352:1" rel="noopener">BeiGene Ltd (6160 HK) </a>and <a href="https://www.smartkarma.com/entities/jacobio-pharmaceuticals" target="_blank" data-smartkarma-citation="entities:29696:1" rel="noopener">Jacobio Pharmaceuticals (1167 HK)</a>. Market Review:Last week, stock price for healthcare sector in A share decreased 2.03%, while CSI 300 increased 0.33% over the same period of time.Risk Disclosure: Policy risk, R&amp;D risk, Company risk and COVID-19 risk.

Industry Viewpoints:
Eight departments jointly issued the pilot plan for deepening the price reform of medical services.
New document was released to regulate the medical beauty advertisement.
With labels such as "whitening", "keeping healthy" and "anti-aging", related functional food has captured the "health anxiety" of young people. 
Company News:News about the updated progress on new drugs of JW Therapeutics (2126 HK), Innovent Biologics Inc (1801 HK), Gloria Biosciences,BeiGene Ltd (6160 HK) and Jacobio Pharmaceuticals (1167 HK). Market Review:Last week, stock price for healthcare sector in A share decreased 2.03%, while CSI 300 increased 0.33% over the same period of time.Risk Disclosure: Policy risk, R&amp;D risk, Company risk and COVID-19 risk.

China Healthcare Weekly (Sep.3) - Price Reform of Medical Services, Medical Beauty, Functional Food

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)

InnoCare Pharma Ltd (9969.HK) - Risk of Becoming Mediocre

This article analyzed InnoCare in terms of its core product orelabrutinib, key product candidates in the pipeline, the competitive landscape, the...

Xinyao (Criss) Wang

China Healthcare Weekly (Sep10)-2021H1 Results Summary,Hospital Compensation Reform,Injection Export

The article analyzed the summary and enlightenment of 2021H1 reports of healthcare companies, reform of public hospital compensation system, export...

Xinyao (Criss) Wang

HSCEI Index Rebalance Preview: Xinyi Solar Should Replace China Evergrande

Xinyi Solar could replace China Evergrande at the HSCEI December rebalance. Over 20% of Xinyi Solar is held by passive investors and the stock...

Brian Freitas

HSI Index Rebalance Preview: Potential Inclusions in December

There could be 10 inclusions to the HSI at the Dec rebalance to help reach the 80 index member count by mid-2022. Index turnover & regulations will...

Brian Freitas

China Healthcare Weekly (Sep.3) - Price Reform of Medical Services, Medical Beauty, Functional Food

This article mainly analyzed the pilot plan for the price reform of medical services, new regulation on medical beauty advertisement, functional...

Xinyao (Criss) Wang

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