HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Event-Driven

<ul>
<li>Leading Chinese biotech firms are among the few sub-sectors sustaining rapid growth. However, RemeGen stands as a negative example, with its business model and investment rationale proving flawed.</li>
<li>“Increasing revenue without increasing profits” is actually a “denial” of a company's business model. Even though the losses decreased in 24H1, this doesn’t change our negative expectations for Zai Lab.</li>
<li>Genor Biopharma and Edding Group are merging through a reverse takeover, benefiting both companies by boosting Genor's valuation and allowing Edding to achieve its goal of going public.</li>
</ul>


Leading Chinese biotech firms are among the few sub-sectors sustaining rapid growth. However, RemeGen stands as a negative example, with its business model and investment rationale proving flawed.
“Increasing revenue without increasing profits” is actually a “denial” of a company's business model. Even though the losses decreased in 24H1, this doesn’t change our negative expectations for Zai Lab.
Genor Biopharma and Edding Group are merging through a reverse takeover, benefiting both companies by boosting Genor's valuation and allowing Edding to achieve its goal of going public.


China Healthcare Weekly (Oct.13)-Genor to Acquire Edding, RemeGen's Bleak Outlook, Zai Lab's Trouble

Pan-Asia Index Flows & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Pan-Asia Index Flows & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

<ul>
<li>The HSCEI serves as a benchmark to reflect the overall performance of the top 50 "Mainland China" securities listed in Hong Kong.</li>
<li>In this insight, we take a look at the final rankings for the HSCEI potential ADDs and potential DELs for the index rebal event in December 2024.</li>
<li>We see two ADDs/DELs - the same names we had in our last insight. At present, we expect US$474mn capping flows one-way but this can change by early-December 2024.</li>
</ul>


The HSCEI serves as a benchmark to reflect the overall performance of the top 50 "Mainland China" securities listed in Hong Kong.
In this insight, we take a look at the final rankings for the HSCEI potential ADDs and potential DELs for the index rebal event in December 2024.
We see two ADDs/DELs - the same names we had in our last insight. At present, we expect US$474mn capping flows one-way but this can change by early-December 2024.


Quiddity Leaderboard HSCEI Dec 24: Two Changes Likely; US$474mn Capping Flows One-Way

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

<ul>
<li>
<a href="https://www.smartkarma.com/entities/picc-property-casualty-h" target="_blank" data-smartkarma-citation="entities:350:1" rel="noopener">PICC Property &amp; Casualty H (2328 HK)</a> inclusion and <a href="https://www.smartkarma.com/entities/longfor-properties" target="_blank" data-smartkarma-citation="entities:8149:1" rel="noopener">Longfor Properties (960 HK)</a> deletion are high probability changes for 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> in December.</li>
<li>There is a lower probability of <a href="https://www.smartkarma.com/entities/china-resources-power-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:5385:1" rel="noopener">China Resources Power (836 HK)</a> being added and of <a href="https://www.smartkarma.com/entities/sino-biopharmaceutical" target="_blank" data-smartkarma-citation="entities:230:1" rel="noopener">Sino Biopharmaceutical (1177 HK)</a> being deleted at the rebalance.</li>
<li>There has been big short covering in <a href="https://www.smartkarma.com/entities/picc-property-casualty-h" target="_blank" data-smartkarma-citation="entities:350:1" rel="noopener">PICC Property &amp; Casualty (2328 HK)</a> over the last couple of months while shorts would have covered <a href="https://www.smartkarma.com/entities/longfor-properties" target="_blank" data-smartkarma-citation="entities:8149:1" rel="noopener">Longfor Properties (960 HK)</a> recently.</li>
</ul>



PICC Property &amp; Casualty H (2328 HK) inclusion and Longfor Properties (960 HK) deletion are high probability changes for the Hang Seng China Enterprises Index (HSCEI INDEX) in December.
There is a lower probability of China Resources Power (836 HK) being added and of Sino Biopharmaceutical (1177 HK) being deleted at the rebalance.
There has been big short covering in PICC Property &amp; Casualty (2328 HK) over the last couple of months while shorts would have covered Longfor Properties (960 HK) recently.


HSCEI Index Rebalance Preview: High & Low Probability Changes

<ul>
<li>The HSCEI serves as a benchmark to reflect the overall performance of the top 50 "Mainland China" securities listed in Hong Kong.</li>
<li>In this insight, we take a look at the potential index changes and the resultant capping flows for HSCEI index rebal event in December 2024.</li>
<li>At present, we see two ADDs/DELs based on the latest available data but the rankings can change until 30th September 2024.</li>
</ul>


The HSCEI serves as a benchmark to reflect the overall performance of the top 50 "Mainland China" securities listed in Hong Kong.
In this insight, we take a look at the potential index changes and the resultant capping flows for HSCEI index rebal event in December 2024.
At present, we see two ADDs/DELs based on the latest available data but the rankings can change until 30th September 2024.


Quiddity Leaderboard HSCEI Dec 24: Two Changes Possible; US$265mn Capping Flows One-Way

Equity Bottom-Up

<ul>
<li>AK112’s HARMONi-2 results were impressive, but there’s still critical data gap before obtaining approval from FDA. The main concern is whether good PFS can be translated into significant OS benefits.</li>
<li>
<a href="https://www.smartkarma.com/entities/akeso-biopharma-inc" target="_blank" data-smartkarma-citation="entities:28830:1" rel="noopener">Akeso </a>will be eligible to receive low double-digit royalties on net sales from Summit. So, Summit is actually a better investment because it has complete global rights of AK112.</li>
<li>Investors are betting Summit to be acquired by MNCs at a high price.Due to anti-monopoly issue, the narrowing pool of potential buyers would increase the difficulty of Summit being acquired.</li>
</ul>


AK112’s HARMONi-2 results were impressive, but there’s still critical data gap before obtaining approval from FDA. The main concern is whether good PFS can be translated into significant OS benefits.

Akeso will be eligible to receive low double-digit royalties on net sales from Summit. So, Summit is actually a better investment because it has complete global rights of AK112.
Investors are betting Summit to be acquired by MNCs at a high price.Due to anti-monopoly issue, the narrowing pool of potential buyers would increase the difficulty of Summit being acquired.


Akeso Biopharma Inc (9926 HK) - Something Beautiful Is Happening

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)

China Healthcare Weekly (Oct.13)-Genor to Acquire Edding, RemeGen's Bleak Outlook, Zai Lab's Trouble

Genor/Edding are merging through a reverse takeover, but valuation is unsatisfactory. Remegen is negative example among China Biotech.Weak...

Xinyao (Criss) Wang

Quiddity Leaderboard HSCEI Dec 24: Two Changes Likely; US$474mn Capping Flows One-Way

The one-way flow estimate for US$474mn translates to a turnover of roughly 4.2%. The final capping flows will be decided on 3rd December 2024.

Janaghan Jeyakumar, CFA

HSCEI Index Rebalance Preview: High & Low Probability Changes

There is one high probability change and one low probability change for the HSCEI in Dec. Estimated one-way turnover at the rebalance is 3.5%...

Brian Freitas

Quiddity Leaderboard HSCEI Dec 24: Two Changes Possible; US$265mn Capping Flows One-Way

PICC Property & Casualty H (2328 HK) and Innovent Biologics Inc (1801 HK) could replace Longfor Properties (960 HK) and Sino Biopharmaceutical...

Janaghan Jeyakumar, CFA

Akeso Biopharma Inc (9926 HK) - Something Beautiful Is Happening

AK112's HARMONi-2 results show promise, but FDA approval depends on OS. Summit is actually a better investment than Akeso. Investors bet Summit to...

Xinyao (Criss) Wang

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52-week Range

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China Healthcare Weekly (Oct.13)-Genor to Acquire Edding, RemeGen's Bleak Outlook, Zai Lab's Trouble

Genor/Edding are merging through a reverse takeover, but valuation is unsatisfactory. Remegen is negative example among China Biotech.Weak...

Xinyao (Criss) Wang

Quiddity Leaderboard HSCEI Dec 24: Two Changes Likely; US$474mn Capping Flows One-Way

The one-way flow estimate for US$474mn translates to a turnover of roughly 4.2%. The final capping flows will be decided on 3rd December 2024.

Janaghan Jeyakumar, CFA

HSCEI Index Rebalance Preview: High & Low Probability Changes

There is one high probability change and one low probability change for the HSCEI in Dec. Estimated one-way turnover at the rebalance is 3.5%...

Brian Freitas

Quiddity Leaderboard HSCEI Dec 24: Two Changes Possible; US$265mn Capping Flows One-Way

PICC Property & Casualty H (2328 HK) and Innovent Biologics Inc (1801 HK) could replace Longfor Properties (960 HK) and Sino Biopharmaceutical...

Janaghan Jeyakumar, CFA

Akeso Biopharma Inc (9926 HK) - Something Beautiful Is Happening

​AK112's HARMONi-2 results show promise, but FDA approval depends on OS. Summit is actually a better investment than Akeso. Investors bet Summit to...

Xinyao (Criss) Wang

AK112's HARMONi-2 results show promise, but FDA approval depends on OS. Summit is actually a better investment than Akeso. Investors bet Summit to...