Pan-Asia Index Flows & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Pan-Asia Index Flows & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Event-Driven

<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

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

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

Yichang HEC Changjiang Pharma / Event-Driven

<ul>
<li>Biotech will continue selling early-stage pipeline in a sluggish market, but this will further lower its valuation as financing won't improve quickly.</li>
<li>Pharmaceutical distribution companies are facing challenges, driving ongoing consolidation in the industry. However, this trend will ultimately benefit the growth of leading companies in the long run.</li>
<li>If investors truly understand "the essence" of <a href="https://www.smartkarma.com/entities/yichang-hec-changjiang-pharmaceutical" target="_blank" data-smartkarma-citation="entities:21040:1" rel="noopener">HEC Changjiang Pharma</a>, they will be more calm/rational to look at this absorption merger and the inclusion of Hang Seng family of indexes.</li>
</ul>


Biotech will continue selling early-stage pipeline in a sluggish market, but this will further lower its valuation as financing won't improve quickly.
Pharmaceutical distribution companies are facing challenges, driving ongoing consolidation in the industry. However, this trend will ultimately benefit the growth of leading companies in the long run.
If investors truly understand "the essence" of HEC Changjiang Pharma, they will be more calm/rational to look at this absorption merger and the inclusion of Hang Seng family of indexes.


China Healthcare Weekly (Sep.1)-Biotech Sell Asset,Pharmaceutical Distribution Company,HEC CJ Pharma

<ul>
<li>The Share Alternative is necessary to improve success rate of privatization. Our guess is Henlius Biopharmaceuticals/Lin Lijun would vote for this privatization, but we’re not sure about Qatar Investment’s decision.</li>
<li>Due to its "flaws", undervaluation of Henlius is difficult to fundamentally change. So, those conservative and cautious investors would choose the Cash Alternative considering the risks behind the Share Alternative.</li>
<li>Even if there’re plans of re-listing, it may be based on a new entity formed after integrating Henlius and other assets within Fosun Pharma. So, the value of Rollover Entities/Securities remains uncertain.</li>
</ul>


The Share Alternative is necessary to improve success rate of privatization. Our guess is Henlius Biopharmaceuticals/Lin Lijun would vote for this privatization, but we’re not sure about Qatar Investment’s decision.
Due to its "flaws", undervaluation of Henlius is difficult to fundamentally change. So, those conservative and cautious investors would choose the Cash Alternative considering the risks behind the Share Alternative.
Even if there’re plans of re-listing, it may be based on a new entity formed after integrating Henlius and other assets within Fosun Pharma. So, the value of Rollover Entities/Securities remains uncertain.


Shanghai Henlius Biotech (2696.HK) - Privatization Has Taken a Positive Step Forward

Equity Capital Markets

<ul>
<li>Medtide relies heavily on limited number of customers to contribute performance. If there is any significant reduction in demand by its major customers, Medtide’s performance growth would be materially/adversely affected.</li>
<li>Due to geopolitical conflicts, pharmaceutical companies are becoming more cautious about their reliance on China CXO. So, the development of Medtide’s overseas business would become more uncertain in this context.</li>
<li>Medtide's business scale is still small and its position in the global peptide CXO industry is not as strong as described. Valuation of Medtide should be lower than peers.</li>
</ul>


Medtide relies heavily on limited number of customers to contribute performance. If there is any significant reduction in demand by its major customers, Medtide’s performance growth would be materially/adversely affected.
Due to geopolitical conflicts, pharmaceutical companies are becoming more cautious about their reliance on China CXO. So, the development of Medtide’s overseas business would become more uncertain in this context.
Medtide's business scale is still small and its position in the global peptide CXO industry is not as strong as described. Valuation of Medtide should be lower than peers.


Pre-IPO Medtide - The Industry, the Business and the Concerns

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
52-week Range	0.00 - 0.00
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Innovent Biologics Inc (1801 HK)

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

China Healthcare Weekly (Sep.1)-Biotech Sell Asset,Pharmaceutical Distribution Company,HEC CJ Pharma

Biotech's decision to sell pipeline will continue in sluggish market, leading to lower valuation. Pharmaceutical distribution companies face...

Xinyao (Criss) Wang

Shanghai Henlius Biotech (2696.HK) - Privatization Has Taken a Positive Step Forward

Share Alternative is necessary to improve success rate of privatization, but there're risk behind. As undervaluation of Henlius is difficult to...

Xinyao (Criss) Wang

Pre-IPO Medtide - The Industry, the Business and the Concerns

Medtide's growth is at risk due to high reliance on limited customers, uncertainty in overseas business and lower-than-expected position in global...

Xinyao (Criss) Wang

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

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

China Healthcare Weekly (Sep.1)-Biotech Sell Asset,Pharmaceutical Distribution Company,HEC CJ Pharma

​Biotech's decision to sell pipeline will continue in sluggish market, leading to lower valuation. Pharmaceutical distribution companies face...

Xinyao (Criss) Wang

Shanghai Henlius Biotech (2696.HK) - Privatization Has Taken a Positive Step Forward

Share Alternative is necessary to improve success rate of privatization, but there're risk behind. As undervaluation of Henlius is difficult to...

Xinyao (Criss) Wang

Pre-IPO Medtide - The Industry, the Business and the Concerns

​Medtide's growth is at risk due to high reliance on limited customers, uncertainty in overseas business and lower-than-expected position in global...

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...

Biotech's decision to sell pipeline will continue in sluggish market, leading to lower valuation. Pharmaceutical distribution companies face...

Medtide's growth is at risk due to high reliance on limited customers, uncertainty in overseas business and lower-than-expected position in global...