Equity Analyst, LightStream Research

Shifara Samsudeen, ACMA, CGMA

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Equity Bottom-Up

Alibaba Health Information Tec / Equity Bottom-Up

<ul>
<li>On 22nd June, China released a draft rule that would prevent third-party e-commerce platforms from selling drugs directly to consumers online.</li>
<li>Alibaba Health’s share price is down more than 10% since the announcement of the draft rule, however, third-party e-commerce platforms accounts for about 10% of Ali Health’s revenues.</li>
<li>Pharmaceutical direct sales business has been generating lower GPM compared to JD Health’s direct biz, and the company’s margins have continued to deteriorate during the last 2-years.</li>
</ul>


On 22nd June, China released a draft rule that would prevent third-party e-commerce platforms from selling drugs directly to consumers online.
Alibaba Health’s share price is down more than 10% since the announcement of the draft rule, however, third-party e-commerce platforms accounts for about 10% of Ali Health’s revenues.
Pharmaceutical direct sales business has been generating lower GPM compared to JD Health’s direct biz, and the company’s margins have continued to deteriorate during the last 2-years.


Alibaba Health: New Digital Healthcare Policy to Have Less Impact but Tumbling Margins Is Worrying

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Capital Markets

Huayiwang Technology / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/huayiwang-technology-inc" target="_blank" data-smartkarma-citation="entities:35518:1" rel="noopener">Huayiwang Technology (1985554D HK)</a> is strong in its digital medical education solutions, which is the cornerstone business for the continuous expansion of other solution offerings and ecosystem.</li>
<li>HUAYIWANG charges service fees mainly from pharmaceutical companies, which could be a more sustainable profit model than charging from patients directly.</li>
<li>However, the increasing competition and potential risk of losing medical professionals could shake the foundations of HUAYIWANG's business. </li>
</ul>



Huayiwang Technology (1985554D HK) is strong in its digital medical education solutions, which is the cornerstone business for the continuous expansion of other solution offerings and ecosystem.
HUAYIWANG charges service fees mainly from pharmaceutical companies, which could be a more sustainable profit model than charging from patients directly.
However, the increasing competition and potential risk of losing medical professionals could shake the foundations of HUAYIWANG's business. 


Pre-IPO Huayiwang Technology - The Business Model Is Reasonable, but There Are Also Challenges

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

Event-Driven

<ul>
<li>Currently at 69 constituents, it is unlikely that we reach 80 member by year end. Hang Seng Indexes is finding it tough to reach the target by excluding unprofitable companies.</li>
<li>We list 11 stocks that could be added to the index in September - with one-way turnover just over 5%, the actual number of inclusions will be lower.</li>
<li>There are a few potential inclusions where short interest is over 5% of the free float. These stocks could see short covering ahead of announcement of the changes.</li>
</ul>


Currently at 69 constituents, it is unlikely that we reach 80 member by year end. Hang Seng Indexes is finding it tough to reach the target by excluding unprofitable companies.
We list 11 stocks that could be added to the index in September - with one-way turnover just over 5%, the actual number of inclusions will be lower.
There are a few potential inclusions where short interest is over 5% of the free float. These stocks could see short covering ahead of announcement of the changes.


HSI Index Rebalance Preview: Finding the Balance

<ul>
<li>Alibaba Health’s core pharmaceutical direct sales business is facing challenges in terms of increasing competition as well as lower revenue growth and margins, dragging down the overall performance.</li>
<li>The recent new policies about online drug sales on third-party digital healthcare platforms and online diagnosis and treatment would add more uncertainties on Alibaba Health’s business and outlook.</li>
<li>If such unfavorable trend continues, the gap between Alibaba Health and JD Health would be wider. It’s not easy to break the deadlock. Investors may need to take heed.</li>
</ul>


Alibaba Health’s core pharmaceutical direct sales business is facing challenges in terms of increasing competition as well as lower revenue growth and margins, dragging down the overall performance.
The recent new policies about online drug sales on third-party digital healthcare platforms and online diagnosis and treatment would add more uncertainties on Alibaba Health’s business and outlook.
If such unfavorable trend continues, the gap between Alibaba Health and JD Health would be wider. It’s not easy to break the deadlock. Investors may need to take heed.


Alibaba Health Information Technology (241.HK) - It’s Not Easy to Break a Deadlock

Thematic (Sector/Industry)

<ul>
<li>Four departments jointly issued “opinions” emphasis on the training/construction of TCM talents, which has great significance of TCM development in China. We advise investors not to underestimate this policy.</li>
<li>The COVID-19, policy risks (VBP/centralized procurement/DRGs) and public hospitals expansion have significantly intensified private hospitals' pressure for survival, which will eventually be reflected in the financial statements.</li>
<li>The deal between <a href="https://www.smartkarma.com/entities/sino-biopharmaceutical" target="_blank" data-smartkarma-citation="entities:230:1" rel="noopener">Sino Biopharmaceutical (1177 HK) </a>and F-star Therapeutics with aggregate consideration of approximately US$161 million indicated that the industry clearing of biotech in China is far from completed.</li>
</ul>


Four departments jointly issued “opinions” emphasis on the training/construction of TCM talents, which has great significance of TCM development in China. We advise investors not to underestimate this policy.
The COVID-19, policy risks (VBP/centralized procurement/DRGs) and public hospitals expansion have significantly intensified private hospitals' pressure for survival, which will eventually be reflected in the financial statements.
The deal between Sino Biopharmaceutical (1177 HK) and F-star Therapeutics with aggregate consideration of approximately US$161 million indicated that the industry clearing of biotech in China is far from completed.


China Healthcare Weekly (July.1)- TCM New Policy, Private Hospitals Survival Pressure, Sino Biopharm

China

JD Health International Inc. operates drug stores. The Company retails Chinese and Western medicines, nutrition products, health care products, and other products. JD Health International markets its products throughout China.

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JD Health International (6618 HK)

Alibaba Health: New Digital Healthcare Policy to Have Less Impact but Tumbling Margins Is Worrying

We expect the impact from the new draft rule on Digital healthcare platforms to be minimal on Ali Health. However, eroding margins is a concern and...

Shifara Samsudeen, ACMA, CGMA

Pre-IPO Huayiwang Technology - The Business Model Is Reasonable, but There Are Also Challenges

The business model of taking medical professional network as the foundation for expansion of other solution offerings/ecosystem is logical....

Xinyao (Criss) Wang

HSI Index Rebalance Preview: Finding the Balance

There could be up to 5 inclusions as Hang Seng works its way up to 80 index members. We highlight the probable inclusions and find that some of...

Brian Freitas

Alibaba Health Information Technology (241.HK) - It’s Not Easy to Break a Deadlock

Alibaba Health is facing challenges in both business and policy sides,with declining performance.The gap with JD Health becomes wider.It’s not easy...

Xinyao (Criss) Wang

China Healthcare Weekly (July.1)- TCM New Policy, Private Hospitals Survival Pressure, Sino Biopharm

New policy about TCM talent will have great significance of TCM development.Private hospitals' survival pressure will be reflected in financial...

Xinyao (Criss) Wang

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