Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Quantitative Analysis

<ul>
<li>We analyze the weekly Shanghai/Shenzhen northbound Connect flows with our data engine for holding position as of July 5th.</li>
<li>We estimate the weekly outflows to be US$1,769.7 million, led by information technology, materials, industrials, and offset by communication services, real estate, utilities.</li>
<li>We note that outflows have been consecutive for four weeks and highlight outflows for CATL (300750 CH).</li>
</ul>


We analyze the weekly Shanghai/Shenzhen northbound Connect flows with our data engine for holding position as of July 5th.
We estimate the weekly outflows to be US$1,769.7 million, led by information technology, materials, industrials, and offset by communication services, real estate, utilities.
We note that outflows have been consecutive for four weeks and highlight outflows for CATL (300750 CH).


Northbound Flows (Jul 5th): 4 Weeks of Outflows

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

Shenyang Xingqi Pharmaceutical / Equity Bottom-Up

<ul>
<li>Xingqi’s 0.01% atropine sulfate eye drops got approved for marketing this March, which is expected to monopolize the domestic market for at least 2.5-3 years, and enjoy higher gross margin.</li>
<li>Peak sales of 0.01% atropine sulfate eye drops would reach RMB5 billion at least. Together with other products, Xingqi’s total revenue would reach at least RMB6 billion in the future.</li>
<li>Due to attractive dividend policy, this stock is worth holding for the long term.Xingqi’s market value could even reach RMB50 billion if the sales exclusivity period is longer than expected. </li>
</ul>


Xingqi’s 0.01% atropine sulfate eye drops got approved for marketing this March, which is expected to monopolize the domestic market for at least 2.5-3 years, and enjoy higher gross margin.
Peak sales of 0.01% atropine sulfate eye drops would reach RMB5 billion at least. Together with other products, Xingqi’s total revenue would reach at least RMB6 billion in the future.
Due to attractive dividend policy, this stock is worth holding for the long term.Xingqi’s market value could even reach RMB50 billion if the sales exclusivity period is longer than expected. 


Shenyang Xingqi Pharmaceutical (300573.CH)-Looking Forward to a Leap in Valuation and Rich Dividends

Blue Lotus China New Economy Research, Blue Lotus Research Institute

Eric Wen

Blue Lotus China New Economy Research

China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

<ul>
<li>Cadonilimab (AK104)(PD-1/CTLA-4) achieved 7.1% market share in China's PD-1(L1) market in 2023, up from 3.4% in 2022, ranking it No.4 in revenue market share after Tislelezumab, Keytruda and Sintilimab;</li>
<li>With six days to go, the chance to receives NMPA approval for Gastric Cancer is slim, which means the June 18 price cut is for the existing Cervical Cancer indication;</li>
<li>The big question is the price elasticity <em>following</em> Cadonilimab's inclusion to NDRL. With ~110K new patients each year and only ~2,100 receiving Cadonilimab, we expect a moderate price cut.</li>
</ul>


Cadonilimab (AK104)(PD-1/CTLA-4) achieved 7.1% market share in China's PD-1(L1) market in 2023, up from 3.4% in 2022, ranking it No.4 in revenue market share after Tislelezumab, Keytruda and Sintilimab;
With six days to go, the chance to receives NMPA approval for Gastric Cancer is slim, which means the June 18 price cut is for the existing Cervical Cancer indication;
The big question is the price elasticity following Cadonilimab's inclusion to NDRL. With ~110K new patients each year and only ~2,100 receiving Cadonilimab, we expect a moderate price cut.


What's Behind Akeso's Cadonilimab Price Cut and What's Next?

Event-Driven

Shanghai Fosun Pharmaceutical (Group) / Event-Driven

<ul>
<li>It is said that Fosun Pharma plans to privatize Henlius. There’re doubts about how to solve the debt problem/cash flow pressure of Fosun Pharma. A third party could be involved.</li>
<li>Shareholders may not be willing to accept an Offer Price that is significantly below IPO price. It’s also possible that shareholders vote against the privatization. So, there are many uncertainties.</li>
<li>Deal talks are still ongoing. It's difficult to see clearly what's happening under the table. Valuation logic of Fosun Pharma should be more like PE/VC firms not traditional pharmaceutical company.</li>
</ul>


It is said that Fosun Pharma plans to privatize Henlius. There’re doubts about how to solve the debt problem/cash flow pressure of Fosun Pharma. A third party could be involved.
Shareholders may not be willing to accept an Offer Price that is significantly below IPO price. It’s also possible that shareholders vote against the privatization. So, there are many uncertainties.
Deal talks are still ongoing. It's difficult to see clearly what's happening under the table. Valuation logic of Fosun Pharma should be more like PE/VC firms not traditional pharmaceutical company.


Fosun Pharma (2196 HK/600196.CH) To Privatize Henlius (2696.HK) - Things Are Not as Good as Expected

<ul>
<li>Innovent’s 24Q1 product sales was up just 6% QoQ. The overall data shows that PD-1 growth has entered a bottleneck. This makes 24H2 YoY growth rate uncertain.</li>
<li>The deal between Hengrui and Hercules is different from traditional license-out cooperation, but belong to asset spin-off in essence, which is a “smart deal” and also a meaningful attempt.</li>
<li>There’re some positive signals in Zai Lab’s 24Q1 performance, but the pain points of business model severely limit its profitability/revenue scale. Zai Lab still has a long way to go.</li>
</ul>


Innovent’s 24Q1 product sales was up just 6% QoQ. The overall data shows that PD-1 growth has entered a bottleneck. This makes 24H2 YoY growth rate uncertain.
The deal between Hengrui and Hercules is different from traditional license-out cooperation, but belong to asset spin-off in essence, which is a “smart deal” and also a meaningful attempt.
There’re some positive signals in Zai Lab’s 24Q1 performance, but the pain points of business model severely limit its profitability/revenue scale. Zai Lab still has a long way to go.


China Healthcare Weekly (Jun.2) - Innovent's Trouble, Hengrui's “smart Deal”, Zai Lab’s Pain Point

China

Jiangsu Hengrui Medicine Co., Ltd. develops, manufactures, and markets a variety of medicines and medicine packing materials. The Company's products include anti-tumor medicines, pain-killers, anti-infection medicines, aluminum foil, and other related products.

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Jiangsu Hengrui Medicine (600276 CH)

Northbound Flows (Jul 5th): 4 Weeks of Outflows

We analyzed northbound Shanghai/Shenzhen connect flows in the past week. We estimate the outflows to be USD1.8bn and highlight flows for CATL.

Ke Yan, CFA, FRM

Shenyang Xingqi Pharmaceutical (300573.CH)-Looking Forward to a Leap in Valuation and Rich Dividends

Xingqi's newly approved atropine eye drops will drive high growth/valuation expansion due to sales exclusivity period.Together with lucrative...

Xinyao (Criss) Wang

What's Behind Akeso's Cadonilimab Price Cut and What's Next?

Akeso's proposition is to develop BsAb as a universal anti-cancer drug. Its revenue from Cadonilimab in the out-of-hospital market for Cervical...

Blue Lotus Research Institute

Fosun Pharma (2196 HK/600196.CH) To Privatize Henlius (2696.HK) - Things Are Not as Good as Expected

Fosun Pharma's plan to privatize Henlius faces uncertainty due to cash-flow pressure.Shareholders' interests may suffer since Offer Price may not...

Xinyao (Criss) Wang

China Healthcare Weekly (Jun.2) - Innovent's Trouble, Hengrui's “smart Deal”, Zai Lab’s Pain Point

Innovent's PD-1 growth face bottleneck, with uncertainty in 24H2 growth; Hengrui-Hercules deal a "smart" asset spin-off; Zai Lab has positive...

Xinyao (Criss) Wang

Price Gauge

52-week Range

Market Cap (USDm)

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Northbound Flows (Jul 5th): 4 Weeks of Outflows

We analyzed northbound Shanghai/Shenzhen connect flows in the past week. We estimate the outflows to be USD1.8bn and highlight flows for CATL.

Ke Yan, CFA, FRM

Shenyang Xingqi Pharmaceutical (300573.CH)-Looking Forward to a Leap in Valuation and Rich Dividends

Xingqi's newly approved atropine eye drops will drive high growth/valuation expansion due to sales exclusivity period.Together with lucrative...

Xinyao (Criss) Wang

What's Behind Akeso's Cadonilimab Price Cut and What's Next?

​Akeso's proposition is to develop BsAb as a universal anti-cancer drug. Its revenue from Cadonilimab in the out-of-hospital market for Cervical...

Blue Lotus Research Institute

Fosun Pharma (2196 HK/600196.CH) To Privatize Henlius (2696.HK) - Things Are Not as Good as Expected

​Fosun Pharma's plan to privatize Henlius faces uncertainty due to cash-flow pressure.Shareholders' interests may suffer since Offer Price may not...

Xinyao (Criss) Wang

China Healthcare Weekly (Jun.2) - Innovent's Trouble, Hengrui's “smart Deal”, Zai Lab’s Pain Point

​Innovent's PD-1 growth face bottleneck, with uncertainty in 24H2 growth; Hengrui-Hercules deal a "smart" asset spin-off; Zai Lab has positive...

Xinyao (Criss) Wang

Akeso's proposition is to develop BsAb as a universal anti-cancer drug. Its revenue from Cadonilimab in the out-of-hospital market for Cervical...

Fosun Pharma's plan to privatize Henlius faces uncertainty due to cash-flow pressure.Shareholders' interests may suffer since Offer Price may not...

Innovent's PD-1 growth face bottleneck, with uncertainty in 24H2 growth; Hengrui-Hercules deal a "smart" asset spin-off; Zai Lab has positive...