HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

Shandong Weigao Group Medical Polymer Co / Equity Bottom-Up

<ul>
<li>Weigao formed a diversified product lines through a series of acquisitions and capital operation. Its performance is more driven by sales not R&amp;D, with limited core competitiveness.</li>
<li>Weigao’s orthopaedic products business is under pressure due to VBP, which would drag down the overall gross margin. The acquisition of Weigao New Life is hard to turn things around.</li>
<li>Weigao is a holding platform, which is worthless in secondary market.There could be some temporary rebounds but share price could still underperform or its valuation is lower than comparable companies.</li>
</ul>


Weigao formed a diversified product lines through a series of acquisitions and capital operation. Its performance is more driven by sales not R&amp;D, with limited core competitiveness.
Weigao’s orthopaedic products business is under pressure due to VBP, which would drag down the overall gross margin. The acquisition of Weigao New Life is hard to turn things around.
Weigao is a holding platform, which is worthless in secondary market.There could be some temporary rebounds but share price could still underperform or its valuation is lower than comparable companies.


Shandong Weigao Group Medical Polymer (1066.HK) - As a Holding Platform, Investment Value Is Limited

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<ul>
<li>The MSCI EM vs.EAFE ratio (local currency) shows EM has outperformed relative to EAFE since the DXY peaked in November 2022, and also shows signs of reversing the 2-year downtrend.</li>
<li>As long as the DXY remains below $103.50-$106, we expect outperformance from EM to continue.</li>
<li>China/Hong Kong, Greece, South Africa, and Mexico stand out as attractive countries. Our top actionable Sectors include Communications, Consumer Discretionary, and Technology. We highlight 76 attractive EM stocks.</li>
</ul>


The MSCI EM vs.EAFE ratio (local currency) shows EM has outperformed relative to EAFE since the DXY peaked in November 2022, and also shows signs of reversing the 2-year downtrend.
As long as the DXY remains below $103.50-$106, we expect outperformance from EM to continue.
China/Hong Kong, Greece, South Africa, and Mexico stand out as attractive countries. Our top actionable Sectors include Communications, Consumer Discretionary, and Technology. We highlight 76 attractive EM stocks.


EM Outperformance to Continue (Vs. EAFE) -- Add on a Pullback; DXY Needs to Hold Below $106

Shanghai Bio-Heart Biological Technology / Equity Bottom-Up

<ul>
<li>Among innovative medical device companies in HKEX under Chapter 18A, Bio-heart is quite “special”- It is the only company without commercialized products but has higher market value than the peers.</li>
<li>The competitiveness of Bio-heart’s core products is not high. There are great uncertainties in terms of the commercialization outlook, because Bio-heart doesn’t have obvious advantages in development progress/sales capability.</li>
<li>Bio-Heart is overvalued. Its efforts to maintain high share price may be to pave the way for listing in A-share,but anything deviates from fundamentals would inevitably return to the origin. </li>
</ul>


Among innovative medical device companies in HKEX under Chapter 18A, Bio-heart is quite “special”- It is the only company without commercialized products but has higher market value than the peers.
The competitiveness of Bio-heart’s core products is not high. There are great uncertainties in terms of the commercialization outlook, because Bio-heart doesn’t have obvious advantages in development progress/sales capability.
Bio-Heart is overvalued. Its efforts to maintain high share price may be to pave the way for listing in A-share,but anything deviates from fundamentals would inevitably return to the origin. 


Shanghai Bio-Heart Biological Technology (2185.HK) - The Bubble Will Eventually Burst

<ul>
<li>We saw some rebounds of <a href="https://www.smartkarma.com/entities/microport-scientific-corp" target="_blank" data-smartkarma-citation="entities:4487:1" rel="noopener">Microport Scientific (853 HK)</a>’s share price recently, which was mainly driven by the catalysts from the policy side. However, such rebounds would not last. </li>
<li>Microport’s development mode is unfavorable to investors. It’s not surprising for Microport to underperform or its valuation to be lower than expected. We recommend investors to focus more on Microport's subsidiaries.</li>
<li>The communication between Microport and investors has a problem, leading investors to think the management's no longer credible. How to repay the US$700 million convertible bond is also a problem.</li>
</ul>


We saw some rebounds of Microport Scientific (853 HK)’s share price recently, which was mainly driven by the catalysts from the policy side. However, such rebounds would not last. 
Microport’s development mode is unfavorable to investors. It’s not surprising for Microport to underperform or its valuation to be lower than expected. We recommend investors to focus more on Microport's subsidiaries.
The communication between Microport and investors has a problem, leading investors to think the management's no longer credible. How to repay the US$700 million convertible bond is also a problem.


Microport Scientific (853.HK) - Underperformance Would Be the Norm

<ul>
<li>Among domestic enterprises, <a href="https://www.smartkarma.com/entities/microport-neurotech-limited" target="_blank" data-smartkarma-citation="entities:35379:1" rel="noopener">MicroPort NeuroTech (2172 HK)</a>’s product richness takes the lead. With the support of <a href="https://www.smartkarma.com/entities/microport-scientific-corp" target="_blank" data-smartkarma-citation="entities:4487:1" rel="noopener">Microport Scientific (853 HK)</a>, the production quality system and capacity are relatively more guaranteed. </li>
<li>Fierce competition and centralized procurement are the major challenges, but the rich domestic distribution network and promising internationalization prospects would help NeuroTech find way out.</li>
<li>By reducing the size of the IPO to maintain a good share price, at the expense of stock liquidity, it doesn’t really solve the problem.There’s risk of overvaluation for NeuroTech.</li>
</ul>


Among domestic enterprises, MicroPort NeuroTech (2172 HK)’s product richness takes the lead. With the support of Microport Scientific (853 HK), the production quality system and capacity are relatively more guaranteed. 
Fierce competition and centralized procurement are the major challenges, but the rich domestic distribution network and promising internationalization prospects would help NeuroTech find way out.
By reducing the size of the IPO to maintain a good share price, at the expense of stock liquidity, it doesn’t really solve the problem.There’s risk of overvaluation for NeuroTech.


MicroPort NeuroTech (2172.HK) 22H1 - Advantages Deserve Recognition, but with Overvaluation Risk

China

Microport Scientific Corp. manufactures interventional and minimally invasive devices for keyhole surgery. The Company's products are used to treat vascular diseases and is developing devices to treat diabetes and orthopedic diseases.

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Microport Scientific (853 HK)

Shandong Weigao Group Medical Polymer (1066.HK) - As a Holding Platform, Investment Value Is Limited

Weigao is lack of core competitiveness due to weak R&D. Its performance could improve after China reopens, but Weigao could still underperform its...

Xinyao (Criss) Wang

EM Outperformance to Continue (Vs. EAFE) -- Add on a Pullback; DXY Needs to Hold Below $106

EM vs. EAFE ratio (local currency) shows EM has outperformed relative to EAFE since the $DXY peaked in November 2022. If the DXY remains below...

Vermilion Research

Shanghai Bio-Heart Biological Technology (2185.HK) - The Bubble Will Eventually Burst

Bio-heart’s core products lack competitiveness, with high uncertainties in commercialization outlook. High valuation is maintained so as to get...

Xinyao (Criss) Wang