HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Capital Markets

Beijing Yuanxin Technology Group Co Ltd / Equity Capital Markets

<ul>
<li>Yuanxin’s financial performance has not improved and it is still in a state of continuous loss. At such low gross margin level, Yuanxin will find it difficult to make money.</li>
<li>As China's retail pharmacy market has entered a new era of integration as the industry growth is slowing down, the challenges Yuanxin has to face would be different from before.</li>
<li>When the market pattern has been basically determined, Yuanxin has little chance to break through. Being acquired may be a better outcome. If IPO, valuation would be lower than peers.</li>
</ul>


Yuanxin’s financial performance has not improved and it is still in a state of continuous loss. At such low gross margin level, Yuanxin will find it difficult to make money.
As China's retail pharmacy market has entered a new era of integration as the industry growth is slowing down, the challenges Yuanxin has to face would be different from before.
When the market pattern has been basically determined, Yuanxin has little chance to break through. Being acquired may be a better outcome. If IPO, valuation would be lower than peers.


Pre-IPO Beijing Yuanxin Technology Group - Some Points Worth the Attention

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

Brilliance China Automotive / Event-Driven

<ul>
<li>It was a busy Friday with a bunch of indices rebalancing at the close and big volumes trading on a lot of stocks.</li>
<li>
<a href="https://www.smartkarma.com/entities/brilliance-china-automotive" target="_blank" data-smartkarma-citation="entities:469:1" rel="noopener">Brilliance China Automotive (1114 HK)</a> had a good week with the stock rallying on Thursday and Friday on huge volumes amid expectations of upcoming passive buying.</li>
<li>A quiet week for ETFs with mainland China ETFs seeing some outflows after the huge inflows over the last couple of months.</li>
</ul>


It was a busy Friday with a bunch of indices rebalancing at the close and big volumes trading on a lot of stocks.

Brilliance China Automotive (1114 HK) had a good week with the stock rallying on Thursday and Friday on huge volumes amid expectations of upcoming passive buying.
A quiet week for ETFs with mainland China ETFs seeing some outflows after the huge inflows over the last couple of months.


Index Rebalance & ETF Flow Recap: HSCEI, HSTECH, CSI500, STAR50, FnGuide Top10

Neusoft Xikang Healthcare Technology Co Ltd / Equity Capital Markets

Neusoft Xikang Healthcare Technology Co Ltd

<ul>
<li>Either from business model or investment logic, the key is to increase the revenue proportion of cloud hospital platform services. However, many restrictions have led to difficulties in nationwide expansion.</li>
<li>Overreliance on government projects and public hospitals makes it difficult to generate high profits. Xikang may continue to suffer loss in the future, and its profitability is worrying. </li>
<li>Based on our analysis, it could be difficult for Xikang to achieve good valuation performance in the future. we think its valuation should be lower than that of ClouDr.</li>
</ul>


Either from business model or investment logic, the key is to increase the revenue proportion of cloud hospital platform services. However, many restrictions have led to difficulties in nationwide expansion.
Overreliance on government projects and public hospitals makes it difficult to generate high profits. Xikang may continue to suffer loss in the future, and its profitability is worrying. 
Based on our analysis, it could be difficult for Xikang to achieve good valuation performance in the future. we think its valuation should be lower than that of ClouDr.


Pre-IPO Neusoft Xikang (PHIP Updates) - Business Expansion and Profitability Remain in Doubt

<ul>
<li>With no stocks in inclusion or deletion zone, we do not expect any constituent changes for the <a href="https://www.smartkarma.com/entities/hang-seng-tech-index" target="_blank" data-smartkarma-citation="entities:31367:1" rel="noopener">Hang Seng TECH Index (HSTECH INDEX)</a> in December.</li>
<li>Capping changes will result in a one-way turnover of a touch below 1% and that will result in a round-trip trade of US$255m.</li>
<li>The impact on the stocks is relatively small for now but that could increase till the end of November when the stocks will be capped.</li>
</ul>


With no stocks in inclusion or deletion zone, we do not expect any constituent changes for the Hang Seng TECH Index (HSTECH INDEX) in December.
Capping changes will result in a one-way turnover of a touch below 1% and that will result in a round-trip trade of US$255m.
The impact on the stocks is relatively small for now but that could increase till the end of November when the stocks will be capped.


HSTECH Index Rebalance Preview: Round-Trip Trade of US$255m in December

Pan-Asia Index Flows & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Pan-Asia Index Flows & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Tongcheng Travel Holdings  / Event-Driven

<ul>
<li>In this insight, we take a look at the potential index changes and the resultant capping flows for the HSTECH Index in December 2023.</li>
<li>There could be one ADD and one DELETE for HSTECH in December 2023 but I would treat them as low-conviction changes.</li>
<li>At present, I see one-way flows for the December 2023 rebalance to be around US$250mn but as prices change, our index change and flow expectations will change too.</li>
</ul>


In this insight, we take a look at the potential index changes and the resultant capping flows for the HSTECH Index in December 2023.
There could be one ADD and one DELETE for HSTECH in December 2023 but I would treat them as low-conviction changes.
At present, I see one-way flows for the December 2023 rebalance to be around US$250mn but as prices change, our index change and flow expectations will change too.


Quiddity HSTECH Dec 23 Flow Expectations: One Low-Conviction Change, US$250mn One-Way

China

Laobaixing Pharmacy Chain JSC wholesales and distributes medical products. The Company provides Chinese herbal medicines, antibiotic preparations, biochemical drugs, and other products. Laobaixing Pharmacy Chain also provides medical equipment.

Shenzhen Agricultural Products Co., Ltd. operates chain supermarkets and wholesale markets for agricultural products.  The Company also provides agricultural products processing and other related services.

Shenzhen Agricultural Products Co, Ltd. (000061 CH)

Yixintang Pharmaceutical Group Co., Ltd. operates pharmaceutical stores. The Company retails Chinese medicines, western medicines, and other products. Yixintang Pharmaceutical Group also provides medical equipment.

Yixintang Pharmaceutical Group (002727 CH)

Shanghai Bailian Group Co.,Ltd. operates as a supermarket. The Company retails vegetables, fruits, meats, seafood, delicatessen products, sweets, snacks, and other related products. Shanghai Bailian Group also operates department store business.

COFCO Joycome Foods Limited engages in animal meat production. The Company produces, processes, distributes, and sells fresh pork, pork products, and animal feeds. COFCO Joycome Foods also operates and manages slaughterhouse throughout China.

Beijing Hualian Hypermarket Co., Ltd. operates supermarkets and department stores.  The Company sells groceries, knitting products, medical instruments, hardware, chemical materials, food, beverages, construction materials, arts and crafts, jewelry, furniture, computers, air-conditioning equipment, metal materials, and other merchandise.

Beijing Hualian Hypermarket Co, Ltd. (600361 CH)

Sanjiang Shopping Club Company Limited operates community budget supermarket franchises. The Company provides customers with retail services.

New Huadu Supercenter Co., Ltd. engages in chain operations in marketplaces, sup ermarkets, department stores.

Better Life Commercial Chain Share Co., Ltd. operates a chain of supermarkets, general merchandise stores and household electrical appliances stores.

Better Life Comm Chain Share Co (002251 CH)

Yonghui Superstores Company Limited operates supermarket franchises . The Company mainly operates hypermarkets, marketplace and supermarkets.

Sun Art Retail Group Ltd. operates hypermarkets.  The Company retails food and offers amenities such as restaurants, automated teller machines, pharmacies and dry cleaners.

Chefs' Warehouse Inc. is a premier distributor of specialty food products in the United States. The Company is focused on serving the specific needs of chefs who own and/or operate restaurants, fine dining establishments, country clubs, hotels, caterers, culinary schools and specialty food stores.

GS Retail Co., Ltd. operates a chain of retail stores. The Company provides beauty and skincare products, candles, gifts, perfumes, ornaments, bathroom accessories, and other products. GS Retail serves its customers in the Republic of South Korea.

The Andersons, Inc. merchandises grain, operates grain elevator facilities, distributes wholesale agricultural fertilizer, and distributes agricultural inputs to dealers and farmers.  The Company also manufactures lawn fertilizer and corncob-based products, and purchases, sells, repairs, and leases railcars. In addition, The Andersons operates retail stores and a distribution center.

Sheng Siong Group Ltd is a retailer in Singapore.  The Company operates a groceries chain across Singapore. Sheng Siong's stores provide fresh and chilled produce, seafood, meat and vegetables, processed, packaged and preserved food products as well as general merchandise such as toiletries and essential household items.

AIN HOLDINGS INC. operates and franchises pharmacies in Japan.  The Company primarily sells medicines, external-use medicine, cosmetics, and food products. AIN Pharmaciez also conducts clinical tests for medical institutions.

Dongsuh Companies Inc. imports, manufactures, processes, markets and distributes general food products such as vegetable cooking oils. The Company also produces packaging materials and ceramic products including food and oil containers. Dongsuh has a cooperative relationship with Kraft Foods Inc.

Ingles Markets, Incorporated operates a supermarket chain in the southeastern United States.  The Company also owns and operates neighborhood shopping centers.

CREATE SD HOLDINGS Co Ltd operates a chain of drug stores based in Kanagawa. The Company sells medical supplies, cosmetics, foodstuff, baby products and daily goods. CREATE SD HOLDINGS also sells prescription medicine.

Puregold Price Club, Inc. operates wholesale and retail stores, including supermarkets.

Ping An Healthcare and Technology Company Limited provides health care software solutions. The Company offers mobile platform for online consultation, hospital referral and appointment, health management, and wellness interaction services, as well as connects consumers and patients with health care resources. Ping An Healthcare and Technology serves customers in China.

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Ping An Healthcare and Technol (1833 HK)

Pre-IPO Beijing Yuanxin Technology Group - Some Points Worth the Attention

Yuanxin has weak profitability. It's questionable whether investors can achieve expected returns on this company.We think Yuanxin may eventually be...

Xinyao (Criss) Wang

Index Rebalance & ETF Flow Recap: HSCEI, HSTECH, CSI500, STAR50, FnGuide Top10

This recap highlights Insights covering Asian index rebalances (announcements/ forecasts/ IPO Fast Entry/ M&A driven changes). We also highlight...

Brian Freitas

Pre-IPO Neusoft Xikang (PHIP Updates) - Business Expansion and Profitability Remain in Doubt

Restrictions imposed by cities would affect the scalability of business. Xikang may suffer long-term loss due to unproven profit model. It's...

Xinyao (Criss) Wang

HSTECH Index Rebalance Preview: Round-Trip Trade of US$255m in December

We do not see any constituents changing in December. Capping will lead to a one-way turnover of 1% resulting in a round-trip trade of US$255m....

Brian Freitas

Quiddity HSTECH Dec 23 Flow Expectations: One Low-Conviction Change, US$250mn One-Way

I see Tongcheng Travel Holdings (780 HK) as a low-conviction ADD and Ping An Healthcare and Technol (1833 HK) as a low-conviction DEL for HSTECH in...

Janaghan Jeyakumar, CFA

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