HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

Shandong Weigao Orthopaedic De / Equity Bottom-Up

<ul>
<li>Although Weigao achieved solid growth in 2021 after pandemic was under control,the real test will come in 2022. The implementation of centralized procurement will have a significant impact on performance.</li>
<li>After spinal implants are included in centralized procurement this year, all of Weigao’s three major businesses (spinal implants/trauma implants/joint implants) are within the scope. Short-term performance pressure is inevitable.</li>
<li>As a result of the pandemic/lockdown in 2022H1, we lowered our performance forecast on Weigao.   </li>
</ul>


Although Weigao achieved solid growth in 2021 after pandemic was under control,the real test will come in 2022. The implementation of centralized procurement will have a significant impact on performance.
After spinal implants are included in centralized procurement this year, all of Weigao’s three major businesses (spinal implants/trauma implants/joint implants) are within the scope. Short-term performance pressure is inevitable.
As a result of the pandemic/lockdown in 2022H1, we lowered our performance forecast on Weigao.   


Shandong Weigao Orthopaedic - 2022 Is the Real Test. Short-Term Performance Pressure Is Inevitable

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>Over 96% of the way through the review period, we see 1 change using a 12 month minimum listing history, and 5 changes using a 6 month minimum listing history.</li>
<li>We expect the index committee to continue using the shorter minimum listing history since the potential adds have much larger market caps than the potential deletes.</li>
<li>The potential adds have outperformed the potential deletes over the last month and there could be more once the current consolidation is complete.</li>
</ul>


Over 96% of the way through the review period, we see 1 change using a 12 month minimum listing history, and 5 changes using a 6 month minimum listing history.
We expect the index committee to continue using the shorter minimum listing history since the potential adds have much larger market caps than the potential deletes.
The potential adds have outperformed the potential deletes over the last month and there could be more once the current consolidation is complete.


STAR50 Index Rebalance Preview (Sep): Adds Outperforming the Deletes

Thematic (Sector/Industry)

<ul>
<li>The 7th National VBP released results. 60 kinds of drugs won the bidding successfully, with price reduction of 48% on average. We analyzed its impact on companies. </li>
<li>The newly issued document about the payment management measures for new technology out of CHS-DRG payment scope is a solid encouragement to innovation and an important policy reform signal.</li>
<li>The national centralized procurement of orthopedic spine consumables has officially started, which is beneficial to those leading companies with complete product line.</li>
</ul>


The 7th National VBP released results. 60 kinds of drugs won the bidding successfully, with price reduction of 48% on average. We analyzed its impact on companies. 
The newly issued document about the payment management measures for new technology out of CHS-DRG payment scope is a solid encouragement to innovation and an important policy reform signal.
The national centralized procurement of orthopedic spine consumables has officially started, which is beneficial to those leading companies with complete product line.


China Healthcare Weekly (July.15)-7th VBP, Policy Correction Signs, Orthopedic Spine Consumables VBP

<ul>
<li>With only one change expected in September using a 12 month minimum listing history, we expect the index committee to continue using a 6 month minimum listing history.</li>
<li>That will see the maximum of 5 changes that are permitted at a single rebalance resulting in a one-way turnover just shy of 5%.</li>
<li>Over the last few rebalances, the adds have outperformed the deletes post the end of the review period. That's expected given passive trackers need to buy/sell a lot of stock.</li>
</ul>


With only one change expected in September using a 12 month minimum listing history, we expect the index committee to continue using a 6 month minimum listing history.
That will see the maximum of 5 changes that are permitted at a single rebalance resulting in a one-way turnover just shy of 5%.
Over the last few rebalances, the adds have outperformed the deletes post the end of the review period. That's expected given passive trackers need to buy/sell a lot of stock.


STAR50 Index Rebalance Preview (Sep): Change Is the Only Constant

<ul>
<li>The index committee has continued to use a 6 month minimum listing history leading to five changes to the <a href="https://www.smartkarma.com/entities/sse-science-and-technology-innovation-board-50-index" target="_blank" data-smartkarma-citation="entities:29279:1" rel="noopener">SSE STAR50 (STAR50 INDEX)</a> in June.</li>
<li>One way turnover is estimated at 8.56% and will result in a one-way trade of CNY 3,496m. Passive trackers will need to trade between 2-6 days ADV on the adds/deletes.</li>
<li>The inclusions have outperformed the deletions and the CSI500 Index since the end of the review period with all inclusions moving higher over the period.</li>
</ul>


The index committee has continued to use a 6 month minimum listing history leading to five changes to the SSE STAR50 (STAR50 INDEX) in June.
One way turnover is estimated at 8.56% and will result in a one-way trade of CNY 3,496m. Passive trackers will need to trade between 2-6 days ADV on the adds/deletes.
The inclusions have outperformed the deletions and the CSI500 Index since the end of the review period with all inclusions moving higher over the period.


STAR50 Index Rebalance: Dear Index Committee...

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.

Shanghai Tofflon Science and Technology Company Limited develops, designs, produces and markets pharmaceutical freeze dryer and related systems. The Company's main products include in-place sterilisation, in-place lyophilization cleaners, laboratory freeze dryers, production freeze dryers, liquid nitrogen freeze dryers and freeze drying systems and equipments.

Shinva Medical Instrument Co., Ltd. manufactures and markets medical instruments and equipment.  The Company's products include sterilization equipment, radiation diagnosis and radiotherapy equipment, chemical indication products, and medical environmental protection equipment.

Double Medical Technology Inc. operates as an orthopedic devices manufacturing company. The Company produces and sells physical therapy equipment, orthopedic surgical instruments, injection puncture, and other products. Double Medical Technology markets its products throughout China.

Blue Sail Medical Co., Ltd. manufactures and sells PVC gloves and other plastic products. The company also engages in the sale of  nitrile gloves, latex gloves,  paper pulp molding products, and a range of medical equipments.

Lifetech Scientific Corporation develops, manufactures and markets minimally invasive interventional medical devices for cardiovascular and peripheral vascular diseases and disorders.  The Company produces congenital heart defect occluders, vena cava filters, stent grafts, balloon catheters, and vascular plugs.

Edan Instruments Inc develops, produces and sells medical electronic equipments.  The Company's main products are fetal dopplers, electrocardiographs, fetal monitors and ultrasound scanners.

AK Medical Holdings Limited manufactures medical devices. The Company produces and sells orthopedic implants, spinal interbody cages, artificial vertebral bodies, and other products. AK Medical Holdings markets its products throughout Hong Kong.

Dirui Industrial Company Limited develops, manufactures and sells medical testing equipment and corollary reagents. The Company's main products are analyzers used in the research of bodily fluid, biochemical substances, and hematology.

Guangzhou Wondfo Biotech Co.,Ltd. was founded in 1992. The company's line of business includes manufacturing of medical diagnostic tests.  Guangzhou Wondfo Biotech serves customers around the world.

Genertec Universal Medical Group Company Limited provides healthcare services. The Company offers medical financing, hospital investment and management, digitization, and clinical department upgrade advisory services. Genertec Universal Medical Group serves customers in Hong Kong.

Artivion Inc.(Artivion) is a medical device company focused on developing simple, elegant solutions that address cardiac and vascular surgeons' most difficult challenges in treating patients with aortic disease. The company's major products include:aortic stents, stent grafts, prosthetic heart valves, cyropreserved cardiac and vascular allografts, and surgical sealants.

AtriCure, Inc. develops, manufactures, and sells surgical devices designed to create precise lesions in soft tissues.  The Company's bipolar ablation system is used by cardiothoracic surgeons as a standard treatment alternative to create lesions in heart tissue to block the abnormal electrical impulses that cause atrial fibrillation.

Avanos Medical, Inc. operates as a medical technology company. The Company offers infection prevention, surgical, respiratory, digestive health, and pain management solutions. Avanos Medical serves healthcare sector worldwide.

Pegavision Corp is a result of a joint venture by Pegatron Corp and Kinsus Corp. The Company manufactures and sells soft contact lenses and other ophthalmic medical devices. Pegavision operates in Taiwan.

FUKUDA DENSHI CO., LTD. manufactures and wholesales electronic equipment for medical use.  The Company's products include electrocardiograph, phonocardiogram, ultrasonic diagnosis systems, physical condition monitoring systems, pacemakers, and respirators.

Paramount Bed Holdings Company Ltd. operates as a holding company. The Company, through its subsidiaries, designs and manufactures hospital, medical, electric, motorized, and orthopedic beds.

Draegerwerk AG & Company KGAA manufactures medical, safety, and aerospace equipment. The Company produces ventilators, monitoring equipment, transport incubators, anesthesia machines, surgical lights, ward equipment, home care equipment, systems for safe breathing in industry, mining and fire fighting, and airplane crew and passenger oxygen systems.

Pulse Biosciences, Inc. operates as a development stage medical device company. The Company offers a local and drug-free technology that utilizes nanosecond pulsed electric fields to induce cell signaling and the activation of cellular pathways in tissue.

Arjo AB develops, manufactures, and markets medical equipment for elderly and disabled patients. The Company offers medical beds, flusher disinfectors, prevention pumps, hygiene lifts, and shower systems. Arjo markets its products worldwide.

Shandong Weigao Orthopaedic Device Company Limited produces and sells medical devices. The Company manufactures and sells orthopedic implants and other products. Shandong Weigao Orthopaedic Device markets its products throughout China.

Shandong Weigao Orthopaedic De (688161 CH)

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Shandong Weigao Orthopaedic De (688161 CH)

Shandong Weigao Orthopaedic - 2022 Is the Real Test. Short-Term Performance Pressure Is Inevitable

All of Weigao’s three major businesses are included in centralized procurement, which will have a significant impact on performance this year....

Xinyao (Criss) Wang

STAR50 Index Rebalance Preview (Sep): Adds Outperforming the Deletes

There could be 5 changes if the index committee continues using a 6 month minimum listing history. The adds have outperformed the deletes over the...

Brian Freitas

China Healthcare Weekly (July.15)-7th VBP, Policy Correction Signs, Orthopedic Spine Consumables VBP

The 7th National VBP released results. New technology payment management measures out of CHS-DRG scope is a policy correction signal.Orthopedic...

Xinyao (Criss) Wang

STAR50 Index Rebalance Preview (Sep): Change Is the Only Constant

We expect the index committee to continue using a 6 month minimum listing history and that will lead to 5 changes in September. Buying the adds and...

Brian Freitas

STAR50 Index Rebalance: Dear Index Committee...

There are 5 changes to the STAR50 Index in June as the index committee continues to use a 6 month minimum listing history. The adds have...

Brian Freitas

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