HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Event-Driven

<ul>
<li>The Cancellation Price of HK$24.60 per share is about 50% lower than the IPO price of HK$49.6 per share in 2019. So, those long-term investors would suffer big losses.</li>
<li>Henlius' share price has outperformed the index. If it remains listed, it’s able to continue to grow and provide long-term returns for shareholders. Reasonable Cancellation Price should be above HK$30/share.</li>
<li>As usual, Fosun doesn't consider the interests of long-term investors and shareholders. There would be some investors/shareholders vote against the privatization, but the returns for arbitrageurs is not bad.</li>
</ul>


The Cancellation Price of HK$24.60 per share is about 50% lower than the IPO price of HK$49.6 per share in 2019. So, those long-term investors would suffer big losses.
Henlius' share price has outperformed the index. If it remains listed, it’s able to continue to grow and provide long-term returns for shareholders. Reasonable Cancellation Price should be above HK$30/share.
As usual, Fosun doesn't consider the interests of long-term investors and shareholders. There would be some investors/shareholders vote against the privatization, but the returns for arbitrageurs is not bad.


Shanghai Henlius Biotech Privatization (2696.HK) - The Offer Price Is Disappointing

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>
<a href="https://www.smartkarma.com/entities/shanghai-fosun-pharmaceutical-group" target="_blank" data-smartkarma-citation="entities:8045:1" rel="noopener">Shanghai Fosun Pharmaceutical (2196 HK)</a> has made a<a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2024/0624/2024062401217.pdf" target="_blank" rel="noopener"> HK$24.60/share Offer</a> (best &amp; final), in cash, for H-shares not held in <a href="https://www.smartkarma.com/entities/shanghai-henlius-biotech-inc" target="_blank" data-smartkarma-citation="entities:27888:1" rel="noopener">Shanghai Henlius Biotech (2696 HK)</a>. A scrip alternative may be afforded. </li>
<li>As Henlius is PRC-incorporated, this Offer is structured as a Merger by Absorption, involving a Scheme-like vote for independent H-shareholders. There is no tendering condition.
</li>
<li>Pre-Conditions include NDRC, MoC, and SAFE. The Long Stop date to secure these conditions is 30th April 2025. That's way too conservative. This should be wrapped up around mid 4Q24.</li>
</ul>



Shanghai Fosun Pharmaceutical (2196 HK) has made a HK$24.60/share Offer (best &amp; final), in cash, for H-shares not held in Shanghai Henlius Biotech (2696 HK). A scrip alternative may be afforded. 
As Henlius is PRC-incorporated, this Offer is structured as a Merger by Absorption, involving a Scheme-like vote for independent H-shareholders. There is no tendering condition.

Pre-Conditions include NDRC, MoC, and SAFE. The Long Stop date to secure these conditions is 30th April 2025. That's way too conservative. This should be wrapped up around mid 4Q24.


Henlius Biotech (2696 HK): Fosun Pharma's "Fair" Offer

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/shanghai-henlius-biotech-inc" target="_blank" data-smartkarma-citation="entities:27888:1" rel="noopener">Shanghai Henlius Biotech (2696 HK)</a> disclosed a pre-conditional privatisation offer by <a href="https://www.smartkarma.com/entities/shanghai-fosun-pharmaceutical-group" target="_blank" data-smartkarma-citation="entities:8045:1" rel="noopener">Shanghai Fosun Pharmaceutical (Group) (2196 HK)</a> at HK$24.60, a 36.7% premium to the undisturbed price. The offer price is final. </li>
<li>The key condition is approval by at least 75% of independent H Shareholders (&lt;10% of all independent H Shareholders rejection). There is no minimum acceptance condition. </li>
<li>Long term investors will be unimpressed as the offer is half the HK$49.60 IPO price. However, shareholders with blocking stakes should be supportive partly because of the share alternative option.</li>
</ul>



Shanghai Henlius Biotech (2696 HK) disclosed a pre-conditional privatisation offer by Shanghai Fosun Pharmaceutical (Group) (2196 HK) at HK$24.60, a 36.7% premium to the undisturbed price. The offer price is final. 
The key condition is approval by at least 75% of independent H Shareholders (&lt;10% of all independent H Shareholders rejection). There is no minimum acceptance condition. 
Long term investors will be unimpressed as the offer is half the HK$49.60 IPO price. However, shareholders with blocking stakes should be supportive partly because of the share alternative option.


Henlius (2696 HK): Fosun Pharma’s HK$24.60 Offer at Around Half the IPO Price

Blue Lotus Research Institute

Andy Fu

China growth and global non-US Internet equities

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

Thematic (Sector/Industry)

<ul>
<li>As Chinese population ages, healthcare is a major source of consumption. Yet we are the most pessimistic for it to become a pillar of consumption;</li>
<li>Low healthcare spending in China is achieved by underpaying doctors and nurses. Enhancing life quality, instead of only curing disease, can meaningfully improve consumption; </li>
<li>However, consumer healthcare begets a larger and more common economic phenomenon, which is underpricing. The issue of underpricing stems from low compliance cost, in our opinion.</li>
</ul>


As Chinese population ages, healthcare is a major source of consumption. Yet we are the most pessimistic for it to become a pillar of consumption;
Low healthcare spending in China is achieved by underpaying doctors and nurses. Enhancing life quality, instead of only curing disease, can meaningfully improve consumption; 
However, consumer healthcare begets a larger and more common economic phenomenon, which is underpricing. The issue of underpricing stems from low compliance cost, in our opinion.


How to Stimulate China's Consumption, Part III

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

China

Shanghai Fosun Pharmaceutical (Group) Co., Ltd. is a pharmaceutical company. Through its subsidiaries, the Company manufactures genetic medicines, Chinese traditional medicines, diagnostic products, and medical instruments, provides technology, marketing, and advertising services, as well as invests in import and export trading.

Shanghai Fosun Pharmaceutical (Group) (2196 HK)

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Shanghai Fosun Pharmaceutical (Group) (2196 HK)

Shanghai Henlius Biotech Privatization (2696.HK) - The Offer Price Is Disappointing

The Cancellation Price is 50% lower than Henlius's IPO price, causing losses for long-term players. Remaining public will provide good returns....

Xinyao (Criss) Wang

Henlius Biotech (2696 HK): Fosun Pharma's "Fair" Offer

I'd be buying Henlius up to around $23.30 or a gross/annualised spread of 5%/15%, assuming early mid-November completion.

David Blennerhassett

Henlius (2696 HK): Fosun Pharma’s HK$24.60 Offer at Around Half the IPO Price

Long-term investors will be unimpressed as the offer is half the HK$49.60 IPO price. However, shareholders with blocking stakes should be...

Arun George

How to Stimulate China's Consumption, Part III

China's healthcare system is supply efficient, which leads to underpaying the healthcare professionals' service but overmedicates. To change,...

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

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Shanghai Henlius Biotech Privatization (2696.HK) - The Offer Price Is Disappointing

The ​Cancellation Price is 50% lower than Henlius's IPO price, causing losses for long-term players. Remaining public will provide good returns....

Xinyao (Criss) Wang

Henlius Biotech (2696 HK): Fosun Pharma's "Fair" Offer

I'd be buying Henlius up to around $23.30 or a gross/annualised spread of 5%/15%, assuming early mid-November completion.

David Blennerhassett

Henlius (2696 HK): Fosun Pharma’s HK$24.60 Offer at Around Half the IPO Price

Long-term investors will be unimpressed as the offer is half the HK$49.60 IPO price. However, shareholders with blocking stakes should be...

Arun George

How to Stimulate China's Consumption, Part III

China's healthcare system is supply efficient, which leads to underpaying the healthcare professionals' service but overmedicates. To change,...

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

The Cancellation Price is 50% lower than Henlius's IPO price, causing losses for long-term players. Remaining public will provide good returns....

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