Pan-Asia Index Flows & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Pan-Asia Index Flows & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Event-Driven

CSPC Innovation Pharmaceutical-A / Event-Driven

<ul>
<li>The ChiNext Index represents the performance of the 100 largest and most liquid A-share stocks listed on the ChiNext Market of the Shenzhen Stock Exchange.</li>
<li>The ChiNext 50 index is a <em>subset</em> of the ChiNext Index and it consists of the top 50 names in the ChiNext index with the highest daily average turnover.</li>
<li>In this insight, we take a look at the names leading the race to become ADDs and DELs in the June 2024 index rebal event.</li>
</ul>


The ChiNext Index represents the performance of the 100 largest and most liquid A-share stocks listed on the ChiNext Market of the Shenzhen Stock Exchange.
The ChiNext 50 index is a subset of the ChiNext Index and it consists of the top 50 names in the ChiNext index with the highest daily average turnover.
In this insight, we take a look at the names leading the race to become ADDs and DELs in the June 2024 index rebal event.


Quiddity Leaderboard ChiNext & ChiNext 50 Jun 24: US$313mn One-Way, Four Names with Double-Impacts

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

<ul>
<li>The review period for the <a href="https://www.smartkarma.com/entities/nifty-index" target="_blank" data-smartkarma-citation="entities:23617:1" rel="noopener">NIFTY</a> family of indices, <a href="https://www.smartkarma.com/entities/nikkei-225" target="_blank" data-smartkarma-citation="entities:22909:1" rel="noopener">Nikkei 225</a>, <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">STAR50</a>, the KRX New Deal Index and a global index ends on 31 January.</li>
<li>The January rebalance of the IDX30 and LQ45 indices will be implemented at the close of trading on 31 January.</li>
<li>There have been huge inflows into the <a href="https://www.smartkarma.com/entities/shanghai-shenzhen-csi-300-inde" target="_blank" data-smartkarma-citation="entities:22906:1" rel="noopener">CSI 300 Index</a> ETFs for another week. This will increase the impact on the index changes at the next rebalance.</li>
</ul>


The review period for the NIFTY family of indices, Nikkei 225, STAR50, the KRX New Deal Index and a global index ends on 31 January.
The January rebalance of the IDX30 and LQ45 indices will be implemented at the close of trading on 31 January.
There have been huge inflows into the CSI 300 Index ETFs for another week. This will increase the impact on the index changes at the next rebalance.


Index Rebalance & ETF Flow Recap: CSI300, CSI500, SSE50, ChiNext, KOSPI200, Renesas, IDX30/LQ45

<ul>
<li>Nearly halfway through the review period, we forecast 7 changes for the <a href="https://www.smartkarma.com/entities/chinext-index" target="_blank" data-smartkarma-citation="entities:25483:1" rel="noopener">ChiNext Index (SZ399006 INDEX EQUITY)</a> and 5 changes for the ChiNext 50 Index in June.</li>
<li>Some of the potential changes will also have passive flows from the <a href="https://www.smartkarma.com/entities/csi-smallcap-500-index-shang" target="_blank" data-smartkarma-citation="entities:35347:1" rel="noopener">CSI 500 Index</a> trackers at the same time as the <a href="https://www.smartkarma.com/entities/chinext-index" target="_blank" data-smartkarma-citation="entities:25483:1" rel="noopener">ChiNext Index</a> rebalance.</li>
<li>The potential inclusions and deletions have slipped over the last couple of months along with the <a href="https://www.smartkarma.com/entities/chinext-index" target="_blank" data-smartkarma-citation="entities:25483:1" rel="noopener">ChiNext Index</a>, but the potential inclusions have outperformed as the deletions have dropped more.</li>
</ul>


Nearly halfway through the review period, we forecast 7 changes for the ChiNext Index (SZ399006 INDEX EQUITY) and 5 changes for the ChiNext 50 Index in June.
Some of the potential changes will also have passive flows from the CSI 500 Index trackers at the same time as the ChiNext Index rebalance.
The potential inclusions and deletions have slipped over the last couple of months along with the ChiNext Index, but the potential inclusions have outperformed as the deletions have dropped more.


ChiNext/​​​ChiNext50 Index Rebalance Preview: Overlapping Names Increases Flow

<ul>
<li>The ChiNext Index represents the performance of the 100 largest and most liquid A-share stocks listed on the ChiNext Market of the Shenzhen Stock Exchange.</li>
<li>The ChiNext 50 index is a subset of the ChiNext Index and it consists of the top 50 names in the ChiNext index with the highest daily average turnover.</li>
<li>In this insight, we take a look at the names leading the race to become ADDs and DELs in the June 2024 index rebal event.</li>
</ul>

Quiddity Leaderboard ChiNext & ChiNext 50 Jun 24: Double Impacts for Some Names

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.

Equity Capital Markets

Zhaoke Ophthalmology Pharmaceutical / Equity Capital Markets

<div>
<p>Founded by Lee's Pharma, Zhaoke offers a comprehensive ophthalmic product pipeline. The company is looking to raise up to USD 200m via a Hong Kong listing.</p>
</div>
<div>
<p>In our previous note, we looked at the company's two products, namely CsA gel and ZKY001. We are of the view that CsA gel does provide advantage over Restasis, the top selling eye gel for the DED, but the forecast of market growth is too aggressive for the DED market. For another core product ZKY001, while there is no data on the efficacy from Phase I clinical trial, we do note that the licensing parnter's product which uses the same technology but on a different indication, did not meet the primary end point in Phase III clinical trial according to a recent announcement, which raises our concern on the potential of the product candidate. In addition, the company also had a long list of generic referencing top selling glaucoma drugs. The company has an OK management team but strong backing of institutional investors.  We have also provided a preliminary valuation for its core products. </p>
<p>We did research on its key competitor in the CsA segment, namely Sinqi, which is listed on the A-share market with a ticker 300573 CH. Sinqi has recently planned to place shares to fund the expansion of the manufacturing facility for the CsA product which was approved by the NMPA in June 2020. From its disclosure, we can see that the CsA market could be aggressively overstated by the third-party consultant Frost &amp; Sullivan who provided the market forecast for the company's prospectus.</p>
</div>
<div>
<h2>Our previous coverage on Zhaoke Ophthalmic</h2>
</div>
<div>
<ul style="list-style-type: disc;">
<li><a href="https://www.smartkarma.com/insights/zhaoke-ophthalmic-could-be-over-valued-for-pre-ipo-round" target="_blank" rel="noopener">Zhaoke Ophthalmic (兆科眼科): Could Be Over-Valued for Pre-IPO Round</a></li>
<li><a href="https://www.smartkarma.com/insights/zhaoke-ophthalmic-pre-ipo-thoughts-on-valuation" target="_blank" rel="noopener">Zhaoke Ophthalmic (兆科眼科) Pre-IPO: Thoughts on Valuation</a></li>
</ul>
</div>


Founded by Lee's Pharma, Zhaoke offers a comprehensive ophthalmic product pipeline. The company is looking to raise up to USD 200m via a Hong Kong listing.


In our previous note, we looked at the company's two products, namely CsA gel and ZKY001. We are of the view that CsA gel does provide advantage over Restasis, the top selling eye gel for the DED, but the forecast of market growth is too aggressive for the DED market. For another core product ZKY001, while there is no data on the efficacy from Phase I clinical trial, we do note that the licensing parnter's product which uses the same technology but on a different indication, did not meet the primary end point in Phase III clinical trial according to a recent announcement, which raises our concern on the potential of the product candidate. In addition, the company also had a long list of generic referencing top selling glaucoma drugs. The company has an OK management team but strong backing of institutional investors.  We have also provided a preliminary valuation for its core products. 
We did research on its key competitor in the CsA segment, namely Sinqi, which is listed on the A-share market with a ticker 300573 CH. Sinqi has recently planned to place shares to fund the expansion of the manufacturing facility for the CsA product which was approved by the NMPA in June 2020. From its disclosure, we can see that the CsA market could be aggressively overstated by the third-party consultant Frost &amp; Sullivan who provided the market forecast for the company's prospectus.


Our previous coverage on Zhaoke Ophthalmic



Zhaoke Ophthalmic (兆科眼科): Could Be Over-Valued for Pre-IPO Round
Zhaoke Ophthalmic (兆科眼科) Pre-IPO: Thoughts on Valuation



Zhaoke Ophthalmic (兆科眼科) Pre-IPO: Beware of Aggressive "Guidance"

China

Jiangsu Nhwa Pharmaceutical Co Ltd integrates science, industry and trade into one Group.  The Group engages in producing medications for central nervous system and preparation of raw materials.

Jiangsu Nhwa Pharmaceutical Co., (002262 CH)

Tasly Pharmaceutical Group Co.,Ltd. manufactures drug products. The Company develops and sells traditional Chinese medicine, biological medicine, chemical medicine, and other related products. Tasly Pharmaceutical Group markets its products throughout China.

Kangmei Pharmaceutical Co., Ltd. develops, produces, and sells medicines that are used for the treatment of high blood pressure and cold.  The Company also pr oduces antibiotic drugs and health care products. Kangmei also sells other manufacturers' medical products through its wholesale and retail chain.

Kangmei Pharmaceutical Co Ltd (600518 CH)

Humanwell Healthcare (Group) Co., Ltd specializes in the R&D and sales of pharmaceuticals, biotechnology, and chemical products, in addition to the import and export of goods and technology. The company, through its subsidiaries, also operate in real estate development and sales, industrial investment and management, and education projects.

Shijiangzhuang Yiling Pharmaceutical Co Ltd develops, produces and sells Chinese patent medicine. The Company's major products include Tongxinluo capsules, Shensongyangxin capsules, Lotus Qingwen capsules, Qili Qiangxin capsules and Bazi Bushen capsules.

Shijiazhuang Yiling Pharmaceutical (002603 CH)

China Resources Double-Crane Pharmaceutical Co., Ltd. develops, manufactures and markets a variety of medical products.  The Company's products include anti-influenza,  antihypertensives, and antibiotics.

China Resources Dubl Crne Phrmctl (600062 CH)

Joincare Pharmaceutical Group Industry Co., Ltd. develops drug products. The Company manufactures and sells Chinese patent medicine, detection reagent, raw material medicine, chemical preparation, and other products. Joincare Pharmaceutical Group Industry also produces health care products.

Joincare Pharmaceutical Group Ind Co. (600380 CH)

Zhenxing Biopharmaceutical and Chemical Co., Ltd manufactures and distributes biopharmaceutical and fine chemical products.  The Company also produces wheel forklift trucks and other accessories.

Zhenxing Biopharmaceutical & Chemicl (000403 CH)

Livzon Pharmaceutical Group Inc. develops and manufactures pharmaceutical products, including chemical medicines, bio-chemical medicines, biological engineering medicines, chemical compound crude medicines, antibiotics, micro-ecological preparations, patent Chinese medicines, and diagnosis reagents etc.

Zhejiang Huahai Pharmaceutical Co., Ltd. manufactures and retails pharmaceutical products and medical raw materials. The Company exports its products to many parts of the world.

Zhejiang Huahai Pharmaceutical Co, Ltd. (600521 CH)

Perrigo Company PLC is a global healthcare supplier that develops, manufactures, and distributes OTC and generic prescription pharmaceuticals, infant formulas, nutritional products, active pharmaceutical ingredients and pharmaceutical and medical diagnostic products. The Company's primary markets and locations of manufacturing and logistics operations are the US, UK, Mexico, and Australia.

Bausch Health Companies Inc. discovers and distributes pharmaceutical. The Company develops drugs for unmet medical needs in central nervous system disorders, eye health, and gastrointestinal diseases, as well as contact lenses, intraocular lenses, ophthalmic surgical equipment, and aesthetic devices. Bausch Health Companies serves customers worldwide.

Celltrion Pharm Inc. manufactures and sells pharmaceutical products.  The Company products inclue drugs for for hepatic diseases, digestion, diabetes, cold and fever, anti-inflammatory, and veterinary medical products.  Celltrion also provides pharmaceutical raw materials.

Sam Chun Dang Pharm Co., Ltd. (SCD) develops, manufactures, and markets medicines for human health care.  The Company specializes in producing medical treatment drugs as well as diagnostic drugs.  SCD Pharm's products include antibiotics, respiratory stimulants, pneumonia diagnosis devices, and many others.

J.B. Chemicals & Pharmaceuticals Ltd. manufactures pharmaceuticals, chemicals and agro-based products. The Group's products include metrogyl, rantac (a ranitidine-based formula), and nicardia, a cardiac care medicine. The Company has an agreement with Justesa Imagen, to manufacture and market diagnostics under the "Trazograf" brand name.

J.B. Chemicals & Pharmaceuticals (JBCP IN)

Corcept Therapeutics Inc. is a pharmaceutical company that discovers and develops drugs for the treatment of severe metabolic and psychiatric disorders. The Company's lead product modulates the effect of cortisol, also known as the "stress hormone", by selectively blocking the binding of cortisol to one of its two known receptors, the GR-II receptor.

SANTEN PHARMACEUTICAL CO., LTD. produces and sells ophthalmic medicine.  The Company manufactures a variety of products including eye drops and ointments. Santen Pharmaceutical also imports lenses and tools and equipment used by optometrists and produces anti-rheumatic drugs.

Ajanta Pharma Limited is a pharmaceutical company involved in the areas of product research, manufacturing, and marketing. The Company's manufacturing capabilities include segments such as antiretrovirals, antimalarials, cardiovascular, dermatology, and ophthalmology. The Company also markets over the counter products that include some nature-based remedies.

Alembic Pharmaceuticals Ltd. manufactures pharmaceuticals.  The Company produces active pharmaceutical ingredients, bulk pharmaceutical chemicals, formulations, herbal nutraceuticals, and veterinary products.

Hanmi Pharm. Company Ltd. produces pharmaceutical products, including antibiotics, vitamins, and intestinal tonics.  The Company also provides beverages and processes soft capsules for other pharmaceutical firms.

Shenyang Xingqi Pharmaceutical Co., Ltd. is a pharmaceutical company. The Company researches, produces, and distributes ophthalmic medicines including anti-bacterial products, allergy medicines, cataract preventions, and glaucoma treatments.

Shenyang Xingqi Pharmaceutical (300573 CH)

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Shenyang Xingqi Pharmaceutical (300573 CH)

Quiddity Leaderboard ChiNext & ChiNext 50 Jun 24: US$313mn One-Way, Four Names with Double-Impacts

I see five ADDs/DELs for the ChiNext index and four ADDs/DELs for the ChiNext 50 index. A couple of expected ADDs and a couple of expected DELs...

Janaghan Jeyakumar, CFA

Index Rebalance & ETF Flow Recap: CSI300, CSI500, SSE50, ChiNext, KOSPI200, Renesas, IDX30/LQ45

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

Brian Freitas

ChiNext/ChiNext50 Index Rebalance Preview: Overlapping Names Increases Flow

There could be 7 changes for the ChiNext and 5 changes for the ChiNext50. Round trip trade is estimated at US$636m. There is overlap between the...

Brian Freitas

Quiddity Leaderboard ChiNext & ChiNext 50 Jun 24: Double Impacts for Some Names

I see four ADDs/DELs for the ChiNext index and three ADDs/DELs for the ChiNext 50 index. Collectively, I expect these changes to cause US$259mn one...

Janaghan Jeyakumar, CFA

Zhaoke Ophthalmic (兆科眼科) Pre-IPO: Beware of Aggressive "Guidance"

We did research on its key competitor in the CsA segment and think that Frost & Sullivan grossly underestimates the competition and overestimates...

Ke Yan, CFA, FRM

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Quiddity Leaderboard ChiNext & ChiNext 50 Jun 24: US$313mn One-Way, Four Names with Double-Impacts

I see five ADDs/DELs for the ChiNext index and four ADDs/DELs for the ChiNext 50 index. A couple of expected ADDs and a couple of expected DELs...

Janaghan Jeyakumar, CFA

Index Rebalance & ETF Flow Recap: CSI300, CSI500, SSE50, ChiNext, KOSPI200, Renesas, IDX30/LQ45

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

Brian Freitas

ChiNext/​​​ChiNext50 Index Rebalance Preview: Overlapping Names Increases Flow

There could be 7 changes for the ChiNext and 5 changes for the ChiNext50. Round trip trade is estimated at US$636m. There is overlap between the...

Brian Freitas

Quiddity Leaderboard ChiNext & ChiNext 50 Jun 24: Double Impacts for Some Names

I see four ADDs/DELs for the ChiNext index and three ADDs/DELs for the ChiNext 50 index. Collectively, I expect these changes to cause US$259mn one...

Janaghan Jeyakumar, CFA

Zhaoke Ophthalmic (兆科眼科) Pre-IPO: Beware of Aggressive "Guidance"

We did research on its key competitor in the CsA segment and think that Frost & Sullivan grossly underestimates the competition and overestimates...

Ke Yan, CFA, FRM

ChiNext/ChiNext50 Index Rebalance Preview: Overlapping Names Increases Flow