HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

<ul>
<li>The main logic of Micro-Tech’s performance growth is import substitution, but the Company is facing some challenges in the short term, such as centralized procurement, pandemic, inflation, etc.</li>
<li>Micro-Tech will face lower-than-expected performance growth in 2022. Since the whole series of products would be covered by centralized procurement, the valuation of Micro-Tech should be lower than Mindray.</li>
<li>However, there are possibilities for Micro-Tech to achieve a turnaround (with bottom-fishing opportunity) if it could make a breakthrough in internationalization and product innovation. We recommend investors follow Micro-Tech closely.</li>
</ul>


The main logic of Micro-Tech’s performance growth is import substitution, but the Company is facing some challenges in the short term, such as centralized procurement, pandemic, inflation, etc.
Micro-Tech will face lower-than-expected performance growth in 2022. Since the whole series of products would be covered by centralized procurement, the valuation of Micro-Tech should be lower than Mindray.
However, there are possibilities for Micro-Tech to achieve a turnaround (with bottom-fishing opportunity) if it could make a breakthrough in internationalization and product innovation. We recommend investors follow Micro-Tech closely.


Micro-Tech Nanjing (688029.CH) - Potential for Reversals Despite Short-Term Pressure on Performance

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.

Quantitative Analysis

<ul>
<li>We analyze the weekly Shanghai/Shenzhen northbound Connect flows with our data engine.</li>
<li>Outflows from consumer discretionary and consumer staple were offset by the inflows into material and energy.</li>
<li>We highlight inflows into Yunnan Energy New Material, Zhejiang Huayou Cobalt, BOE Technology and etc.</li>
</ul>


We analyze the weekly Shanghai/Shenzhen northbound Connect flows with our data engine.
Outflows from consumer discretionary and consumer staple were offset by the inflows into material and energy.
We highlight inflows into Yunnan Energy New Material, Zhejiang Huayou Cobalt, BOE Technology and etc.


Northbound Flows: Yunnan Energy New Material, Zhejiang Huayou Cobalt, BOE Technology

<ul>
<li>We analyze the weekly Shanghai/Shenzhen northbound Connect flows with our data engine.</li>
<li>Banks led the outflow as offshore investors are concerned about the risk from property sectors.</li>
<li>We highlight inflows into Mindray, Tianjin Zhonghuan, BYD and outflows from banks.</li>
</ul>


We analyze the weekly Shanghai/Shenzhen northbound Connect flows with our data engine.
Banks led the outflow as offshore investors are concerned about the risk from property sectors.
We highlight inflows into Mindray, Tianjin Zhonghuan, BYD and outflows from banks.


Northbound Flows: Mindray, Tianjin Zhonghuan, BYD, Banks

Thematic (Sector/Industry)

<ul>
<li>DRGs will become the main form of medical insurance payment, which will bring huge impact on all parties (hospitals, physicians, patients, companies) and fundamentally change the existing medical environment.</li>
<li>DRGs would force hospitals/doctors to cure patients within specified time and amount of cost, which would promote the improvement of technology with differentiated innovation that truly drives clinical benefits.</li>
<li>Overall, investors are advised to pay attention to related opportunities but also prepare for the potential risks in advance.</li>
</ul>


DRGs will become the main form of medical insurance payment, which will bring huge impact on all parties (hospitals, physicians, patients, companies) and fundamentally change the existing medical environment.
DRGs would force hospitals/doctors to cure patients within specified time and amount of cost, which would promote the improvement of technology with differentiated innovation that truly drives clinical benefits.
Overall, investors are advised to pay attention to related opportunities but also prepare for the potential risks in advance.


The Impact of DRGs Policy on China Medical System

Shenzhen Mindray Bio-Medical Electronics / Equity Bottom-Up

<ul>
<li>In 2021/22Q1, Mindray’s 20%+ growth rate is not easy in this difficult/complicated environment, but the market hopes to see stronger data and a fresh logic of growth to restore confidence.</li>
<li>After China's “new infrastructure”  projects finish, how to maintain its 20%+ growth could be a challenge in the long term if Mindray couldn’t make breakthrough in internationalization or innovation.</li>
<li>However, Mindray is still a “safe play”. Its current PE/TTM is also more reasonable, but definitely not undervalued. It would be much better to long Mindray at a lower valuation.</li>
</ul>


In 2021/22Q1, Mindray’s 20%+ growth rate is not easy in this difficult/complicated environment, but the market hopes to see stronger data and a fresh logic of growth to restore confidence.
After China's “new infrastructure”  projects finish, how to maintain its 20%+ growth could be a challenge in the long term if Mindray couldn’t make breakthrough in internationalization or innovation.
However, Mindray is still a “safe play”. Its current PE/TTM is also more reasonable, but definitely not undervalued. It would be much better to long Mindray at a lower valuation.


Shenzhen Mindray Bio-Medical Electronics (300760.CH) - Still a “Safe Play” Despite Growth Slowdown

China

Shenzhen Mindray Bio-Medical Electronics Co., Ltd. manufactures and distributes medical equipment. The Company produces life information supporting, in vitro diagnostic, and medical imaging equipment equipment. Shenzhen Mindray Bio-Medical Electronics also produces supporting reagents.

Shenzhen Mindray Bio-Medical Electronics (300760 CH)

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Shenzhen Mindray Bio-Medical Electronics (300760 CH)

Micro-Tech Nanjing (688029.CH) - Potential for Reversals Despite Short-Term Pressure on Performance

Micro-Tech’s performance is under pressure due to centralized procurement, pandemic and inflation. But there is potential for future reversals with...

Xinyao (Criss) Wang

Northbound Flows: Yunnan Energy New Material, Zhejiang Huayou Cobalt, BOE Technology

Northbound connect recorded second week of outflows. We highlight inflows into Yunnan Energy New Material, Zhejiang Huayou Cobalt, BOE Technology...

Ke Yan, CFA, FRM

Northbound Flows: Mindray, Tianjin Zhonghuan, BYD, Banks

Northbound trade recorded $3.2bn outlfows last week. We highlight inflows into Shenzhen Mindray, Tianjin Zhonghuan, BYD and outflows from banks.

Ke Yan, CFA, FRM

The Impact of DRGs Policy on China Medical System

An important remaining piece of China healthcare reform is DRGs, which will fundamentally change the existing medical environment. Investors need...

Xinyao (Criss) Wang

Shenzhen Mindray Bio-Medical Electronics (300760.CH) - Still a “Safe Play” Despite Growth Slowdown

We analyzed Mindray's 2021/2022Q1 results.Despite growth slowdown, due to medical device industry characteristics and Mindray's strength, it's...

Xinyao (Criss) Wang

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