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.

Event-Driven

China Traditional Chinese Medicine / Event-Driven

<ul>
<li>On no news, <a href="https://www.smartkarma.com/entities/china-traditional-chinese-medicine" target="_blank" data-smartkarma-citation="entities:351:1" rel="noopener">China Traditional Chinese Medicine (570 HK)</a> shares declined 12% today. We spoke to several readers to gauge the likely reasons for the fall.</li>
<li>The speculation is that the fall could be due to forced liquidation, Sinopharm’s new Chairman pulling the offer, the consortium unravelling, SAMR issues and Ping An blocking the deal. </li>
<li>There is clearly news behind today’s fall, but none of the above rumours seem credible. The risk/reward is attractive as the upside (25% spread) outweighs the downside (18% to undisturbed).</li>
</ul>


On no news, China Traditional Chinese Medicine (570 HK) shares declined 12% today. We spoke to several readers to gauge the likely reasons for the fall.
The speculation is that the fall could be due to forced liquidation, Sinopharm’s new Chairman pulling the offer, the consortium unravelling, SAMR issues and Ping An blocking the deal. 
There is clearly news behind today’s fall, but none of the above rumours seem credible. The risk/reward is attractive as the upside (25% spread) outweighs the downside (18% to undisturbed).


China Traditional Chinese Medicine (570 HK): Something Is Brewing, but Nobody Knows Quite What

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

<ul>
<li>Retail pharmacies experienced performance decline in April and May. Due to negative policies, retail pharmacies will experience industry clearance. Therefore, we do not recommend investors to bottom-fish related stocks now.</li>
<li>There is a logic to biotech's performance from 2023 to present.The clearer the path of sustainable development, the better the stock price performance. They can be divided into three types.</li>
<li>YSB faces big risks and the outlook is not optimistic. If the final valuation of the Company is lower than <a href="https://www.smartkarma.com/entities/china-resources-pharmaceutical-group" target="_blank" data-smartkarma-citation="entities:22928:1" rel="noopener">China Resources Pharmaceutical</a> and <a href="https://www.smartkarma.com/entities/shanghai-pharmaceuticals-holding" target="_blank" data-smartkarma-citation="entities:228:1" rel="noopener">Shanghai Pharmaceuticals</a>, we wouldn't be too surprised.</li>
</ul>


Retail pharmacies experienced performance decline in April and May. Due to negative policies, retail pharmacies will experience industry clearance. Therefore, we do not recommend investors to bottom-fish related stocks now.
There is a logic to biotech's performance from 2023 to present.The clearer the path of sustainable development, the better the stock price performance. They can be divided into three types.
YSB faces big risks and the outlook is not optimistic. If the final valuation of the Company is lower than China Resources Pharmaceutical and Shanghai Pharmaceuticals, we wouldn't be too surprised.


China Healthcare Weekly (Jun23)-Retail Pharmacy's Dilemma, Logic to Biotech's Stock Price,YSB's Risk

China Resources Pharmaceutical / Equity Bottom-Up

<ul>
<li>The NHSA issued a Notice on “improving the quality and expanding the scope of VBP”. The trend of full coverage of VBP of conventional drugs/consumables is determined.TCM is under pressure.</li>
<li>We analyzed the potential demand growth rate of the glove industry, which is already better than most cyclical stocks. Therefore, we see no need to remain pessimistic about this industry.</li>
<li>Holding platform companies have valuation discounts.HK$50-60 billion is reasonable market value for China Resources Pharmaceutical.Better to go long when share price is below HK$5 and then hold to receive dividends.</li>
</ul>


The NHSA issued a Notice on “improving the quality and expanding the scope of VBP”. The trend of full coverage of VBP of conventional drugs/consumables is determined.TCM is under pressure.
We analyzed the potential demand growth rate of the glove industry, which is already better than most cyclical stocks. Therefore, we see no need to remain pessimistic about this industry.
Holding platform companies have valuation discounts.HK$50-60 billion is reasonable market value for China Resources Pharmaceutical.Better to go long when share price is below HK$5 and then hold to receive dividends.


China Healthcare Weekly (May.26)-VBP Scope Expands, Optimistic About Glove Industry, China Resources

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>Post market close tomorrow, Hang Seng Indexes will announce the changes for the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hang Seng Index (HSI INDEX)</a> that will be implemented at the close on 7 June.</li>
<li>There were no constituent changes to the index in March. We highlight ten profitable and eligible stocks that could be added to the index in June.</li>
<li>Changes to the Hang Seng Industry Classification System (HSICS) could lead to inclusions for the Information Technology industry while there could also be inclusions for the underweighted Healthcare industry.</li>
</ul>


Post market close tomorrow, Hang Seng Indexes will announce the changes for the Hang Seng Index (HSI INDEX) that will be implemented at the close on 7 June.
There were no constituent changes to the index in March. We highlight ten profitable and eligible stocks that could be added to the index in June.
Changes to the Hang Seng Industry Classification System (HSICS) could lead to inclusions for the Information Technology industry while there could also be inclusions for the underweighted Healthcare industry.


Hang Seng Index (HSI) Rebalance Preview: Inclusion Candidates for June

China National Medicines A / Event-Driven

<ul>
<li>The "Entrusted Management Agreement" indicates that horizontal competition issue will be completely solved within three years.This could pave the way for a future merger between Guorui and <a href="https://www.smartkarma.com/entities/shanghai-shyndec-pharmaceutical-co-ltd" target="_blank" data-smartkarma-citation="entities:1952:1" rel="noopener">Shanghai Shyndec Pharmaceutical</a>. </li>
<li>The spin-off of Guorui won’t have material impact on China National Medicines Corporation (CNMC). After restructuring, CNMC will focus on “Beijing area pharmaceutical distribution + nationwide distribution of anesthesia/psychotropic drugs”. </li>
<li>Based on strong/stable fundamentals as well as the dominant position in anesthesia and psychotropic drug business, CNMC’s future growth potential is promising. We share our views on the Company’s valuation.</li>
</ul>


The "Entrusted Management Agreement" indicates that horizontal competition issue will be completely solved within three years.This could pave the way for a future merger between Guorui and Shanghai Shyndec Pharmaceutical. 
The spin-off of Guorui won’t have material impact on China National Medicines Corporation (CNMC). After restructuring, CNMC will focus on “Beijing area pharmaceutical distribution + nationwide distribution of anesthesia/psychotropic drugs”. 
Based on strong/stable fundamentals as well as the dominant position in anesthesia and psychotropic drug business, CNMC’s future growth potential is promising. We share our views on the Company’s valuation.


China National Medicines (600511.CH) - After Restructuring, Performance Growth Is Guaranteed

China

Shanghai Pharmaceuticals Holding Co., Ltd. manufactures, retails, and wholesales a variety of pharmaceuticals including biopharmaceuticals, chemical and Chinese traditional medicines, and healthcare products. The Company also invests in new medicine development and provides related services.

Shanghai Pharmaceuticals Holding (2607 HK)

Huadong Medicine Co., Ltd. wholesales and retails medicines, pharmaceutical preparations, biological products, and medical instruments.  Through its subsidiaries, the Company also manufactures antibiotic medicines and biochemical products.

WuXi Biologics (Cayman) Inc. is a leading open-access R&D capability and technology platform company serving the pharmaceutical, biotechnology, and medical device industries, with operations in China, U.S., and Iceland.  We provide a broad and integrated portfolio of laboratory and manufacturing services throughout the drug and medical device R&D process.  Our services are designed to help our global partners in shortening the cycle and lowering the cost of drug and medical device R&D through cost-effective and efficient solutions. 

Guangzhou Baiyunshan Pharmaceutical Holdings Co., Ltd. manufactures and sells Chinese patent medicine. The Company also wholesales, retails, imports, and exports Western and Chinese pharmaceutical products and various medical apparatus.

Guangzhou Baiyunshan Pharmaceu (600332 CH)

Topchoice Medical Investment Corporation provides dental and oral health care services.

China National Medicines Corp. Ltd. wholesales and retails chemical material medicines, western medicine preparations, biochemical medicines, biological products, and Chinese traditional medicines.  Through its subsidiaries, the Company also manufactures pharmaceuticals including injections, capsules, tablets, and other related products under the CNCM brand name.

Aier Eye Hospital Group Co., Ltd provides ophthalmological services.  The Company's services include ophthalmological diagnosis and treatments.

Tibet Rhodiola Pharmaceutical Holding Co. develops, manufactures, and markets Tibet medicines.  The Company's products include Rhodiola capsules, Rhodiola pellets, and other related medicines.

Shenzhen Neptunus Bioengineering Co., Ltd. develops, manufactures, and markets biochemical pharmaceuticals, biological products, traditional Chinese medicines, and healthcare products.  Through its subsidiaries, the Company also manufactures food.

Searainbow Holding Corp., produces chemical fibers and other textile products. The company, through its subsidiaries, also provides medical e-commerce and on-line games.

Ramsay Health Care Ltd. provides health care services. The Company offers private hospital services, including, rehabilitation, psychiatric care, day, and complex surgery. Ramsay Health Care owns, operates, and manages health care facilities throughout Australia, Indonesia, and Europe.

Bumrungrad Hospital Public Company Limited, through its subsidiaries,  owns and operates the Bumrungrad Hospital. Located in Bangkok, the Hospital has capacity of international standard medical care with 554 beds for inpatients and approximately 125 clinic examination suites that can serve up to 3,000 outpatients daily.

LHC Group Inc. provides post-acute healthcare services primarily to Medicare beneficiaries in rural markets in the southern United States. The company provides home-based services through home nursing agencies and hospices and facility-based services through long-term acute care hospitals and  outpatient rehabilitation clinics.

Ensign Group, Inc. operates facilities offering nursing and rehabilitative care services in multiple states. The Company provides a broad spectrum of nursing and assisted living services, physical, occupational and speech therapies, and other rehabilitative and healthcare services, for both long-term residents and short-stay rehabilitation patients.

Encompass Health Corporation provides inpatient rehabilitative healthcare services.  The Company operates inpatient rehabilitation hospitals, outpatient and rehabilitation satellites, and home health agencies. Encompass Health provides treatment on both an inpatient and outpatient basis.

HealthEquity, Inc. provides technology-enabled services platforms that allow consumers to make healthcare saving and spending decisions. Consumers can access their tax-advantaged healthcare savings, compare treatment options and pricing, evaluate and pay healthcare bills, receive personalized benefit and clinical information, and earn wellness incentives.

Chemed Corporation operates in the healthcare field through its subsidiary Vitas Healthcare Corporation.  The Company also maintains a presence in the residential and commercial repair-and-maintenance-service industry under the names Roto-Rooter and Service America Network Inc.

Sonic Healthcare Limited is a medical diagnostics company with operations in Australia, New Zealand, and Europe.  The Company provides a comprehensive range of pathology and diagnostic imaging services to medical practitioners, hospitals and their patients along with providing administrative services and facilities to medical practitioners.

Acadia Healthcare Co Ltd operates a network of behavioral health centers. The Company provides psychiatric and chemical dependency services, inpatient psychiatric hospitals, residential treatment centers, outpatient clinics, and therapeutic school based programs across the United States.

Option Care Health, Inc. provides infusion and home care management solutions. The Company offers products, services, and condition-specific clinical management programs for gastrointestinal abnormalities, infectious diseases, cancer, organ and blood cell transplants, bleeding disorders, and heart failures. Option Care Health serves patients in the United States.

Sinopharm Group Co Ltd is a pharmacy distribution company. The Company also owns several pharmacy enterprise groups in different industries such as logistics, retail stores, pharmaceutical manufacturing, and chemical testing.

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Sinopharm Group Co Ltd H (1099 HK)

China Traditional Chinese Medicine (570 HK): Something Is Brewing, but Nobody Knows Quite What

We spoke to several readers to gauge the likely reasons for the share price fall. There is clearly news behind today’s fall, but none of the...

Arun George

China Healthcare Weekly (Jun23)-Retail Pharmacy's Dilemma, Logic to Biotech's Stock Price,YSB's Risk

Retail pharmacies facing industry clearance due to negative policies.Biotech stock performance tied to sustainable development path. YSB faces...

Xinyao (Criss) Wang

China Healthcare Weekly (May.26)-VBP Scope Expands, Optimistic About Glove Industry, China Resources

Due to VBP scope expansion, TCM will face more pressure.Time to be optimistic about glove industry, which is better than expected.China Resources...

Xinyao (Criss) Wang

Hang Seng Index (HSI) Rebalance Preview: Inclusion Candidates for June

The move to 100 constituents is expected to drag on into 2025. We highlight 10 stocks that could be considered for inclusion in the HSI in June....

Brian Freitas

China National Medicines (600511.CH) - After Restructuring, Performance Growth Is Guaranteed

Horizontal competition issue will be solved within 3 years. The restructuring will increase the business concentration/scale/competitiveness of...

Xinyao (Criss) Wang

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

China Traditional Chinese Medicine (570 HK): Something Is Brewing, but Nobody Knows Quite What

We spoke to several readers to gauge the likely reasons for the share price fall. There is clearly news behind today’s fall, but none of the...

Arun George

China Healthcare Weekly (Jun23)-Retail Pharmacy's Dilemma, Logic to Biotech's Stock Price,YSB's Risk

​Retail pharmacies facing industry clearance due to negative policies.Biotech stock performance tied to sustainable development path. YSB faces...

Xinyao (Criss) Wang

China Healthcare Weekly (May.26)-VBP Scope Expands, Optimistic About Glove Industry, China Resources

Due to VBP scope expansion, TCM will face more pressure.Time to be optimistic about glove industry, which is better than expected.China Resources...

Xinyao (Criss) Wang

Hang Seng Index (HSI) Rebalance Preview: Inclusion Candidates for June

The move to 100 constituents is expected to drag on into 2025. We highlight 10 stocks that could be considered for inclusion in the HSI in June....

Brian Freitas

China National Medicines (600511.CH) - After Restructuring, Performance Growth Is Guaranteed

Horizontal competition issue will be solved within 3 years. The restructuring will increase the business concentration/scale/competitiveness of...

Xinyao (Criss) Wang

Retail pharmacies facing industry clearance due to negative policies.Biotech stock performance tied to sustainable development path. YSB faces...