HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Thematic (Sector/Industry)

<ul>
<li>China’s GDP growth target of 5% for 2023 is a "deliberate decision".Chinese authorities may have seen potential downside risks of economy and hope to restore the credibility of growth target.</li>
<li>If investors fantasize about low interest rates would continue in the future, they could be disappointed. This means that investors' strategies and mentality may need to be changed in time.</li>
<li>For China healthcare, the expansion of high-quality medical resources in grassroots markets would be a big opportunity, involving reform of State-owned Enterprise-run hospitals and increasing market penetration of medical device/TCM. </li>
</ul>


China’s GDP growth target of 5% for 2023 is a "deliberate decision".Chinese authorities may have seen potential downside risks of economy and hope to restore the credibility of growth target.
If investors fantasize about low interest rates would continue in the future, they could be disappointed. This means that investors' strategies and mentality may need to be changed in time.
For China healthcare, the expansion of high-quality medical resources in grassroots markets would be a big opportunity, involving reform of State-owned Enterprise-run hospitals and increasing market penetration of medical device/TCM. 


China's 2023 Government Work Report in 14th NPC - The Highlights and the Outlook

Equity Bottom-Up

Sonoscape Medical Corp / Equity Bottom-Up

<ul>
<li>We are optimistic about Sonoscape's 2022 annual results, which was an important turning year. Due to policy catalyst/China reopening, Sonoscape would maintain high growth in 2023, with relatively high certainty.</li>
<li>Sonoscape has established a high moat in the field of soft endoscopes. Even if new manufacturers enter this market, they are hard to affect the market pattern in short term.</li>
<li>Although the current valuation is not cheap, based on our forecast of its business lines, there's still growth space in valuation. Under positive momentum, this stock can be traded repeatedly.</li>
</ul>


We are optimistic about Sonoscape's 2022 annual results, which was an important turning year. Due to policy catalyst/China reopening, Sonoscape would maintain high growth in 2023, with relatively high certainty.
Sonoscape has established a high moat in the field of soft endoscopes. Even if new manufacturers enter this market, they are hard to affect the market pattern in short term.
Although the current valuation is not cheap, based on our forecast of its business lines, there's still growth space in valuation. Under positive momentum, this stock can be traded repeatedly.


2023 High Conviction Update: Sonoscape Medical (300633.CH) - High Growth Is Expected to Continue

<ul>
<li>China issued the “Outline of the Strategic Plan for Expanding Domestic Demand (2022-2035)”, where some statements are different from those in the  "14th Five-year Plan" and the 20th National Congress report.</li>
<li>We analyzed our interpretation and speculated the “wind direction” behind the difference in statements, so as to identify some possible changes in China healthcare industry in 2023.</li>
<li>
<em> The Outline</em> is not only in line with the adjustment of COVID policies,but also highly relevant to the major contradictions/changes in internal and external situations. Investors need to follow the trend.  </li>
</ul>


China issued the “Outline of the Strategic Plan for Expanding Domestic Demand (2022-2035)”, where some statements are different from those in the  "14th Five-year Plan" and the 20th National Congress report.
We analyzed our interpretation and speculated the “wind direction” behind the difference in statements, so as to identify some possible changes in China healthcare industry in 2023.

 The Outline is not only in line with the adjustment of COVID policies,but also highly relevant to the major contradictions/changes in internal and external situations. Investors need to follow the trend.  


Identify New Directions of China Healthcare in 2023 – Major Changes In Highest Level Policy Document

<ul>
<li>The most obvious opportunity in China healthcare at the current stage is import substitution. If import substitution is fully realized, it can bring a clear performance increase to the companies.</li>
<li>In 2023, we are optimistic that China healthcare would gain more household expenditure in the “Long COVID” effect, thus generating excess returns under the logic of expanding domestic demand.</li>
<li>We would recommend investors consider making layout in those non-COVID related companies in 2023.  We analyzed the outlook, investment logic and investment opportunities in medical device, biotech and CXO sectors.</li>
</ul>


The most obvious opportunity in China healthcare at the current stage is import substitution. If import substitution is fully realized, it can bring a clear performance increase to the companies.
In 2023, we are optimistic that China healthcare would gain more household expenditure in the “Long COVID” effect, thus generating excess returns under the logic of expanding domestic demand.
We would recommend investors consider making layout in those non-COVID related companies in 2023.  We analyzed the outlook, investment logic and investment opportunities in medical device, biotech and CXO sectors.


Presentation for Webinar: China Healthcare - Outlook and Opportunities in 2023

<ul>
<li>China's relaxation of COVID-19 control measures is much faster than expected. Due to rising infection rate and mortality rate, China would bear some pressure in the short term. </li>
<li>We analyzed the direct impacts due to COVID policy shift and related investment opportunities. The hardest time of three-year COVID-19 has passed.The playbook of the pandemic is about to end.</li>
<li>With the new leadership taking office, China will be more committed to economic growth after the Two Sessions. Starting from 2023H2, China could formulate independent financial/monetary policies. China will change. </li>
</ul>


China's relaxation of COVID-19 control measures is much faster than expected. Due to rising infection rate and mortality rate, China would bear some pressure in the short term. 
We analyzed the direct impacts due to COVID policy shift and related investment opportunities. The hardest time of three-year COVID-19 has passed.The playbook of the pandemic is about to end.
With the new leadership taking office, China will be more committed to economic growth after the Two Sessions. Starting from 2023H2, China could formulate independent financial/monetary policies. China will change. 


China Makes U-Turn on COVID Policy - Here Are the Direct Impacts and Investment Opportunities

China

Sinocare Inc. develops, manufactures, sells biosensor technology real-time detection products. The Company's main products include rapid trace blood glucose testers, and supporting blood glucose testing strips.

Andon Health Co., Ltd. develops, manufactures and sells medical electronic devices for home use.  The Company's products include blood pressure monitors, blood glucose monitors, and digital thermometers.

Shandong Weigao Group Medical Polymer Company Limited, through its subsidiaries, researches and develops, produces, and sells single-use aseptic polymer medical products.

Shandong Weigao Group Medical Polymer Co (1066 HK)

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.

Shandong Pharmaceutical Glass Co., Ltd. manufactures and markets a variety of pharmaceutical glass products including molded vials, tube vials, ampoule, amber vials, infusion vials, and glass tubes.  The Company also manufactures paper packaging boxes and invests in petrochemical industry.

Shandong Pharmaceutical Glass Co., Ltd. A (600529 CH)

Shandong Pharmaceutical Glass Co., Ltd. A

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.

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.

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.

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.

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.

Osstem Implant Co., Ltd. manufactures dental implant system. The Company also markets dental management software. Osstem Implant provides products for dental surgery and exports abroad.

JEOL Ltd. manufactures electron optics instruments and analytical instruments including electron microscope, X-ray diffractometer and spectrometer and thermographs.  The Company also makes semiconductor manufacturing equipment, medical equipment and industrial equipment.

CONMED Corporation provides orthopedic products, specializing in arthroscopy and powered surgical instruments.  The Company develops, manufactures, and supplies surgical instruments and systems used in a range of surgical procedures.  CONMED's products include arthroscopic surgery devices and powered surgical instruments, electrosurgery systems, and ECG electrodes for heart monitoring.

QuidelOrtho Corporation provides health care services. The Company offers technologies and platforms to benefit customers with expanded access to clinical chemistry, immunoassay, molecular diagnostics, immunohematology, donor screening, and point-of-care diagnostics offerings.

LeMaitre Vascular, Inc. manufactures medical devices for vascular surgeons and interventionists.  The Company develops, produces, and markets disposable and implantable devices for the treatment of peripheral vascular disease, such as stent grafts, anastomotic clips, valvulotomes, radiopaque marking tape, shunts, and embolectomy catheters.

Veracyte, Inc. develops molecular tests for oncology. The Company offers molecular cytology and tests for the diagnostic accuracy of cytology samples. Veracyte provides its products and services to healthcare and molecular diagnostic companies in the United States.

NuVasive, Inc. designs, develops, and markets products for the surgical treatment of spine disorders. The Company's products include Maximum Access Surgery (MAS) and Fusion products.

Top Glove Corporation Bhd manufactures a wide range of latex gloves.  The Company's products include latex examination powdered, latex examination powderfree, nitrile examination gloves,soft nitrile examination gloves, vinyl examination gloves, surgical gloves, and other related products.

Ossur hf does research and develops prosthetic aids.  The Company also designs, makes, and markets prosthetic and orthotic products, and offers a wide line of customized solutions.  The product line includes Iceross, a silicon socket, the ICEX socket system, and Masterstep, a prosthetic foot.  Ossur operates through a global network of sales outlets and agencies.

Novocure Limited is an oncology company. The Company researches and develops novel technologies for the treatment of cancer. Novocure serves the healthcare industry worldwide.

Sonoscape Medical Corp. manufactures medical equipment. The Company develops, produces, and sells ultrasound diagnostic systems, transducers, and other medical equipment products. Sonoscape Medical serves customers worldwide.

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Sonoscape Medical Corp (300633 CH)

China's 2023 Government Work Report in 14th NPC - The Highlights and the Outlook

We analyzed our interpretation on China's 2023 Government Work Report in 14th NPC, including GDP growth, CPI, fiscal/monetary policy, valuation...

Xinyao (Criss) Wang

2023 High Conviction Update: Sonoscape Medical (300633.CH) - High Growth Is Expected to Continue

We're optimistic about Sonoscape's 2022 results.High growth continues in 2023.Based on our forecast, there's still growth space in valuation.Under...

Xinyao (Criss) Wang

Identify New Directions of China Healthcare in 2023 – Major Changes In Highest Level Policy Document

China issued the Outline of the Strategic Plan for Expanding Domestic Demand (2022-2035), where some statements have changed, leading to the change...

Xinyao (Criss) Wang

Presentation for Webinar: China Healthcare - Outlook and Opportunities in 2023

We're bullish on China healthcare in 2023 due to increasing household expenditure in “Long COVID” effect and the rebound of non-COVID medical...

Xinyao (Criss) Wang

China Makes U-Turn on COVID Policy - Here Are the Direct Impacts and Investment Opportunities

China's U-turn on COVID policy will lead to rising infection/mortality rate.We analyzed the direct impact/investment opportunity. Under new...

Xinyao (Criss) Wang

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