Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

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

Pharmaron Beijing   / Equity Capital Markets

Joint Global coordinators aim to raise around US$125m via selling shares in Pharmaron in order to aid certain convertible bond investors to hedge their exposure.Our previous coverage on Pharmaron<div><ul style="list-style-type: disc;">
<li><a href="https://www.smartkarma.com/insights/pharmaron-a-h-listing-a-leading-drug-discovery-company" target="_blank" rel="noopener">Pharmaron (康龙化成) A+H Listing: A Leading Drug Discovery Company</a></li>
<li><a href="https://www.smartkarma.com/insights/pharmaron-a-h-listing-3q2019-numbers-and-thoughts-on-valuation" target="_blank" rel="noopener">Pharmaron (康龙化成) A+H Listing: 3Q2019 Numbers and Thoughts on Valuation</a></li>
</ul></div><div>
<ul style="list-style-type: disc;">
<li><a href="https://www.smartkarma.com/insights/pharmaron-a-h-decent-h-a-discount-and-cornerstone-line-up" target="_blank" rel="noopener">Pharmaron (康龙化成) A+H: Decent H/​A Discount and Cornerstone Line-Up</a></li>
<li><a href="https://www.smartkarma.com/insights/pharmaron-a-h-allocation-and-thoughts-on-trading" target="_blank" rel="noopener">Pharmaron (康龙化成) A+H: Allocation and Thoughts on Trading</a></li>
</ul>
In this note, we will run the deal through our ECM framework and talk about the deal dynamics.
</div>

Joint Global coordinators aim to raise around US$125m via selling shares in Pharmaron in order to aid certain convertible bond investors to hedge their exposure.Our previous coverage on Pharmaron
Pharmaron (康龙化成) A+H Listing: A Leading Drug Discovery Company
Pharmaron (康龙化成) A+H Listing: 3Q2019 Numbers and Thoughts on Valuation


Pharmaron (康龙化成) A+H: Decent H/​A Discount and Cornerstone Line-Up
Pharmaron (康龙化成) A+H: Allocation and Thoughts on Trading

In this note, we will run the deal through our ECM framework and talk about the deal dynamics.


Pharmaron Placement - Strong Track Record

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/wuxi-apptec-co-ltd-bf4a1265-beef-48b6-b82d-29308426030f" target="_blank" data-smartkarma-citation="entities:27795:1" rel="noopener">WuXi AppTec Co. Ltd. (2359 HK)</a> has released its financial reports in 2020 and 2021Q1. The revenue in 2020 was RMB16.5 billion, up 28.46% YoY, and net profit attributed to shareholders was RMB2.96 billion, up 59.6% YoY. In 2021Q1, the revenue was RMB4.95 billion, up 55.31% YoY, and net profit attributed to shareholders was RMB1.5 billion, up 394.92% YoY. The results beat market expectations. As the leading/benchmark company in China CRO/CDMO industry, WuXi AppTec has always been the focus of investors. This insight mainly analyzed the performance outlook in the future, including both the certainties and uncertainties.

WuXi AppTec Co. Ltd. (2359 HK) has released its financial reports in 2020 and 2021Q1. The revenue in 2020 was RMB16.5 billion, up 28.46% YoY, and net profit attributed to shareholders was RMB2.96 billion, up 59.6% YoY. In 2021Q1, the revenue was RMB4.95 billion, up 55.31% YoY, and net profit attributed to shareholders was RMB1.5 billion, up 394.92% YoY. The results beat market expectations. As the leading/benchmark company in China CRO/CDMO industry, WuXi AppTec has always been the focus of investors. This insight mainly analyzed the performance outlook in the future, including both the certainties and uncertainties. 

WuXi AppTec (2359.HK) - The Certainties and the Uncertainties

Shanghai Haoyuan Chemexpress C / Equity Capital Markets

Recently, small market capitalization and undervalued CRO companies are favored by the market. For example, the most eye-catching rebound came from the <a href="https://www.smartkarma.com/entities/viva-biotech-holdings" target="_blank" data-smartkarma-citation="entities:27850:1" rel="noopener">Viva Biotech Holdings (1873 HK)</a> (up over 60% in May) and <a href="https://www.smartkarma.com/entities/hitgen-inc" target="_blank" data-smartkarma-citation="entities:30371:1" rel="noopener">HitGen Inc (688222 CH)</a> (up over 27% in May). In fact, the investment logic in CRO industry can be divided into two aspects: One is to invest in the leading companies with higher certainty, such as <a href="https://www.smartkarma.com/entities/wuxi-apptec-co-ltd-bf4a1265-beef-48b6-b82d-29308426030f" target="_blank" data-smartkarma-citation="entities:27795:1" rel="noopener">WuXi AppTec Co. Ltd. (2359 HK)</a>, <a href="https://www.smartkarma.com/entities/hangzhou-tigermed-consulting-co-ltd-1008d609-73bd-4d76-8315-b29502a448ff" target="_blank" data-smartkarma-citation="entities:29212:1" rel="noopener">Hangzhou Tigermed Consulting (H) (3347 HK)</a>, <a href="https://www.smartkarma.com/entities/pharmaron-beijing-co-ltd" target="_blank" data-smartkarma-citation="entities:28428:1" rel="noopener">Pharmaron Beijing Co Ltd-H (3759 HK)</a> and so on; The other is to pursue flexibility and choose to invest some targets that have made certain achievements in subdivision fields, such as the <a href="https://www.smartkarma.com/entities/viva-biotech-holdings" target="_blank" data-smartkarma-citation="entities:27850:1" rel="noopener">Viva Biotech Holdings (1873 HK)</a> and <a href="https://www.smartkarma.com/entities/hitgen-inc" target="_blank" data-smartkarma-citation="entities:30371:1" rel="noopener">HitGen Inc (688222 CH)</a> mentioned above. Here comes a new CRO/CDMO company that worth the attention, <a href="https://www.smartkarma.com/entities/shanghai-haoyuan-chemexpress" target="_blank" data-smartkarma-citation="entities:33415:1" rel="noopener">Shanghai Haoyuan Chemexpress (688131 CH)</a>, which will list on the SSE STAR Market soon. The following insight mainly analyzes the industry characteristics, business, financial performance and potential risks of the Company.

Recently, small market capitalization and undervalued CRO companies are favored by the market. For example, the most eye-catching rebound came from the Viva Biotech Holdings (1873 HK) (up over 60% in May) and HitGen Inc (688222 CH) (up over 27% in May). In fact, the investment logic in CRO industry can be divided into two aspects: One is to invest in the leading companies with higher certainty, such as WuXi AppTec Co. Ltd. (2359 HK), Hangzhou Tigermed Consulting (H) (3347 HK), Pharmaron Beijing Co Ltd-H (3759 HK) and so on; The other is to pursue flexibility and choose to invest some targets that have made certain achievements in subdivision fields, such as the Viva Biotech Holdings (1873 HK) and HitGen Inc (688222 CH) mentioned above. Here comes a new CRO/CDMO company that worth the attention, Shanghai Haoyuan Chemexpress (688131 CH), which will list on the SSE STAR Market soon. The following insight mainly analyzes the industry characteristics, business, financial performance and potential risks of the Company.

Pre-IPO Shanghai Haoyuan Chemexpress - A New CRO/CDMO with Continued High Growth Potential

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

Novotech Holdings / Equity Capital Markets

Novotech is a leading biotech focused contract research organization in Asia Pacific. The company is looking to raise up to USD 1.5bn via a Hong Kong listing.The company has a long history of operation since 1997 and was formed by a merger of two companies. It has a customer focus on biotech companies with its flexible services, particularly services in the clinical research stage. We like the company's leading market position in Australia/New Zealand and South Korea. The company is run by a decent team and has obtained investments from a strong line-up of investors. It has been growing at a rate above the industry average but it only turned profitable in 2020. Looking at the company's pre-IPO valuation, we think the investors have been bullish on the prospect of margin improvement.

Novotech is a leading biotech focused contract research organization in Asia Pacific. The company is looking to raise up to USD 1.5bn via a Hong Kong listing.The company has a long history of operation since 1997 and was formed by a merger of two companies. It has a customer focus on biotech companies with its flexible services, particularly services in the clinical research stage. We like the company's leading market position in Australia/New Zealand and South Korea. The company is run by a decent team and has obtained investments from a strong line-up of investors. It has been growing at a rate above the industry average but it only turned profitable in 2020. Looking at the company's pre-IPO valuation, we think the investors have been bullish on the prospect of margin improvement. 

Novotech Pre-IPO: Biotech Focused CRO at Hefty Pre-IPO Valuation

Thematic (Sector/Industry)

Executive SummaryWith the natural growth of the population and the inevitable trend of population aging, the demand in the healthcare industry will continue to rise. In addition, the improvement of people’s health consciousness, the upgrade of medical consumption and related favorable policies are the core factors driving the demand of China's medical device industry. Over the past five years, the global medical device market has maintained an annual growth rate of about 5%, while the growth rate of China's medical device market was more than 15%. It is expected that the gap between China and the global medical device market size would be gradually narrowed and China’s medical device market would play a more important role in the future. Therefore, the investment opportunities in China medical device market are very attractive and unmissable. On the other hand, with the promotion of the centralized procurement of high-value medical consumables nationwide, related medical device companies are facing pressure. So, how to find valuable investment targets that can avoid the influence of government's centralized procurement policy is important to investors. This Original mainly analyzed good investment opportunities, the industry characteristics, the investment rationale and the potential risks.What’s Original?We have identified the following investment opportunities in the Health Care Equipment and Services category in MSCI China:<ul>
<li>
<a href="https://www.smartkarma.com/entities/shenzhen-mindray-bio-medic-a" target="_blank" data-smartkarma-citation="entities:28017:1" rel="noopener">Shenzhen Mindray Bio-Medical Electronics (300760 CH)</a>: Mindray is the largest medical device and solution supplier in China. Its three core businesses are all in the forefront in China, and is also one of the few domestic companies that is truly capable of achieving import substitution and internationalization and could compete with overseas giants. Meanwhile, because of the Company's business layout, Mindray is not greatly affected by the centralized procurement policy in the short term. Together with the strategy of “innovation + M&amp;A + internationalization”, Mindray has formed the high moat and become the industry benchmark.</li>
<li>
<a href="https://www.smartkarma.com/entities/ovctek-china-inc" target="_blank" data-smartkarma-citation="entities:29638:1" rel="noopener">Ovctek China Inc (300595 CH)</a>: OVCTEK is the leading company in China orthokeratology lens market, with broad market prospect. Considering the high prosperity of the industry in which the Company is located, the good competition pattern, and the low penetration rate of orthokeratology lens, OVCTEK is expected to continue to maintain rapid growth in the future. Meanwhile, because the products have strong consumption attributes, OVCTEK’s business will not be affected by the centralized procurement policy. The obvious product performance advantage, the strong sales channel and the large market potential are the drivers for revenue and margins.</li>
<li>
<a href="https://www.smartkarma.com/entities/jafron-biomedical-co-ltd" target="_blank" data-smartkarma-citation="entities:29575:1" rel="noopener">Jafron Biomedical Co Ltd (300529 CH)</a>: JAFRON is the leading company in the field of hemoperfusion in China. As there are very limited competing products in the market, the Company is currently in a monopoly position of hemoperfusion cartridge, with strong pricing power and over 80% gross margin for more than five years. In addition, there is still a lot of room for growth in the hemoperfusion cartridge market, together with the strong product competitiveness, and the technical, raw material and channel advantages, JAFRON has established a high moat in this market.</li>
</ul>The pecking order is: Mindray, OVCTEK and JAFRON.

Executive SummaryWith the natural growth of the population and the inevitable trend of population aging, the demand in the healthcare industry will continue to rise. In addition, the improvement of people’s health consciousness, the upgrade of medical consumption and related favorable policies are the core factors driving the demand of China's medical device industry. Over the past five years, the global medical device market has maintained an annual growth rate of about 5%, while the growth rate of China's medical device market was more than 15%. It is expected that the gap between China and the global medical device market size would be gradually narrowed and China’s medical device market would play a more important role in the future. Therefore, the investment opportunities in China medical device market are very attractive and unmissable. On the other hand, with the promotion of the centralized procurement of high-value medical consumables nationwide, related medical device companies are facing pressure. So, how to find valuable investment targets that can avoid the influence of government's centralized procurement policy is important to investors. This Original mainly analyzed good investment opportunities, the industry characteristics, the investment rationale and the potential risks.What’s Original?We have identified the following investment opportunities in the Health Care Equipment and Services category in MSCI China:

Shenzhen Mindray Bio-Medical Electronics (300760 CH): Mindray is the largest medical device and solution supplier in China. Its three core businesses are all in the forefront in China, and is also one of the few domestic companies that is truly capable of achieving import substitution and internationalization and could compete with overseas giants. Meanwhile, because of the Company's business layout, Mindray is not greatly affected by the centralized procurement policy in the short term. Together with the strategy of “innovation + M&amp;A + internationalization”, Mindray has formed the high moat and become the industry benchmark.

Ovctek China Inc (300595 CH): OVCTEK is the leading company in China orthokeratology lens market, with broad market prospect. Considering the high prosperity of the industry in which the Company is located, the good competition pattern, and the low penetration rate of orthokeratology lens, OVCTEK is expected to continue to maintain rapid growth in the future. Meanwhile, because the products have strong consumption attributes, OVCTEK’s business will not be affected by the centralized procurement policy. The obvious product performance advantage, the strong sales channel and the large market potential are the drivers for revenue and margins.

Jafron Biomedical Co Ltd (300529 CH): JAFRON is the leading company in the field of hemoperfusion in China. As there are very limited competing products in the market, the Company is currently in a monopoly position of hemoperfusion cartridge, with strong pricing power and over 80% gross margin for more than five years. In addition, there is still a lot of room for growth in the hemoperfusion cartridge market, together with the strong product competitiveness, and the technical, raw material and channel advantages, JAFRON has established a high moat in this market.
The pecking order is: Mindray, OVCTEK and JAFRON.

Investment Opportunities in China Medical Device Industry

China

WuXi AppTec Co., Ltd. manufactures medical products. The Company produces biological agents, antibodies, biological diagnostic reagents, and other products. WuXi AppTec also provides biological analysis, technical study, and other services.

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WuXi AppTec (603259 CH)

Pharmaron Placement - Strong Track Record

Joint Global coordinators aim to raise around US$125m via selling shares in Pharmaron in order to aid certain convertible bond investors to hedge...

Sumeet Singh

WuXi AppTec (2359.HK) - The Certainties and the Uncertainties

As the benchmark company in China CRO/CDMO industry, WuXi AppTec is always the focus of investors. This insight mainly analyzed the certainties and...

Xinyao (Criss) Wang

Pre-IPO Shanghai Haoyuan Chemexpress - A New CRO/CDMO with Continued High Growth Potential

As CRO/CDMO continues to be a hot sector for investors and have outstanding performance, the new pre-IPO company Haoyuan Chemexpress with high...

Xinyao (Criss) Wang

Novotech Pre-IPO: Biotech Focused CRO at Hefty Pre-IPO Valuation

Novotech has an interesting value proposition as a biotech focused CRO in the APAC region. The company has a decent growth in the past but we think...

Ke Yan, CFA, FRM

Investment Opportunities in China Medical Device Industry

This Original mainly analyzed good investment opportunities, the industry characteristics, the investment rationale and the potential risks in...

Xinyao (Criss) Wang

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