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.

Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/giant-biogene-holding-co-ltd" target="_blank" data-smartkarma-citation="entities:35950:1" rel="noopener">Giant Biogene Holding (GBH HK)</a>, a leading professional skin care product manufacturer, has started pre-marketing a US$500 million HKEx IPO.  </li>
<li>In <em><strong><a href="https://www.smartkarma.com/insights/giant-biogene-ipo-the-bull-case" target="_blank" data-smartkarma-citation="insights:81963" rel="noopener">Giant Biogene IPO: The Bull Case</a></strong></em>, we highlighted the key elements of the bull case. In this note, we outline the bear case.  </li>
<li>The key elements of the bear case rest on a worrying performance of Collgene (the second flagship brand), an inexorable rise in S&amp;M expenses and margins on a downward trajectory.</li>
</ul>



Giant Biogene Holding (GBH HK), a leading professional skin care product manufacturer, has started pre-marketing a US$500 million HKEx IPO.  
In Giant Biogene IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.  
The key elements of the bear case rest on a worrying performance of Collgene (the second flagship brand), an inexorable rise in S&amp;M expenses and margins on a downward trajectory.


<ul>
<li>
<a href="https://www.smartkarma.com/entities/giant-biogene-holding-co-ltd" target="_blank" data-smartkarma-citation="entities:35950:1" rel="noopener">Giant Biogene Holding (GBH HK)</a>, a leading professional skin care product manufacturer, has started pre-marketing a US$500 million HKEx IPO.  </li>
<li>According to Frost &amp; Sullivan, Biogene was China's second-largest professional skin treatment product company by retail sales in 2021.  </li>
<li>The key elements of the bull case rest on a large and growing addressable market, regulatory tailwinds, the core brand’s stellar performance and high cash generation. </li>
</ul>



Giant Biogene Holding (GBH HK), a leading professional skin care product manufacturer, has started pre-marketing a US$500 million HKEx IPO.  
According to Frost &amp; Sullivan, Biogene was China's second-largest professional skin treatment product company by retail sales in 2021.  
The key elements of the bull case rest on a large and growing addressable market, regulatory tailwinds, the core brand’s stellar performance and high cash generation. 


External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

Thematic (Sector/Industry)

<div><div><div><div><ul><li>A non-eventful 3Q. While earnings cuts and de-ratings have taken place and reset market expectation across 1H results, in our view, earnings volatility for 3Q is unlikely to be drastic.</li><li>For items that we monitored, our channel checks suggested that sales momentum was largely on track to us - low-teen growth for CRB, double-digit growth for Nongfu, and particularly sequential double- digit recovery for Mengniu and Feihe.</li><li>Separately, the lockdown of Hainan since August could mean downside revision potential for CTGDF despite a well-maintained GPM.</li></ul></div></div></div></div><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

A non-eventful 3Q. While earnings cuts and de-ratings have taken place and reset market expectation across 1H results, in our view, earnings volatility for 3Q is unlikely to be drastic.For items that we monitored, our channel checks suggested that sales momentum was largely on track to us - low-teen growth for CRB, double-digit growth for Nongfu, and particularly sequential double- digit recovery for Mengniu and Feihe.Separately, the lockdown of Hainan since August could mean downside revision potential for CTGDF despite a well-maintained GPM.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China Consumer – Addressing Recent Investors’ Concerns

<ul><li>1H ended with 3 beats, 3 misses and 5 in-lines. The wrap-up of 1H/ 2Q earnings season has largely reset market expectation with latest earnings forecasts, management guidance and hence a refreshed 2H outlook.</li><li>In the near term, in our view, when the PPI-CPI scissor gap continues to narrow, market likely refocuses on the legitimation of any GPM expansion for staple players.</li><li>Meanwhile, lockdown risks prompt us to reside with plays that enjoy high online sales mix, and more importantly, relevant to the upcoming Double 11 campaign.</li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

1H ended with 3 beats, 3 misses and 5 in-lines. The wrap-up of 1H/ 2Q earnings season has largely reset market expectation with latest earnings forecasts, management guidance and hence a refreshed 2H outlook.In the near term, in our view, when the PPI-CPI scissor gap continues to narrow, market likely refocuses on the legitimation of any GPM expansion for staple players.Meanwhile, lockdown risks prompt us to reside with plays that enjoy high online sales mix, and more importantly, relevant to the upcoming Double 11 campaign.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China Consumer Staples – A diverging 1H; mix upgrade and cost savings were keys to stay relevant

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

Zhangzhou Pientzehuang Pharmaceutical Co., Ltd. / Equity Bottom-Up

Zhangzhou Pientzehuang Pharmaceutical Co., Ltd.

<ul>
<li>Due to the lockdown/pandemic, <a href="https://www.smartkarma.com/entities/zhangzhou-pientzehuang-pharmaceutical-co-ltd" target="_blank" data-smartkarma-citation="entities:15709:1" rel="noopener">Pientzehuang Pharmaceutical</a>’s 2022H1 performance slowed down. Considering the economic downturn and people's cutting back spending on non-rigid consumption, the full-year revenue growth could be around 10%-20%.</li>
<li>The Company's key challenge lies in revenue growth. However, it is not easy to increase sales largely due to the scarcity of raw materials, which limits the expansion of production.</li>
<li>Pien Tze Huang is overvalued. Share price could continue to fall,but it will bounce back due to its high moat. 2022 is a good time for bottom fishing this stock.</li>
</ul>


Due to the lockdown/pandemic, Pientzehuang Pharmaceutical’s 2022H1 performance slowed down. Considering the economic downturn and people's cutting back spending on non-rigid consumption, the full-year revenue growth could be around 10%-20%.
The Company's key challenge lies in revenue growth. However, it is not easy to increase sales largely due to the scarcity of raw materials, which limits the expansion of production.
Pien Tze Huang is overvalued. Share price could continue to fall,but it will bounce back due to its high moat. 2022 is a good time for bottom fishing this stock.


Zhangzhou Pientzehuang Pharmaceutical (600436CH) 22H1- 2022 Is Stressful but Shares Will Bounce Back

China

Yunnan Botanee Bio-Technology Group Co. LTD manufactures and sells skin care and cosmetics. The Company produces masks, toners, hand creams, and other cosmetics. Yunnan Botanee Bio-Technology Group also develops new biology technologies.

Yunnan Botanee Bio-Technology (300957 CH)

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Yunnan Botanee Bio-Technology (300957 CH)

Giant Biogene IPO: The Bear Case

The key elements of the bear case rest on a worrying performance of Collgene (the second flagship brand), an inexorable rise in S&M expenses and...

Arun George

Giant Biogene IPO: The Bull Case

The key elements of the bull case rest on a large and growing addressable market, regulatory tailwinds, the core brand’s stellar performance and...

Arun George

China Consumer – Addressing Recent Investors’ Concerns

A non-eventful 3Q. While earnings cuts and de-ratings have taken place and reset market expectation across 1H results, in our view, earnings...

CMB International

China Consumer Staples – A diverging 1H; mix upgrade and cost savings were keys to stay relevant

In the near term, in our view, when the PPI-CPI scissor gap continues to narrow, market likely refocuses on the legitimation of any GPM expansion...

CMB International

Zhangzhou Pientzehuang Pharmaceutical (600436CH) 22H1- 2022 Is Stressful but Shares Will Bounce Back

Pien Tze Huang's performance slows down this year. Shares could continue to fall due to overvaluation, but will bounce back due to its high moat....

Xinyao (Criss) Wang

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52-week Range

Market Cap (USDm)

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