HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Thematic (Sector/Industry)

<ul>
<li>While the final results of 2021 national medical insurance negotiation have yet to be announced, here are what's circulating in the market.</li>
<li>The centralized procurement on spring coil in Hebei province would start soon, which means that the centralized procurement in the field of neuro-intervention in China has officially begun.</li>
<li>There is a phenomenon of "valuation upside down" in the primary and secondary market of healthcare investment, so we recommend investors to be more cautious and rational.</li>
</ul>


While the final results of 2021 national medical insurance negotiation have yet to be announced, here are what's circulating in the market.
The centralized procurement on spring coil in Hebei province would start soon, which means that the centralized procurement in the field of neuro-intervention in China has officially begun.
There is a phenomenon of "valuation upside down" in the primary and secondary market of healthcare investment, so we recommend investors to be more cautious and rational.


China Healthcare Weekly (Nov.12)-Medical Insurance Negotiation,Spring Coil VBP,Valuation Upside Down

Equity Analyst, LightStream Research

Shifara Samsudeen, ACMA, CGMA

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Equity Capital Markets

MicroTech Medical Hangzhou / Equity Capital Markets

<a href="https://www.smartkarma.com/entities/microtech-medical-hangzhou-co-ltd" target="_blank" data-smartkarma-citation="entities:33367:1" rel="noopener">MicroTech Medical Hangzhou (2235 HK)</a> provides diabetes treatment and diabetes monitoring medical devices in China and globally. MicroTech’s core product, a semi-disposable patch insulin pump (known as Equil) is the only patch insulin pump available in China whereas the competitor products are tube insulin pumps. The company also has a CGMS product (Continuous Glucose Monitoring System), AiDEX G7 which is the second commercialised calibration-free real-time CGMS in the world. AiDEX G7 has received the CE Marking in the EU in September 2020 and the product has been certified by the NMPA to be eligible for Special Approval Procedures of Innovative Medical Devices promulgated by the NMPA.MicroTech has priced its IPO at HK$30.50 per share, slightly below the upper end of the indicative IPO price range of HK$27.70-31.15 per share. At the offer price of HK$30.50 per share, the company raised net proceeds of HK$1,815.1m at a market capitalisation of HK$12.9bn and a post-money enterprise value of HK$10.5bn. According to the company, its Hong Kong offering was oversubscribed by about 6.79x while the international offering was oversubscribed by about 4.9x.In our previous two insights on the company’s IPO, we discussed the company’s core products and product portfolio, market potential for its products and the company’s valuation.

MicroTech Medical Hangzhou (2235 HK) provides diabetes treatment and diabetes monitoring medical devices in China and globally. MicroTech’s core product, a semi-disposable patch insulin pump (known as Equil) is the only patch insulin pump available in China whereas the competitor products are tube insulin pumps. The company also has a CGMS product (Continuous Glucose Monitoring System), AiDEX G7 which is the second commercialised calibration-free real-time CGMS in the world. AiDEX G7 has received the CE Marking in the EU in September 2020 and the product has been certified by the NMPA to be eligible for Special Approval Procedures of Innovative Medical Devices promulgated by the NMPA.MicroTech has priced its IPO at HK$30.50 per share, slightly below the upper end of the indicative IPO price range of HK$27.70-31.15 per share. At the offer price of HK$30.50 per share, the company raised net proceeds of HK$1,815.1m at a market capitalisation of HK$12.9bn and a post-money enterprise value of HK$10.5bn. According to the company, its Hong Kong offering was oversubscribed by about 6.79x while the international offering was oversubscribed by about 4.9x.In our previous two insights on the company’s IPO, we discussed the company’s core products and product portfolio, market potential for its products and the company’s valuation.

MicroTech Medical IPO: Thoughts on First Day Trading

Industry viewpoints:<ul>
<li>The recent centralized procurement on spring coil in Hebei province could be a warning to the relevant enterprises.</li>
<li>The NHSA pointed out that it will explore feasible ways to include dental items into the payment scope of commercial insurance.</li>
<li>We expect to see AI deeply integrated into the new drug development process and revolutionize the industry in the future.</li>
</ul>Company news:News about the updated progress on new drugs and cooperation agreement of <a href="https://www.smartkarma.com/entities/akeso-biopharma-inc" target="_blank" data-smartkarma-citation="entities:28830:1" rel="noopener">Akeso Biopharma Inc (9926 HK)</a>, <a href="https://www.smartkarma.com/entities/cspc-pharmaceutical-group-ltd" target="_blank" data-smartkarma-citation="entities:229:1" rel="noopener">CSPC Pharmaceutical Group (1093 HK)</a> and <a href="https://www.smartkarma.com/entities/everest-medicines-ltd" target="_blank" data-smartkarma-citation="entities:29224:1" rel="noopener">Everest Medicines (1952 HK)</a>. Market review:Last week, stock price for healthcare sector in A share increased 3.74%, while CSI 300 decreased 0.37% over the same period of time.Risk disclosure:Policy risk, R&amp;D risk, Company risk and COVID-19 risk.

Industry viewpoints:
The recent centralized procurement on spring coil in Hebei province could be a warning to the relevant enterprises.
The NHSA pointed out that it will explore feasible ways to include dental items into the payment scope of commercial insurance.
We expect to see AI deeply integrated into the new drug development process and revolutionize the industry in the future.
Company news:News about the updated progress on new drugs and cooperation agreement of Akeso Biopharma Inc (9926 HK), CSPC Pharmaceutical Group (1093 HK) and Everest Medicines (1952 HK). Market review:Last week, stock price for healthcare sector in A share increased 3.74%, while CSI 300 decreased 0.37% over the same period of time.Risk disclosure:Policy risk, R&amp;D risk, Company risk and COVID-19 risk.

China Healthcare Weekly (Sep.24) - VBP on Neuro-Intervention, Payment System Changes, AI in Drug R&D

<a href="https://www.smartkarma.com/entities/broncus-holding-corporation" target="_blank" data-smartkarma-citation="entities:33315:1" rel="noopener">Broncus (2216 HK)</a> is a medical device company focused on the development of interventional pulmonology products. The company offers five interventional therapeutic products and product candidates for lung diseases (including its core products InterVapor and RF-II) and offers six interventional diagnostic medical consumable products including LungPoint. The company was ranked first in China’s interventional pulmonology navigation device market with a market share of 43.2% based on sales volume and ranked second with a market share of 37.5% measured by sales revenue from 2018-2020.The company has priced its IPO at HK$18.70 per share, at the upper end of the IPO price range of HK$17.2-18.7 per share. At the above price, Broncus raised net proceeds of HK$1,552.4m at a market capitalisation of HK$9.9bn and a post-money enterprise value of HK$8.0bn. According to the company, its Hong Kong offering was oversubscribed by about 11.1x while the international offering was oversubscribed by about 4.1x.In our previous two insights on the company’s IPO, we discussed the company’s core products and product portfolio, market potential for its products and the company’s valuation.

Broncus (2216 HK) is a medical device company focused on the development of interventional pulmonology products. The company offers five interventional therapeutic products and product candidates for lung diseases (including its core products InterVapor and RF-II) and offers six interventional diagnostic medical consumable products including LungPoint. The company was ranked first in China’s interventional pulmonology navigation device market with a market share of 43.2% based on sales volume and ranked second with a market share of 37.5% measured by sales revenue from 2018-2020.The company has priced its IPO at HK$18.70 per share, at the upper end of the IPO price range of HK$17.2-18.7 per share. At the above price, Broncus raised net proceeds of HK$1,552.4m at a market capitalisation of HK$9.9bn and a post-money enterprise value of HK$8.0bn. According to the company, its Hong Kong offering was oversubscribed by about 11.1x while the international offering was oversubscribed by about 4.1x.In our previous two insights on the company’s IPO, we discussed the company’s core products and product portfolio, market potential for its products and the company’s valuation.

Broncus IPO: Thoughts on First Day Trading

Shanghai HeartCare Medical Technology / Equity Capital Markets

<a href="https://www.smartkarma.com/entities/shanghai-heartcare-medical-technology-corporation-limited" target="_blank" data-smartkarma-citation="entities:32192:1" rel="noopener">Shanghai HeartCare Medical Technology (6609 HK)</a> is a neuro-interventional medical device company in China. The company’s product portfolio includes two core products Captor and LAA Occluder of which Captor received the NMPA approval in August 2020 and the company started commercialising the product in December 2020. On the other hand, LAA Occluder is an ischemic stroke prevention device, and the company expects to receive NMPA approval in 4Q2021 whereby they can commence sales in 2Q2022. The company’s LAA Occluder indicates better efficacy and safety compared to other products in the market.The company has priced its IPO at HK$171 per share, at the upper end of the IPO price range of HK$160-171 per share. At the above price, Medlive raised net proceeds of HK$1,014.8m (US$131.9m) at a market capitalisation of HK$5.40bn and a post-money enterprise value of HK$3.96bn.In our previous insight, we discussed our forecasts and valuation and our DCF based valuation offered price per share of HK$182.78 per share, which is 6.9% higher than the company’s final IPO price of HK$171 per share.

Shanghai HeartCare Medical Technology (6609 HK) is a neuro-interventional medical device company in China. The company’s product portfolio includes two core products Captor and LAA Occluder of which Captor received the NMPA approval in August 2020 and the company started commercialising the product in December 2020. On the other hand, LAA Occluder is an ischemic stroke prevention device, and the company expects to receive NMPA approval in 4Q2021 whereby they can commence sales in 2Q2022. The company’s LAA Occluder indicates better efficacy and safety compared to other products in the market.The company has priced its IPO at HK$171 per share, at the upper end of the IPO price range of HK$160-171 per share. At the above price, Medlive raised net proceeds of HK$1,014.8m (US$131.9m) at a market capitalisation of HK$5.40bn and a post-money enterprise value of HK$3.96bn.In our previous insight, we discussed our forecasts and valuation and our DCF based valuation offered price per share of HK$182.78 per share, which is 6.9% higher than the company’s final IPO price of HK$171 per share.

Shanghai Heartcare IPO: Thoughts on First Day Trading

China

Leading player in the neuro- and peripheral-vascular interventional medical device market in China.

Zylox-Tonbridge Medical Technology (2190 HK)

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Zylox-Tonbridge Medical Technology (2190 HK)

China Healthcare Weekly (Nov.12)-Medical Insurance Negotiation,Spring Coil VBP,Valuation Upside Down

This insight mainly analyzed some news circulating about 2021 national medical insurance negotiation results, VBP on spring coil in Hebei and...

Xinyao (Criss) Wang

MicroTech Medical IPO: Thoughts on First Day Trading

MicroTech priced its IPO at HK$30.50 per share which significantly overvalues the shares. We expect the company's shares to open poorly at its...

Shifara Samsudeen, ACMA, CGMA

China Healthcare Weekly (Sep.24) - VBP on Neuro-Intervention, Payment System Changes, AI in Drug R&D

This article analyzed the centralized procurement on spring coil in Hebei province, commercial insurance coverage for dental items, AI in new drug...

Xinyao (Criss) Wang

Broncus IPO: Thoughts on First Day Trading

Though Broncus priced its IPO at the top-end of its price range, our reverse DCF model suggests that Broncus’ IPO is overvalued. We expect shares...

Shifara Samsudeen, ACMA, CGMA

Shanghai Heartcare IPO: Thoughts on First Day Trading

We expect Heartcare’s IPO to remain under pressure at its open due to uncertainty regarding the lawsuit with Medtronics despite being priced at a...

Shifara Samsudeen, ACMA, CGMA

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