HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Thematic (Sector/Industry)

<p><strong>Industry viewpoints:</strong></p><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><p><strong>Company news:</strong></p><p style="text-align: start;">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>. </p><p><strong>Market review:</strong></p><p style="text-align: start;">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.</p><p><strong>Risk disclosure:</strong></p><p style="text-align: start;">Policy risk, R&amp;D risk, Company risk and COVID-19 risk.</p>

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

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

<p><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.</p><p>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.</p><p>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.</p>

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

<p><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.</p><p>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.</p><p>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.</p>

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

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

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

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.

<p>Shanghai HeartCare raised HKD 1,014 million (USD 131m) from its global offering and will list on the Hong Kong Stock Exchange on Friday, August 20th.</p>
<p>In our previous note, we looked at the company's two core products Captor and LAA Occluder. We think the Captor, a stent retrieving thrombectomy device, is the main selling point of the deal given its decent efficacy and safety data and it has already been approved by the NMPA. Market structure for Captor is characterized by the early stage of growth and dominance by MNC players and the company's product is the first approved domestic product with commendable data from head-to-head clinical trials. The company's management are mainly ex-employee from Microport Scientific, a leading international medical device player in China.</p>
<p>In this note, we look at the updates since our last note. The demand for the deal is strong from the retail side but weak on the institution side. We think the institutional investors are risk off for the deal given the overhang of legal proceedings and the weak sentiment on medical devices and hence the debut performance is likely under pressure. Otherwise we remain positive on the company from a valuation perspective.</p>

Shanghai HeartCare raised HKD 1,014 million (USD 131m) from its global offering and will list on the Hong Kong Stock Exchange on Friday, August 20th.
In our previous note, we looked at the company's two core products Captor and LAA Occluder. We think the Captor, a stent retrieving thrombectomy device, is the main selling point of the deal given its decent efficacy and safety data and it has already been approved by the NMPA. Market structure for Captor is characterized by the early stage of growth and dominance by MNC players and the company's product is the first approved domestic product with commendable data from head-to-head clinical trials. The company's management are mainly ex-employee from Microport Scientific, a leading international medical device player in China.
In this note, we look at the updates since our last note. The demand for the deal is strong from the retail side but weak on the institution side. We think the institutional investors are risk off for the deal given the overhang of legal proceedings and the weak sentiment on medical devices and hence the debut performance is likely under pressure. Otherwise we remain positive on the company from a valuation perspective.

Heartcare (心玮医疗) IPO Trading: Risk-Off for Institutional Investors

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.

Acotec Scientific Holdings / Equity Capital Markets

<div><p><a href="https://www.smartkarma.com/entities/acotec-scientific-holdings-limited" target="_blank" data-smartkarma-citation="entities:32176:1" rel="noopener">Acotec Scientific Holdings (6669 HK)</a> is a leading innovative medical device company in China focusing on providing treatment solutions for vascular diseases, particularly in the fields of drug-coated balloons (DCB) and thrombus aspiration catheters. The two core products are <em>AcorArt Orchid &amp; Dhalia</em> and <em>AcorArt Tulip &amp; Litos</em>. </p></div><div><p>Acotec has launched an HKEx IPO to raise net proceeds of HK$1,473.6 million ($189 million) at the mid-point of the IPO price range of HK$22.20-23.80 per share. Thirteen Chinese cornerstone investors will subscribe for $105 million worth of the offer shares. Pricing will be finalised on 17 August and the shares will list on 24 August.</p></div><div><p>In <a href="https://www.smartkarma.com/insights/acotec-scientific-ipo-living-right" target="_blank" data-smartkarma-citation="insights:56006" rel="noopener">Acotec Scientific IPO: Living Right</a>, we opined that Acotec has an established commercialisation track record with <em>AcorArt Orchid &amp; Dhalia</em> launched in China in 2016. The growth story is supported by ongoing market growth, the recent commercial launch of its second core product, indication expansion for the core products and ambition to commercialise all of the product candidates in the pipeline before the end of 2025. We concluded that Acotec’s product portfolio is attractive.  </p></div><div><div><div class="content-highlight"><p>Our base-case DCF valuation is HK$21.65 per share, which is a -6% downside to the mid-point of the IPO price range of HK$22.20-23.80 per share. Consequently, we think the shares are fully priced at the IPO price range. In combination with the lack of blue-chip cornerstone investors, we would wait on the sidelines for a lower entry point. </p></div></div></div>

Acotec Scientific Holdings (6669 HK) is a leading innovative medical device company in China focusing on providing treatment solutions for vascular diseases, particularly in the fields of drug-coated balloons (DCB) and thrombus aspiration catheters. The two core products are AcorArt Orchid &amp; Dhalia and AcorArt Tulip &amp; Litos. Acotec has launched an HKEx IPO to raise net proceeds of HK$1,473.6 million ($189 million) at the mid-point of the IPO price range of HK$22.20-23.80 per share. Thirteen Chinese cornerstone investors will subscribe for $105 million worth of the offer shares. Pricing will be finalised on 17 August and the shares will list on 24 August.In Acotec Scientific IPO: Living Right, we opined that Acotec has an established commercialisation track record with AcorArt Orchid &amp; Dhalia launched in China in 2016. The growth story is supported by ongoing market growth, the recent commercial launch of its second core product, indication expansion for the core products and ambition to commercialise all of the product candidates in the pipeline before the end of 2025. We concluded that Acotec’s product portfolio is attractive.  Our base-case DCF valuation is HK$21.65 per share, which is a -6% downside to the mid-point of the IPO price range of HK$22.20-23.80 per share. Consequently, we think the shares are fully priced at the IPO price range. In combination with the lack of blue-chip cornerstone investors, we would wait on the sidelines for a lower entry point. 

Acotec Scientific IPO: Valuation Insights

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 (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

Heartcare (心玮医疗) IPO Trading: Risk-Off for Institutional Investors

We analyze the new information for HeartCare IPO. We think the demand is not strong and debut performance will be under pressure given the overhang...

Ke Yan, CFA, FRM

Acotec Scientific IPO: Valuation Insights

Our base-case DCF valuation is HK$21.65 per share, which is a -6% downside to the mid-point of the IPO price range. Consequently, we think the...

Arun George

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