In this briefing:
- Best World (BEST SP): Not the Best Financials to Disprove The Business Times Allegations
- HLX02: Innovation Could Overtake
- January Headline Data for China
- China Housing In The Guangdong – Hong Kong – Macau Greater Bay Area (GBA)
1. Best World (BEST SP): Not the Best Financials to Disprove The Business Times Allegations
Best World International (BEST SP) is a direct-selling company that distributes premium skincare and wellness products. On Monday, The Business Times claimed that it is difficult to verify Best World’s strong sales in China based on “an unimpressive online and offline footprint.” On the back of the Business Times article, Best World shares slid 17% before the company was granted a trading halt pending a clarification announcement.
Checking the accuracy of the Business Times’ facts and figures is beyond the scope of this note. Instead, the aim is to analyse alternative financial metrics to judge if Business Times’ allegations have some substance. Overall, our analysis suggests that Business Times’ claims have some substance and investors should not be so quick to dismiss it.
2. HLX02: Innovation Could Overtake
The oncology treatment landscape in China is evolving rapidly as the government has prioritized access to innovative drugs to meet this significant unmet need. In particular, investors considering the Shanghai Henlius Biotech (1566213D HK) listing should be aware of the emergence of a drug that potentially is superior to Roche Holding AG (ROG SW)‘s Herceptin (and Shanghai Henlius’ HLX02) for the treatment of patients with HER2-positive breast cancer (and ultimately HER2-positive gastric cancer). While there should be good demand for cheaper alternatives to Herceptin, the availability of a superior alternative potentially shortens the lifecycle of Herceptin biosimilars.
China has only recently “modernized” its drug approval and reimbursement, so there is little precedent to rely upon to estimate the speed and magnitude of changes in the market. As brokers rollout forecasts for the company and HLX02, investors should ask if the numbers somehow reflect this risk.
We do not have a view of the offering, but tag this Insight as Bearish because we are highlighting a potential risk.
3. January Headline Data for China
Sometimes at Balding’s World we explore worm holes of Chinese data. Yes, granular data is awesome, but the global economic calendar should not be overlooked nor headline data taken for granted. To that end today we take a look at some key figures to recently emerge.
4. China Housing In The Guangdong – Hong Kong – Macau Greater Bay Area (GBA)
The long-awaited outline of the development plans for the Guangdong – Hong Kong – Macau Greater Bay Area (GBA) was announced Monday evening local time. In this note, we look at the China housing market dynamics in the key 8-9 cities on the mainland and the land acquisition activity by the major developers.
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