Daily Brief China: Akeso Biopharma Inc, Jiangxi Rimag Group, Sichuan Kelun-Biotech Biopharm, China Vanke and more

• Disputable Phase III result of Akeso’s (9926 HK) flagship pipeline Ivonescimab (AK112) caused Akeso’s share price to drop 28% in three days, reaching the bottom of a year-long trading range;
• The fundamental difference of opinions is around Ivonescimab’s global prospects against (1) Merck’s Keytruda, (2) J&J’s Rybrevant, (3) Kelun’s SKB264 and domestic prospect against (4) Innovent’s IBI305;
• Some answers are clear while others are now. What can provide answers are (1) SKB264‘s Phase III data, and to a lesser degree (2) AK112’s head-to-head trial against Keytruda.

• Considering the dominant position of medical imaging centers in public hospitals and challenges from other players, future development space of Rimag would be squeezed,and even will soon encounter growth bottlenecks.
• Although Rimag turned losses into profits, we still have doubts about its future profitability due to increasing costs and potential price decline.This business may fail to bring investors decent profits.
• Rimag’s post-investment valuation after last round financing isn’t cheap.Given the uncertainty of future revenue growth prospects and the real market space, P/S of below 3 is a more comfortable range.

• The imagination space and good stories for Sichuan Kelun-Biotech Biopharm (6990 HK) at this stage mainly come from SKB264. The market has higher expectations for SKB264’s clinical data on NSCLC/TNBC. 
• The better the clinical results of SKB264 +PD1/L1, the greater the negative impact on AK112’s future expectations/market space in NSCLC. ADC +PD-1 seems more “convincing” than the logic of BsAb.
• This July, restricted shares of major shareholders will be lifted, which may lead to big share price fluctuation if they reduce their shareholdings. Investors need not rush to be long.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• China Vanke