In today’s briefing:
- China Healthcare Weekly (Oct.20)-A Big Lesson from China TCM’s Deal Break, “Must Option” of Biotech
- SSE50 Index Rebalance Preview: Potential Inclusions Continue to Outperform; Trim into Strength
- JD.com (JD US): Boycotted by Male Users, Denies Run on JD Finance
- Pre-IPO China Resources Beverage – Due to the Pain Points, High Valuation Is Not Justified
- China Consumption Weekly (21 Oct 2024): Sun Art, Alibaba, Tesla, JD.com
- Singamas (716 HK): Positive Readthrough from CIMC
China Healthcare Weekly (Oct.20)-A Big Lesson from China TCM’s Deal Break, “Must Option” of Biotech
- The “industry clearing” of innovative drug companies is far longer and more brutal than imagined. But Chinese innovative drug ecosystem will ultimately usher in a better innovation pattern in the future.
- For every innovative pharmaceutical company with ambitious goals, globalization is a “must option”. With more and more Chinese biotech achieving success, the internationalization prospects will become better and better.
- China TCM’s privatization failure made us realize large SOEs we always believe in would violate their commitments to market/investors.Now, we need to get back to the fundamentals to minimize losses.
SSE50 Index Rebalance Preview: Potential Inclusions Continue to Outperform; Trim into Strength
- With over 95% of the review period complete, 4 non-constituents are in inclusion zone and 6 constituents are in deletion zone.
- We estimate one-way turnover of 6.5% at the December rebalance leading to a one-way trade of CNY 11.95bn (US$1.7bn). Index arb balances could increase the impact on the stocks.
- The potential adds have continued to outperform the potential deletes. There has been a big jump in the last few weeks as markets have rallied. Trim positions into strength.
JD.com (JD US): Boycotted by Male Users, Denies Run on JD Finance
- On October 18, JD denies there is a run on JD Finance.
- Many male users claimed they boycott JD for the invitation of Miss Yang, a talk show celebrity.
- We believe the event will negatively impact JD and benefit Alibaba.
Pre-IPO China Resources Beverage – Due to the Pain Points, High Valuation Is Not Justified
- The whole industry has entered a medium to low-speed growth stage, and the industry’s future growth rate will remain single-digit growth. So, CR Beverage’s future performance decline is inevitable.
- Due to serious homogenization/competition of packaged drinking water market, there’s not much room for innovation/iteration. CR Beverage’s sales-driven model is hard to bring “new story” to break through the dilemma.
- CR Beverage is clearly inferior to Nongfu Spring. Its valuation should be lower than Nongfu Spring. We think reasonable valuation of CR Beverage is about US$4 billion (or lower).
China Consumption Weekly (21 Oct 2024): Sun Art, Alibaba, Tesla, JD.com
- Alibaba is selling Sun Art, a listed supermarket subsidiary, as Sun Art’s revenue is shrinking.
- Alibaba gained 6 million new retailers on its Taobao Tmall platform year to date.
- In September Tesla’s sales volume increased by 66% YoY and all major Chinese NEV grew strongly.
Singamas (716 HK): Positive Readthrough from CIMC
- With its share price returning to HK$0.68 level, the investment value of Singamas Container Holdings (716 HK) has re-emerged.
- Its competitor, CIMC, has just issued a positive profit alert, indicating an impressive 888.7% and 317.3% growth in reported and recurring earnings, which is positive for Singamas.
- An 11% growth in the global containership fleet in FY24 is also beneficial to the company. Its net cash of HK$1.65bn equals 1.02x its market capitalisation.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
