Daily Brief Health Care: Pharmaron Beijing , Max Healthcare Institute, Shijiazhuang Yiling Pharmaceutical and more

In today’s briefing:

A/H Premium Tracker (To 8 Dec 23): H Down Vs A, Again, Despite SOUTHBOUND Buying; Pharmas Weak
Max Healthcare (MAXHEALTH IN): New Hospital Acquisition Expands Footfall in a New Populus City
Shijiazhuang Yiling Pharmaceutical (002603.CH) – Valuation Rebound Is Worth Looking Forward To

A/H Premium Tracker (To 8 Dec 23): H Down Vs A, Again, Despite SOUTHBOUND Buying; Pharmas Weak

The New and Better (5mos old) A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
Hs with H/A pairs under-perform their As on average by 70+bp. Liquid HK H/A Pairs saw H/As -66bp. H/A Pair intracorrelation is down but it feels like liquidation.
SOUTHBOUND and NORTHBOUND flows were buys, and sells, respectively, but Hs have had two bad weeks in a row, and high premia A/H pairs have seen premia rise significantly.

Max Healthcare Institute (MAXHEALT IN) has entered into a share purchase agreement for acquisition of a 550-bedded Sahara Hospital in Lucknow, Uttar Pradesh for an enterprise value of INR9.4B (~$113M).
The Hospital currently serves ~2 lakh patients every year, with FY24 revenue run rate of INR2B. It has a renowned center of excellence for Neurosciences.
The Hospital has a potential to quickly ramp up beds in existing building and expand medical programs such as oncology, transplants, robotics, etc.

Now that the pandemic has passed, Yiling’s performance has to face a sharp decline due to the high base before, but in our view, the situation is not so bad.
According to the management,sales of cardiovascular and cerebrovascular products would gradually increase to make up for the sales decline of Lianhua Qingwen, which would still be higher than pre-pandemic level.
About 15-20% performance growth is still reachable in the future. PE of 20-30 is a reasonable range for Yiling. Being included in CSI 300 Index helps to improve the liquidity.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network