HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Thematic (Sector/Industry)

<ul>
<li>Some assets in A-share that were considered to have long-term growth but are not anymore. Then the logic of capital's allocation in A-share isn’t based on growth, but on liquidity.</li>
<li>There’s no real separation between local finance and medical insurance fund. So, there could be “surprises” during the promotion of DRGs policy. Then a slump in sentiment and valuations is possible.</li>
<li>For China healthcare, there’re structural opportunities and rebounds this year. We analyzed the possible trajectory of stock price fluctuations in different sectors, and also our top pick.</li>
</ul>


Some assets in A-share that were considered to have long-term growth but are not anymore. Then the logic of capital's allocation in A-share isn’t based on growth, but on liquidity.
There’s no real separation between local finance and medical insurance fund. So, there could be “surprises” during the promotion of DRGs policy. Then a slump in sentiment and valuations is possible.
For China healthcare, there’re structural opportunities and rebounds this year. We analyzed the possible trajectory of stock price fluctuations in different sectors, and also our top pick.


2023H2 China Healthcare Investment Strategy and Top Pick

<ul>
<li>According to the latest requirements of NHSA, the inclusion of biological drugs in VBP is an inevitable trend, and seven varieties could be included in the upcoming 9th national VBP.</li>
<li>When the “noise” of consumption upgrading fades, the so-called product pricing power doesn't belong to enterprises, but would return to consumers themselves.This is what companies/investors need to be aware of. </li>
<li>We hope that investors can rationally see the applications and impacts of ChatGPT in the medical field. Its popularity and adoption may not be as fast as expected.</li>
</ul>


According to the latest requirements of NHSA, the inclusion of biological drugs in VBP is an inevitable trend, and seven varieties could be included in the upcoming 9th national VBP.
When the “noise” of consumption upgrading fades, the so-called product pricing power doesn't belong to enterprises, but would return to consumers themselves.This is what companies/investors need to be aware of. 
We hope that investors can rationally see the applications and impacts of ChatGPT in the medical field. Its popularity and adoption may not be as fast as expected.


China Healthcare Weekly (Jun.16)- 9th National VBP Update, “Noise” of Consumption Upgrading, ChatGPT

Equity Bottom-Up

Clover Biopharmaceuticals / Equity Bottom-Up

<ul>
<li>The General Office of National Health Commission issued a notice on further strengthening the management of clinical medication for children. Pediatric TCM is more popular, with decent growth potential.</li>
<li>Long-Term money choosing to leave A-share isn't due to geopolitical risks. If outlook isn't good, the logic of capital's allocation in A-share isn't based on promising growth, but on liquidity instead.</li>
<li>We analyzed key points of <a href="https://www.smartkarma.com/entities/clover-biopharmaceuticals-ltd" target="_blank" data-smartkarma-citation="entities:33029:1" rel="noopener">Clover Biopharmaceuticals (2197 HK)</a>. The Company has entered a vicious cycle. If Clover is abandoned by the market, it will lead to lack of liquidity.</li>
</ul>


The General Office of National Health Commission issued a notice on further strengthening the management of clinical medication for children. Pediatric TCM is more popular, with decent growth potential.
Long-Term money choosing to leave A-share isn't due to geopolitical risks. If outlook isn't good, the logic of capital's allocation in A-share isn't based on promising growth, but on liquidity instead.
We analyzed key points of Clover Biopharmaceuticals (2197 HK). The Company has entered a vicious cycle. If Clover is abandoned by the market, it will lead to lack of liquidity.


China Healthcare Weekly (Jun.9) - Pediatric TCM New Policy, Long-Term Money Dislikes A-Share, Clover

Aier Eye Hospital Group / Equity Bottom-Up

<ul>
<li>Aier’s performance slowed significantly in 2022, with revenue and net profit growth rates at their lowest in nearly a decade.Although performance rebounded in 23Q1, the growth rate lags behind peers.</li>
<li>In front of increasing competition and difficulty of finding good acquisition targets, Aier’s poor operational capabilities and endogenous growth cannot support rapid growth. The beautiful story has shown obvious cracks.</li>
<li>Future single-digit growth is inevitable. Aier is significantly overvalued due to problematic long logic. It should be noted that there would be four further holdings reductions for Aier this year.</li>
</ul>


Aier’s performance slowed significantly in 2022, with revenue and net profit growth rates at their lowest in nearly a decade.Although performance rebounded in 23Q1, the growth rate lags behind peers.
In front of increasing competition and difficulty of finding good acquisition targets, Aier’s poor operational capabilities and endogenous growth cannot support rapid growth. The beautiful story has shown obvious cracks.
Future single-digit growth is inevitable. Aier is significantly overvalued due to problematic long logic. It should be noted that there would be four further holdings reductions for Aier this year.


Aier Eye Hospital Group (300015.CH) 2022/23Q1 - The Era Belonging to Aier Has Come to an End

Hygeia Healthcare Group / Equity Bottom-Up

<ul>
<li>In 2022, Hygeia maintained stable revenue growth but with lower-than-expected profit performance. We think Hygeia’s profitability would improve gradually in the future as more and more new hospitals become break-even.</li>
<li>Different from Aier/Topchoice, Hygeia’s acquired hospitals would be directly incorporated into the listed company, which means all aspects of consideration would be prudent. This is clearly more beneficial for investors/shareholders.</li>
<li>Hygeia’s business model has proven to be replicable.The implementation of DRG policy has no significant impact on profitability. Hygeia is expected to have higher valuation than Aier/Topchoice in the future.</li>
</ul>


In 2022, Hygeia maintained stable revenue growth but with lower-than-expected profit performance. We think Hygeia’s profitability would improve gradually in the future as more and more new hospitals become break-even.
Different from Aier/Topchoice, Hygeia’s acquired hospitals would be directly incorporated into the listed company, which means all aspects of consideration would be prudent. This is clearly more beneficial for investors/shareholders.
Hygeia’s business model has proven to be replicable.The implementation of DRG policy has no significant impact on profitability. Hygeia is expected to have higher valuation than Aier/Topchoice in the future.


Hygeia Healthcare (6078.HK) - Profits Fell Short of Expectations, but the Outlook Remains Positive

China

Aier Eye Hospital Group Co., Ltd provides ophthalmological services.  The Company's services include ophthalmological diagnosis and treatments.

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Aier Eye Hospital Group (300015 CH)

2023H2 China Healthcare Investment Strategy and Top Pick

There're structural opportunity in China healthcare in 23H2. We advise investors not to miss out.Risks remain, offloading after rebound is...

Xinyao (Criss) Wang

China Healthcare Weekly (Jun.16)- 9th National VBP Update, “Noise” of Consumption Upgrading, ChatGPT

9th national VBP may include biological drugs, which is inevitable trend. Product pricing power will return to consumers themselves as “noise” of...

Xinyao (Criss) Wang