HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Capital Markets

Jiangsu Hengrui Medicine / Equity Capital Markets

<ul>
<li>Trump signed an executive order aimed at lowering prescription drug prices in the US, but the specific implementation may encounter obstacles. This is good news for China's innovative drug assets. </li>
<li>Under tariff/trade war, as long as the US does not issue any bill proposing to suspend the technology exchange, licensing-out business model of China biotech will not be substantially affected.</li>
<li>Hengrui's IPO in Hong Kong is not attractive from a fundamental perspective. However, the recent strong performance of Hengrui's A-share has lifted investors' sentiment, making them "interested" in this IPO.</li>
</ul>


Trump signed an executive order aimed at lowering prescription drug prices in the US, but the specific implementation may encounter obstacles. This is good news for China's innovative drug assets. 
Under tariff/trade war, as long as the US does not issue any bill proposing to suspend the technology exchange, licensing-out business model of China biotech will not be substantially affected.
Hengrui's IPO in Hong Kong is not attractive from a fundamental perspective. However, the recent strong performance of Hengrui's A-share has lifted investors' sentiment, making them "interested" in this IPO.


China Healthcare Weekly (May.18) - Trump to Lower US Drug Prices, Thoughts on Hengrui's IPO Pricing

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/jiangsu-hengrui-medicine-co-ltd" target="_blank" data-smartkarma-citation="entities:14128:1" rel="noopener">Jiangsu Hengrui Medicine (600276 CH)</a>, a China-based pharmaceutical company, aims to raise around US$1.3bn in its H-share listing.</li>
<li>JHP Has been ranked as one of the global Top 50 pharmaceutical companies by Pharm Exec for six consecutive years since 2019.</li>
<li>We have looked at the company’s past performance and other deal dynamics in our previous note. In this note, we talk about the IPO pricing.</li>
</ul>



Jiangsu Hengrui Medicine (600276 CH), a China-based pharmaceutical company, aims to raise around US$1.3bn in its H-share listing.
JHP Has been ranked as one of the global Top 50 pharmaceutical companies by Pharm Exec for six consecutive years since 2019.
We have looked at the company’s past performance and other deal dynamics in our previous note. In this note, we talk about the IPO pricing.


Jiangsu Hengrui Pharma A/H Listing - Low-End Is Probably Close to Fair Value

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/jiangsu-hengrui-medicine-co-ltd" target="_blank" data-smartkarma-citation="entities:14128:1" rel="noopener">Jiangsu Hengrui Medicine (600276 CH)</a> could raise up to US$1.6bn in its H-share listing if the Offer Size Adjustment Option and the Overallotment Option are both exercised.</li>
<li>There is a big allocation to cornerstone investors that is locked up for 6 months. That eliminates the possibility of Fast Entry inclusion to global indexes.</li>
<li>Jiangsu Hengrui (1276 HK) should be added to Southbound Stock Connect from the open of trading on 20 June following the end of the Price Stabilisation period.</li>
</ul>



Jiangsu Hengrui Medicine (600276 CH) could raise up to US$1.6bn in its H-share listing if the Offer Size Adjustment Option and the Overallotment Option are both exercised.
There is a big allocation to cornerstone investors that is locked up for 6 months. That eliminates the possibility of Fast Entry inclusion to global indexes.
Jiangsu Hengrui (1276 HK) should be added to Southbound Stock Connect from the open of trading on 20 June following the end of the Price Stabilisation period.


Jiangsu Hengrui (1276 HK) H-Share IPO: Index Inclusion Later This Year

<ul>
<li>
<a href="https://www.smartkarma.com/entities/jiangsu-hengrui-medicine-co-ltd" target="_blank" data-smartkarma-citation="entities:14128:1" rel="noopener">Jiangsu Hengrui Medicine (600276 CH)</a> (JHP), a China-based pharmaceutical company, aims to raise around US$2bn in its H-share listing.</li>
<li>
<a href="https://www.smartkarma.com/entities/jiangsu-hengrui-pharmaceuticals" target="_blank" data-smartkarma-citation="entities:44224:1" rel="noopener">JHP</a> has been ranked as one of the global Top 50 pharmaceutical companies by Pharm Exec for six consecutive years since 2019.</li>
<li>We have looked at the past performance and other dynamics in our previous note. In this note, we talk about the updates and provide our thoughts on the A/H premium.</li>
</ul>



Jiangsu Hengrui Medicine (600276 CH) (JHP), a China-based pharmaceutical company, aims to raise around US$2bn in its H-share listing.

JHP has been ranked as one of the global Top 50 pharmaceutical companies by Pharm Exec for six consecutive years since 2019.
We have looked at the past performance and other dynamics in our previous note. In this note, we talk about the updates and provide our thoughts on the A/H premium.


Jiangsu Hengrui Pharma A/H Listing - PHIP Updates and Updated Thoughts on A/H Premium

<ul>
<li>Hengrui's high growth in 2024/25Q1 mainly relies on the realization of BD cooperation. The short-term performance improvement cannot conceal the long-term pressure. The turning point of endogenous growth hasn't arrived.</li>
<li>Hengrui would continue to be affected by VBP. The generic drug business is “outdated”, whose valuation contribution is negligible. The BD model will lead to significant fluctuations in performance.</li>
<li>Our forecast is net profit YoY growth in 2025-2027 would fall back to 15-20%. Hengrui’s valuation should be lower than that of BeiGene and Hansoh in Hong Kong stock market.</li>
</ul>


Hengrui's high growth in 2024/25Q1 mainly relies on the realization of BD cooperation. The short-term performance improvement cannot conceal the long-term pressure. The turning point of endogenous growth hasn't arrived.
Hengrui would continue to be affected by VBP. The generic drug business is “outdated”, whose valuation contribution is negligible. The BD model will lead to significant fluctuations in performance.
Our forecast is net profit YoY growth in 2025-2027 would fall back to 15-20%. Hengrui’s valuation should be lower than that of BeiGene and Hansoh in Hong Kong stock market.


Pre-IPO Jiangsu Hengrui Medicine H Share Listing (PHIP Updates) - Some Points Worth the Attention

China

Jiangsu Hengrui Medicine Co., Ltd. develops, manufactures, and markets a variety of medicines and medicine packing materials. The Company's products include anti-tumor medicines, pain-killers, anti-infection medicines, aluminum foil, and other related products.

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Jiangsu Hengrui Medicine (600276 CH)

China Healthcare Weekly (May.18) - Trump to Lower US Drug Prices, Thoughts on Hengrui's IPO Pricing

Hengrui's HK IPO debut is strong, driven by positive sentiment for AH listing and the small IPO size (225 million circulating shares). Investors...

Xinyao (Criss) Wang

Jiangsu Hengrui Pharma A/H Listing - Low-End Is Probably Close to Fair Value

Jiangsu Hengrui Medicine (600276 CH), a China-based pharmaceutical company, aims to raise around US$1.3bn in its H-share listing. In this note, we...

Sumeet Singh

Jiangsu Hengrui Pharma A/H Listing - PHIP Updates and Updated Thoughts on A/H Premium

Jiangsu Hengrui Medicine (600276 CH) (JHP), a China-based pharmaceutical company, aims to raise around US$2bn in its H-share listing. In this note,...

Sumeet Singh

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

China Healthcare Weekly (May.18) - Trump to Lower US Drug Prices, Thoughts on Hengrui's IPO Pricing

Hengrui's HK IPO debut is strong, driven by positive sentiment for AH listing and the small IPO size (225 million circulating shares). Investors...

Xinyao (Criss) Wang

Jiangsu Hengrui Pharma A/H Listing - Low-End Is Probably Close to Fair Value

Jiangsu Hengrui Medicine (600276 CH), a China-based pharmaceutical company, aims to raise around US$1.3bn in its H-share listing. In this note, we...

Sumeet Singh

Jiangsu Hengrui (1276 HK) H-Share IPO: Index Inclusion Later This Year

Jiangsu Hengrui could raise up to US$1.6bn in its H-share offering. The huge allocation to cornerstone investors will result in missed index Fast...

Brian Freitas

Jiangsu Hengrui Pharma A/H Listing - PHIP Updates and Updated Thoughts on A/H Premium

Jiangsu Hengrui Medicine (600276 CH) (JHP), a China-based pharmaceutical company, aims to raise around US$2bn in its H-share listing. In this note,...

Sumeet Singh

Pre-IPO Jiangsu Hengrui Medicine H Share Listing (PHIP Updates) - Some Points Worth the Attention

​Hengrui's growth in 2024/25Q1 hinges on BD cooperation, but long-term pressure remains. VBP will lead to future performance decline. Valuation...

Xinyao (Criss) Wang

Hengrui's growth in 2024/25Q1 hinges on BD cooperation, but long-term pressure remains. VBP will lead to future performance decline. Valuation...