HK/China Equity Long-Short

Osbert Tang, CFA

Thematic (Sector/Industry)

<ul>
<li>Following a 20% rally in 1H25, the market has built in excessive optimism on the HSI. Historically, average returns for Jul-Oct are negative, suggesting caution is needed.</li>
<li>The top 10 best-performing constituents are sitting on 24x FY25F PER, much higher than 11x for the Index, implying that earnings excitement has been well factored in. </li>
<li>Among the worst-performing ones in 1H25, <a href="https://www.smartkarma.com/entities/byd-electronic-international-co-ltd" target="_blank" data-smartkarma-citation="entities:1927:1" rel="noopener">BYD Electronics (285 HK)</a>, <a href="https://www.smartkarma.com/entities/haier-smart-home-co-ltd-b3ef445f-0f54-4586-8c58-9073de98d60e" target="_blank" data-smartkarma-citation="entities:31105:1" rel="noopener">Haier Smart Home (6690 HK)</a>, and <a href="https://www.smartkarma.com/entities/techtronic-industries-co-ltd" target="_blank" data-smartkarma-citation="entities:4561:1" rel="noopener">Techtronic Industries (669 HK)</a> look appealing in 2H25.</li>
</ul>


Following a 20% rally in 1H25, the market has built in excessive optimism on the HSI. Historically, average returns for Jul-Oct are negative, suggesting caution is needed.
The top 10 best-performing constituents are sitting on 24x FY25F PER, much higher than 11x for the Index, implying that earnings excitement has been well factored in. 
Among the worst-performing ones in 1H25, BYD Electronics (285 HK), Haier Smart Home (6690 HK), and Techtronic Industries (669 HK) look appealing in 2H25.


HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Capital Markets

China Medical System / Equity Capital Markets

<ul>
<li>CMS announced proposed secondary listing on the SGX-ST. The Company is undergoing pipeline adjustments and strategic transformation. Its growth logic is shifting from "dependence on generic drugs" to "innovation-driven drugs".</li>
<li>However, the valuation logic has changed. The capital market will give high valuations to companies that achieve overseas licensing-out deals, rather than the attractive DCF model based on traditional business.</li>
<li>After 2023/2024 performance downturn, revenue growth is expected to return to positive in 2025. But in essence, CMS’s current business model is license-in, which will affect the future valuation performance. </li>
</ul>


CMS announced proposed secondary listing on the SGX-ST. The Company is undergoing pipeline adjustments and strategic transformation. Its growth logic is shifting from "dependence on generic drugs" to "innovation-driven drugs".
However, the valuation logic has changed. The capital market will give high valuations to companies that achieve overseas licensing-out deals, rather than the attractive DCF model based on traditional business.
After 2023/2024 performance downturn, revenue growth is expected to return to positive in 2025. But in essence, CMS’s current business model is license-in, which will affect the future valuation performance. 


Pre-IPO China Medical System (867 HK) - About the IPO in Singapore and Concerns on Valuation Outlook

Innovent Biologics Inc / Equity Capital Markets

<ul>
<li>The valuation bubble of innovative drug companies is about to burst as some founders/shareholders have started to reduce their holdings and cash out. We recommend investors to be rational.</li>
<li>Domestic innovative drugs market size would be about RMB600 billion by 2035. It is estimated the whole innovative drug industry's CAGR would be about 15% for the next decade.</li>
<li>Innovent announced Placement with the Placing price of HK$78.36/share. However, valuation is clearly at a high level. A more suitable option is to take profits rather than buy.</li>
</ul>


The valuation bubble of innovative drug companies is about to burst as some founders/shareholders have started to reduce their holdings and cash out. We recommend investors to be rational.
Domestic innovative drugs market size would be about RMB600 billion by 2035. It is estimated the whole innovative drug industry's CAGR would be about 15% for the next decade.
Innovent announced Placement with the Placing price of HK$78.36/share. However, valuation is clearly at a high level. A more suitable option is to take profits rather than buy.


China Healthcare Weekly (Jun.29) - Biotech Valuation Bubble Is About to Burst, Innovent's Placement

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

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.

Quantitative Analysis

<ul>
<li>We analyze statistics on top repurchases over one week, one month, one quarter and one year periods ended on Jun 27th based on HKEx daily reports.</li>
<li>In the past 7 days, the top 3 companies that repurchased the most shares from the market were Tencent (700 HK), AIA (1299 HK), Yantai North Andre Juice (2218 HK).</li>
<li>In the past 30 days, the top 3 companies that repurchased the most shares from the market were Tencent (700 HK), AIA (1299 HK), Chow Tai Fook Jewellery (1929 HK).</li>
</ul>


We analyze statistics on top repurchases over one week, one month, one quarter and one year periods ended on Jun 27th based on HKEx daily reports.
In the past 7 days, the top 3 companies that repurchased the most shares from the market were Tencent (700 HK), AIA (1299 HK), Yantai North Andre Juice (2218 HK).
In the past 30 days, the top 3 companies that repurchased the most shares from the market were Tencent (700 HK), AIA (1299 HK), Chow Tai Fook Jewellery (1929 HK).


Hong Kong Buybacks Weekly (Jun 27th): Tencent, AIA, Yantai North Andre Juice

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

<ul>
<li>
<a href="https://www.smartkarma.com/entities/innovent-biologics-inc" target="_blank" data-smartkarma-citation="entities:27452:1" rel="noopener">Innovent Biologics Inc (1801 HK)</a> aims to raise around US$500m for R&amp;D and marketing.</li>
<li>The company has undertaken a number of deals in the past, with the overall results being mixed but recent deals have done well.</li>
<li>In this note, we will talk about the deal dynamics and run the deal through our ECM framework.</li>
</ul>



Innovent Biologics Inc (1801 HK) aims to raise around US$500m for R&amp;D and marketing.
The company has undertaken a number of deals in the past, with the overall results being mixed but recent deals have done well.
In this note, we will talk about the deal dynamics and run the deal through our ECM framework.


Innovent Biologics Placement - Second for the Month, Stock Has Doubled but Momentum Is Strong

China

WuXi Biologics (Cayman) Inc. is a leading open-access R&D capability and technology platform company serving the pharmaceutical, biotechnology, and medical device industries, with operations in China, U.S., and Iceland.  We provide a broad and integrated portfolio of laboratory and manufacturing services throughout the drug and medical device R&D process.  Our services are designed to help our global partners in shortening the cycle and lowering the cost of drug and medical device R&D through cost-effective and efficient solutions. 

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Wuxi Biologics (2269 HK)

HK Strategy: Some Ideas for 2H25

Excessive optimism on HSI after a 20% rally YTD, caution needed for Jul-Oct as historically returns are negative. BYD Electronic, Haier Smart...

Osbert Tang, CFA

Pre-IPO China Medical System (867 HK) - About the IPO in Singapore and Concerns on Valuation Outlook

Listing in SGX opens a new chapter and CMS is undergoing pipeline adjustments and strategic transformation. But as valuation logic changes, license...

Xinyao (Criss) Wang

China Healthcare Weekly (Jun.29) - Biotech Valuation Bubble Is About to Burst, Innovent's Placement

The valuation bubble of innovative drug companies may burst soon, with some founders/shareholders already cashing out. Innovent's Placing Price of...

Xinyao (Criss) Wang

Hong Kong Buybacks Weekly (Jun 27th): Tencent, AIA, Yantai North Andre Juice

We analyzed the Hong Kong buyback data in the past week and highlight the top 3 companies that repurchased the most shares were Tencent (700 HK),...

Ke Yan, CFA, FRM

Innovent Biologics Placement - Second for the Month, Stock Has Doubled but Momentum Is Strong

Innovent Biologics Inc (1801 HK) aims to raise around US$500m for R&D and marketing. In this note, we talk about the deal dynamics.

Sumeet Singh

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

HK Strategy: Some Ideas for 2H25

​Excessive optimism on HSI after a 20% rally YTD, caution needed for Jul-Oct as historically returns are negative. BYD Electronic, Haier Smart...

Osbert Tang, CFA

Pre-IPO China Medical System (867 HK) - About the IPO in Singapore and Concerns on Valuation Outlook

Listing in SGX opens a new chapter and CMS is undergoing pipeline adjustments and strategic transformation. But as valuation logic changes, license...

Xinyao (Criss) Wang

China Healthcare Weekly (Jun.29) - Biotech Valuation Bubble Is About to Burst, Innovent's Placement

The valuation bubble of innovative drug companies may burst soon, with some founders/shareholders already cashing out. Innovent's Placing Price of...

Xinyao (Criss) Wang

Hong Kong Buybacks Weekly (Jun 27th): Tencent, AIA, Yantai North Andre Juice

We analyzed the Hong Kong buyback data in the past week and highlight the top 3 companies that repurchased the most shares were Tencent (700 HK),...

Ke Yan, CFA, FRM

Innovent Biologics Placement - Second for the Month, Stock Has Doubled but Momentum Is Strong

Innovent Biologics Inc (1801 HK) aims to raise around US$500m for R&D and marketing. In this note, we talk about the deal dynamics.

Sumeet Singh

Excessive optimism on HSI after a 20% rally YTD, caution needed for Jul-Oct as historically returns are negative. BYD Electronic, Haier Smart...