Asia Pac ECM and Index Rebal, Shenton Research

Ke Yan, CFA, FRM

Asia Pac ECM and Index Rebal

Asia Pac IPO & Placement Research, China Biotech

DZT Research

DZT Research is an independent Asia Pacific equity specialist. Our quantitative research covers index rebalancing flows, alongside exchange data analytics accross Asia Pacific. On the equity capital markets side, we focus on Asia Pacific ECM, especially biotech and TMT. Our lead analyst is frequently cited by international media.

Quantitative Analysis

<ul>
<li>We analyse the changes of A-H premium on 143 stocks over the last week. The average A-H premium was 120.6% as of Jul 7th.</li>
<li>The average A-H premium changed by 5.9ppt week on week, led by consumer staples, consumer discretionary, energy.</li>
<li>We highlight weekly changes in A-H premium for BankComm, ICBC, CCB, BYD, Asymchem, Hisense, Baiyunshan, Yankuang Energy, New China Life.</li>
</ul>


We analyse the changes of A-H premium on 143 stocks over the last week. The average A-H premium was 120.6% as of Jul 7th.
The average A-H premium changed by 5.9ppt week on week, led by consumer staples, consumer discretionary, energy.
We highlight weekly changes in A-H premium for BankComm, ICBC, CCB, BYD, Asymchem, Hisense, Baiyunshan, Yankuang Energy, New China Life.


A-H Premium Weekly (Jul 7th): BankComm, ICBC, CCB, BYD, Asymchem, Hisense, Baiyunshan

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

Guangzhou Baiyunshan Pharmaceu / Equity Bottom-Up

Guangzhou Baiyunshan Pharmaceu (600332 CH)

<ul>
<li>Baiyunshan is not a typical TCM company. As Great Commerce accounts for the majority of revenue, it clearly drags down the quality of total assets and growth expectation for valuation.</li>
<li>As Jin Ge and Wang Lao Ji are facing different challenges, the overall growth/profitability of Baiyunshan is under pressure.Due to uncompetitive product line, Baiyunshan’s future growth appears to lack momentum.</li>
<li>The valuation of Baiyunshan-A share is still expensive, but Baiyunshan-H share is attractive. After all, the future consumption recovery would be beneficial for boosting Baiyunshan’s valuation. Then, trading opportunity occurs. </li>
</ul>


Baiyunshan is not a typical TCM company. As Great Commerce accounts for the majority of revenue, it clearly drags down the quality of total assets and growth expectation for valuation.
As Jin Ge and Wang Lao Ji are facing different challenges, the overall growth/profitability of Baiyunshan is under pressure.Due to uncompetitive product line, Baiyunshan’s future growth appears to lack momentum.
The valuation of Baiyunshan-A share is still expensive, but Baiyunshan-H share is attractive. After all, the future consumption recovery would be beneficial for boosting Baiyunshan’s valuation. Then, trading opportunity occurs. 


Guangzhou Baiyunshan Pharmaceutical (874.HK) - When Valuation Is Low Enough, Drawbacks Are Tolerable

<ul>
<li>We analyse the changes of A-H premium on 143 stocks over the last week. The average A-H premium was 113.6% as of May 26th.</li>
<li>The average A-H premium changed by 2.3ppt week on week, led by information technology, utilities, consumer discretionary and offset by financials.</li>
<li>We highlight weekly changes in A-H premium for Shandong Gold, China Longyuan, BYD, Shenhua, China Minsheng, CSSC Offshore, Shanghai Fudan, China Life, Flat Glass, CCCC.</li>
</ul>


We analyse the changes of A-H premium on 143 stocks over the last week. The average A-H premium was 113.6% as of May 26th.
The average A-H premium changed by 2.3ppt week on week, led by information technology, utilities, consumer discretionary and offset by financials.
We highlight weekly changes in A-H premium for Shandong Gold, China Longyuan, BYD, Shenhua, China Minsheng, CSSC Offshore, Shanghai Fudan, China Life, Flat Glass, CCCC.


A-H Premium Weekly (May 26th): Shandong Gold, China Longyuan, BYD, Shenhua, China Minsheng

<ul>
<li>We analyse the changes of A-H premium on 143 stocks over the last week. The average A-H premium was 111.6% as of May 12th.</li>
<li>The average A-H premium changed by 0.4ppt week on week, led by real estate, financials, utilities and offset by consumer staples, consumer discretionary, energy.</li>
<li>We highlight weekly changes in A-H premium for CCB, BoC, China Shenhua, Yankuang Energy, CHina Life.</li>
</ul>


We analyse the changes of A-H premium on 143 stocks over the last week. The average A-H premium was 111.6% as of May 12th.
The average A-H premium changed by 0.4ppt week on week, led by real estate, financials, utilities and offset by consumer staples, consumer discretionary, energy.
We highlight weekly changes in A-H premium for CCB, BoC, China Shenhua, Yankuang Energy, CHina Life.


A-H Premium Weekly (May 12th): CCB, BoC, China Shenhua, Yankuang Energy, CHina Life

<ul>
<li>The potential high-priced acquisition proposed by Wepon failed. In fact, Wepon is in a vicious circle. So, terminating the acquisition is not a bad thing for <a href="https://www.smartkarma.com/entities/consun-pharmaceutical-group" target="_blank" data-smartkarma-citation="entities:1261:1" rel="noopener">Consun Pharmaceutical (1681 HK)</a>.</li>
<li>Consun kept positive momentum and its performance was strong in 22H1. Such growth is expected to continue after China reopens as non-COVID related medical demand returns to normal.</li>
<li>Considering its solid business performance and large cash balance, Consun is obviously undervalued. In our view, even without Wepon’s deal as the catalyst, Consun still has investment value.</li>
</ul>


The potential high-priced acquisition proposed by Wepon failed. In fact, Wepon is in a vicious circle. So, terminating the acquisition is not a bad thing for Consun Pharmaceutical (1681 HK).
Consun kept positive momentum and its performance was strong in 22H1. Such growth is expected to continue after China reopens as non-COVID related medical demand returns to normal.
Considering its solid business performance and large cash balance, Consun is obviously undervalued. In our view, even without Wepon’s deal as the catalyst, Consun still has investment value.


Consun Pharmaceutical (1681.HK) - Still Has Investment Value Even Without High-Priced Acquisition

China

Guangzhou Baiyunshan Pharmaceutical Holdings Company Limited is a major Chinese pharmaceutical firm engaged in the research, development, manufacturing, and sales of traditional Chinese medicines, Western pharmaceuticals, chemical raw materials, and health products. The company operates across segments including Great Southern Traditional Chinese Medicine, Great Health, Great Commerce, and Great Medical. It was founded on September 1, 1997, and is headquartered in Guangzhou, China.

Guangzhou Baiyunshan Pharmaceutical (874 HK)

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Guangzhou Baiyunshan Pharmaceutical (874 HK)

A-H Premium Weekly (Jul 7th): BankComm, ICBC, CCB, BYD, Asymchem, Hisense, Baiyunshan

We analyzed A-H premium changes in the past week and highlight A-H premium changes for BankComm, ICBC, CCB, BYD, Asymchem, Hisense, Baiyunshan,...

Ke Yan, CFA, FRM