HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Capital Markets

Sunshine Lake Pharma / Equity Capital Markets

<ul>
<li>Most revenue was contributed by Kewei, but kewei has been included in VBP.Together with increasing competition, the outlook is gloomy if Sunshine Lake Pharma continues to mainly rely on Kewei.</li>
<li>There’s a significant gap in Sunshine Lake Pharma's R&amp;D progress/clinical data compared to the products of peers.The pipeline has been “disconnected” from the level of domestic biotech in recent years</li>
<li>Sunshine Lake Pharma is inferior to other pharmaceutical companies in China.Even if CJ Pharma will be merged into Sunshine Lake Pharma, its market value should be lower than leading Biotech.</li>
</ul>


Most revenue was contributed by Kewei, but kewei has been included in VBP.Together with increasing competition, the outlook is gloomy if Sunshine Lake Pharma continues to mainly rely on Kewei.
There’s a significant gap in Sunshine Lake Pharma's R&amp;D progress/clinical data compared to the products of peers.The pipeline has been “disconnected” from the level of domestic biotech in recent years
Sunshine Lake Pharma is inferior to other pharmaceutical companies in China.Even if CJ Pharma will be merged into Sunshine Lake Pharma, its market value should be lower than leading Biotech.


Pre-IPO Sunshine Lake Pharma - “Outdated” Pipeline Is Difficult to Obtain Decent Valuation

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

<ul>
<li>The vote on Fosun Pharma’s HK$24.60 offer for <a href="https://www.smartkarma.com/entities/shanghai-henlius-biotech-inc" target="_blank" data-smartkarma-citation="entities:27888:1" rel="noopener">Shanghai Henlius Biotech (2696 HK)</a> is on 22 January. The gross spread has ballooned to 21.8%, which suggests a deal break.</li>
<li>I previously stated that LVC’s trading behaviour over the coming days will indicate its voting intentions. Unfortunately, this behaviour suggests a high likelihood of blocking the vote.</li>
<li>Fosun Pharma has two potential options to secure LVC’s backing: increase the share alternative cap or introduce a rollover option. Both have challenges and are, therefore, not viable options.</li>
</ul>


The vote on Fosun Pharma’s HK$24.60 offer for Shanghai Henlius Biotech (2696 HK) is on 22 January. The gross spread has ballooned to 21.8%, which suggests a deal break.
I previously stated that LVC’s trading behaviour over the coming days will indicate its voting intentions. Unfortunately, this behaviour suggests a high likelihood of blocking the vote.
Fosun Pharma has two potential options to secure LVC’s backing: increase the share alternative cap or introduce a rollover option. Both have challenges and are, therefore, not viable options.


Henlius (2696 HK): Hurtling Towards a Likely Deal Break

<ul>
<li>The vote on Fosun Pharma’s HK$24.60 offer for <a href="https://www.smartkarma.com/entities/shanghai-henlius-biotech-inc" target="_blank" data-smartkarma-citation="entities:27888:1" rel="noopener">Shanghai Henlius Biotech (2696 HK)</a> is on 22 January. The gross spread ballooned today due to LVC’s amassing a blocking stake.</li>
<li>There are valid arguments for LVC to block the vote or to support the offer. LVC’s trading behaviour over the coming days will point to its voting intentions. </li>
<li>I continue to believe that LVC will support the offer. At the current price and for a 15 February payment, the gross/annualised spread is 9.1%/160%.</li>
</ul>


The vote on Fosun Pharma’s HK$24.60 offer for Shanghai Henlius Biotech (2696 HK) is on 22 January. The gross spread ballooned today due to LVC’s amassing a blocking stake.
There are valid arguments for LVC to block the vote or to support the offer. LVC’s trading behaviour over the coming days will point to its voting intentions. 
I continue to believe that LVC will support the offer. At the current price and for a 15 February payment, the gross/annualised spread is 9.1%/160%.


Henlius (2696 HK): Test of Nerves Awaiting LVC’s Next Move

<ul>
<li>The vote on Fosun Pharma’s HK$24.60 offer for <a href="https://www.smartkarma.com/entities/shanghai-henlius-biotech-inc" target="_blank" data-smartkarma-citation="entities:27888:1" rel="noopener">Shanghai Henlius Biotech (2696 HK)</a> is on 22 January. The gross spread widened after the initial tightening due to the precondition satisfaction.</li>
<li>Several readers have enquired about my thoughts on the widening spread. Our conversations have raised several potential concerns that could explain it.</li>
<li>I think these concerns are unwarranted, and the vote should pass. At the last close and for a 15 February payment, the gross/annualised spread is 4.7%/55.0%.</li>
</ul>


The vote on Fosun Pharma’s HK$24.60 offer for Shanghai Henlius Biotech (2696 HK) is on 22 January. The gross spread widened after the initial tightening due to the precondition satisfaction.
Several readers have enquired about my thoughts on the widening spread. Our conversations have raised several potential concerns that could explain it.
I think these concerns are unwarranted, and the vote should pass. At the last close and for a 15 February payment, the gross/annualised spread is 4.7%/55.0%.


Henlius (2696 HK): Anxiety Creeping Back Ahead of the 22 January Vote

<ul>
<li>
<a href="https://www.smartkarma.com/entities/shanghai-henlius-biotech-inc" target="_blank" data-smartkarma-citation="entities:27888:1" rel="noopener">Shanghai Henlius Biotech (2696 HK)</a>’s IFA opines that <a href="https://www.smartkarma.com/entities/shanghai-fosun-pharmaceutical-group" target="_blank" data-smartkarma-citation="entities:8045:1" rel="noopener">Shanghai Fosun Pharmaceutical (Group) (2196 HK)</a>’s HK$24.60 offer is fair and reasonable. The vote is on 22 January. </li>
<li>The key condition is approval by at least 75% of independent H Shareholders (&lt;10% of all independent H Shareholders rejection). There are recent movements in H Share substantial shareholders. </li>
<li>Key shareholders should be supportive of the cash/scrip offer. At the last close and for a 15 February payment, the gross/annualised spread is 2.9%/16.9%.</li>
</ul>



Shanghai Henlius Biotech (2696 HK)’s IFA opines that Shanghai Fosun Pharmaceutical (Group) (2196 HK)’s HK$24.60 offer is fair and reasonable. The vote is on 22 January. 
The key condition is approval by at least 75% of independent H Shareholders (&lt;10% of all independent H Shareholders rejection). There are recent movements in H Share substantial shareholders. 
Key shareholders should be supportive of the cash/scrip offer. At the last close and for a 15 February payment, the gross/annualised spread is 2.9%/16.9%.


Henlius (2696 HK): Interesting Shareholder Movements with the Vote on 22 January

China

3SBio is a leading biotechnology company engaged in the research, development, manufacturing, and marketing of biopharmaceutical products. The company's diverse portfolio addresses therapeutic areas such as nephrology, oncology, supportive cancer care, inflammation, infectious diseases, autoimmune diseases, metabolism, and dermatology, with key products including EPIAO and TPIAO. 3SBio was founded in 1993 and is headquartered in Shenyang, China.

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3SBio (1530 HK)

Pre-IPO Sunshine Lake Pharma - “Outdated” Pipeline Is Difficult to Obtain Decent Valuation

Sunshine Lake Pharma is heavily relying on Kewei, leading to a gloomy outlook due to competition/VBP. Pipeline has been “disconnected” from the...

Xinyao (Criss) Wang

Henlius (2696 HK): Hurtling Towards a Likely Deal Break

LVC’s trading behaviour suggests that it is likely to block the vote. Fosun Pharma has two potential options to secure LVC’s backing. Both have...

Arun George

Henlius (2696 HK): Test of Nerves Awaiting LVC’s Next Move

There are valid arguments for LVC to block the vote and support the offer. LVC’s trading behaviour over the coming days will point to its voting...

Arun George

Henlius (2696 HK): Anxiety Creeping Back Ahead of the 22 January Vote

Several readers have enquired about my thoughts on the widening spread. Our conversations have raised several potential concerns that could explain...

Arun George

Henlius (2696 HK): Interesting Shareholder Movements with the Vote on 22 January

Key shareholders will be supportive, and this is a done deal. At the last close, the gross/annualised spread for a 15 February payment was 2.9%...

Arun George

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Pre-IPO Sunshine Lake Pharma - “Outdated” Pipeline Is Difficult to Obtain Decent Valuation

​Sunshine Lake Pharma is heavily relying on Kewei, leading to a gloomy outlook due to competition/VBP. Pipeline has been “disconnected” from the...

Xinyao (Criss) Wang

Henlius (2696 HK): Hurtling Towards a Likely Deal Break

LVC’s trading behaviour suggests that it is likely to block the vote. Fosun Pharma has two potential options to secure LVC’s backing. Both have...

Arun George

Henlius (2696 HK): Test of Nerves Awaiting LVC’s Next Move

There are valid arguments for LVC to block the vote and support the offer. LVC’s trading behaviour over the coming days will point to its voting...

Arun George

Henlius (2696 HK): Anxiety Creeping Back Ahead of the 22 January Vote

Several readers have enquired about my thoughts on the widening spread. Our conversations have raised several potential concerns that could explain...

Arun George

Henlius (2696 HK): Interesting Shareholder Movements with the Vote on 22 January

Key shareholders will be supportive, and this is a done deal. At the last close, the gross/annualised spread for a 15 February payment was 2.9%...

Arun George

Sunshine Lake Pharma is heavily relying on Kewei, leading to a gloomy outlook due to competition/VBP. Pipeline has been “disconnected” from the...