HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

Aier Eye Hospital Group / Equity Bottom-Up

<ul>
<li>Licensing-Out deals of Chinese pharmaceutical assets are indeed significant milestones, but we should not exaggerate its significance. The product strength itself/subsequent progress are the true sources of clinical benefits/commercial value.</li>
<li>In the field of weight loss drugs, first-mover advantage may not be that obvious. The possibility of latecomers to disrupt first-mover would not be that low or time-consuming.</li>
<li>For Aier, 23Q4 results could show an obvious rebound, leading to relatively high growth in 2023 full year. However, Aier’s problems are still there, which means Aier is not undervalued.</li>
</ul>


Licensing-Out deals of Chinese pharmaceutical assets are indeed significant milestones, but we should not exaggerate its significance. The product strength itself/subsequent progress are the true sources of clinical benefits/commercial value.
In the field of weight loss drugs, first-mover advantage may not be that obvious. The possibility of latecomers to disrupt first-mover would not be that low or time-consuming.
For Aier, 23Q4 results could show an obvious rebound, leading to relatively high growth in 2023 full year. However, Aier’s problems are still there, which means Aier is not undervalued.


China Healthcare Weekly (Mar.31)- Milestone of Chinese Pharmaceutical Assets, Weight Loss Drug, Aier

<ul>
<li>Aier’s 23Q3 profit growth exceeded expectations. Considering the low base in 22Q4, Aier’s 23Q4 performance could show an obvious rebound. Then, the 2023 full-year results would be more certain.</li>
<li>Aier has a considerable amount of "off-balance-sheet profits" that can be incorporated into statements in the future. So, although Aier's growth rate has decreased, it wouldn’t collapse in short term.</li>
<li>More hidden problems would be exposed in the process of transferring off-balance sheet profits to the on-balance sheet. All the repurchased shares should be cancelled to reduce Aier’s registered capital.</li>
</ul>


Aier’s 23Q3 profit growth exceeded expectations. Considering the low base in 22Q4, Aier’s 23Q4 performance could show an obvious rebound. Then, the 2023 full-year results would be more certain.
Aier has a considerable amount of "off-balance-sheet profits" that can be incorporated into statements in the future. So, although Aier's growth rate has decreased, it wouldn’t collapse in short term.
More hidden problems would be exposed in the process of transferring off-balance sheet profits to the on-balance sheet. All the repurchased shares should be cancelled to reduce Aier’s registered capital.


Aier Eye Hospital (300015.CH) 23Q3 - While Enjoy the Rebound, Recognize the Endgame Behind the Story

<ul>
<li>Aier’s revenue would be up 20%+ YoY in 2023, but one risk is the slowing growth rate of refractive/other consumption upgrading projects in the context of sluggish consumption in 23H2.</li>
<li>The positive impact of aging on performance would not be able to hedge against the negative impact of declining birth rate, ultimately leading to a decline in overall performance growth.</li>
<li>When Aier's external expansion model fails and endogenous growth is lower-than-expectation, we suggest that Aier increase dividends/stock buybacks instead of ineffective expansion. This would make Aier more attractive to investors.</li>
</ul>


Aier’s revenue would be up 20%+ YoY in 2023, but one risk is the slowing growth rate of refractive/other consumption upgrading projects in the context of sluggish consumption in 23H2.
The positive impact of aging on performance would not be able to hedge against the negative impact of declining birth rate, ultimately leading to a decline in overall performance growth.
When Aier's external expansion model fails and endogenous growth is lower-than-expectation, we suggest that Aier increase dividends/stock buybacks instead of ineffective expansion. This would make Aier more attractive to investors.


Aier Eye Hospital Group (300015.CH) 23H1 - Time to Face the Gap Between Ideal and Reality

Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

Cross Asset Strategy

<ul>
<li>Industrials and Consumer Staples Remain Top Overweights, Though Sentiment Fragile for Both.</li>
<li>Energy sector shows signs of a turnaround from long-term decline, whilst Financials remain unloved by China investors.</li>
<li>Real Estate allocations have hit record lows, with average holdings at just 2.93%, while Consumer Discretionary sector approaches all-time highs.</li>
</ul>


Industrials and Consumer Staples Remain Top Overweights, Though Sentiment Fragile for Both.
Energy sector shows signs of a turnaround from long-term decline, whilst Financials remain unloved by China investors.
Real Estate allocations have hit record lows, with average holdings at just 2.93%, while Consumer Discretionary sector approaches all-time highs.


Thematic (Sector/Industry)

<ul>
<li>From peak allocations of over 8% at the height of the COVID-19 pandemic, China &amp; HK Health Care allocations have fallen back in to their long-term range</li>
<li>Greater China managers have actively rebalanced portfolios away from China &amp; HK Health Care over the last 6-months, with Taiwan Tech the key beneficiary</li>
<li>Venus MedTech and Jiangsu Hengrui Medicine led the exodus, but it wasn't completely one-sided, with Mindray Bio-Medical Electronics and Aier Eye Hospital Group capturing new investment from Greater China managers.</li>
</ul>


From peak allocations of over 8% at the height of the COVID-19 pandemic, China &amp; HK Health Care allocations have fallen back in to their long-term range
Greater China managers have actively rebalanced portfolios away from China &amp; HK Health Care over the last 6-months, with Taiwan Tech the key beneficiary
Venus MedTech and Jiangsu Hengrui Medicine led the exodus, but it wasn't completely one-sided, with Mindray Bio-Medical Electronics and Aier Eye Hospital Group capturing new investment from Greater China managers.


Greater China Funds: China Health Care Reversal

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)

China Healthcare Weekly (Mar.31)- Milestone of Chinese Pharmaceutical Assets, Weight Loss Drug, Aier

Chinese pharmaceutical companies have highly integrated into global market. For weight loss drug, the possibility of latecomers to disrupt first...

Xinyao (Criss) Wang

Aier Eye Hospital (300015.CH) 23Q3 - While Enjoy the Rebound, Recognize the Endgame Behind the Story

Aier's share price rebounded after 23Q3 results was released, but 2024 performance growth could be lower-than-expected. The contribution brought by...

Xinyao (Criss) Wang