HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

<p>We view the FY21 (Year end Mar) result of <a href="https://www.smartkarma.com/entities/china-dongxiang-group-co" target="_blank" data-smartkarma-citation="entities:1068:1" rel="noopener">China Dongxiang Group Co (3818 HK)</a> positively, despite a dividend payout ratio which is lower than expected. As we wrote in <a href="https://www.smartkarma.com/insights/china-dongxiang-3818-hk-what-can-we-expect-from-the-final-result" target="_blank" data-smartkarma-citation="insights:53174" rel="noopener">China Dongxiang (3818 HK): What Can We Expect from the Final Result?</a>, its sportswear business in China has recorded good turnaround, with gross profit soared 46.3% YoY and 27.9% HoH. Meanwhile, its investment business also registered an income of Rmb2.1bn for full-year, or Rmb759.7m for 2H21, up 88.7% YoY.</p><p>Going forward, we expect CNDX's strategy to bring about further improvement in its sportswear business in China. It has also disclosed more names of listed equity that it hold both directly and indirectly and they are all of good quality, in our view. The stock is trading on 47% discount to book value which made up of 14% of net cash, 73% of investment portfolio and 13% of other net assets. Frankly, we think such valuation is too depressed and believe there is more upside room even after a 52% rally in share price YTD.</p>

We view the FY21 (Year end Mar) result of China Dongxiang Group Co (3818 HK) positively, despite a dividend payout ratio which is lower than expected. As we wrote in China Dongxiang (3818 HK): What Can We Expect from the Final Result?, its sportswear business in China has recorded good turnaround, with gross profit soared 46.3% YoY and 27.9% HoH. Meanwhile, its investment business also registered an income of Rmb2.1bn for full-year, or Rmb759.7m for 2H21, up 88.7% YoY.Going forward, we expect CNDX's strategy to bring about further improvement in its sportswear business in China. It has also disclosed more names of listed equity that it hold both directly and indirectly and they are all of good quality, in our view. The stock is trading on 47% discount to book value which made up of 14% of net cash, 73% of investment portfolio and 13% of other net assets. Frankly, we think such valuation is too depressed and believe there is more upside room even after a 52% rally in share price YTD.

China Dongxiang (3818 HK): Lower-Than-Expected Dividends but Still A Marvelous FY21

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.

Equity Capital Markets

Hygeia Healthcare / Equity Capital Markets

<p>Warburg Pincus aims to raise around US$216m via selling 3.2% of Hygeia Healthcare. This won’t be the first selldown by Warburg. </p><p>Despite having been listed just around a year ago, the stock has already seen two placements, both in Jan 2021, just after the lock-up expiry. Both the past deals did well. However, the stock was trading a whole lot lower at that time.</p><p>In this note, we will run the deal through our ECM framework and talk about the deal dynamics.</p><div><h2>Our previous coverage on Hygeia</h2></div><div><ul style="list-style-type: disc;">
<li dir="ltr"><p><a href="https://www.smartkarma.com/insights/hygeia-healthcare-pre-ipo-the-making-of-jinxin-in-the-oncology-segment" target="_blank" rel="noopener">Hygeia Healthcare (海吉亚) Pre-IPO: The making of Jinxin in the oncology segment</a></p></li>
<li dir="ltr"><a href="https://www.smartkarma.com/insights/hygeia-healthcare-pre-ipo-phip-updates-and-thoughts-on-valuation" target="_blank" rel="noopener">Hygeia Healthcare (海吉亚) Pre-IPO: PHIP Updates and Thoughts on Valuation</a></li>
<li dir="ltr"><a href="https://www.smartkarma.com/insights/hygeia-healthcare-ipo-hot-deal-but-expect-tiny-allocation" target="_blank" rel="noopener">Hygeia Healthcare (海吉亚) IPO: Hot Deal but Expect Tiny Allocation</a></li>
<li dir="ltr"><a href="https://www.smartkarma.com/insights/hygeia-healthcare-ipo-trading-upside-might-take-time-to-crystalize" target="_blank" rel="noopener">Hygeia Healthcare (海吉亚) IPO Trading: Upside Might Take Time to Crystalize</a></li>
</ul></div>

Warburg Pincus aims to raise around US$216m via selling 3.2% of Hygeia Healthcare. This won’t be the first selldown by Warburg. Despite having been listed just around a year ago, the stock has already seen two placements, both in Jan 2021, just after the lock-up expiry. Both the past deals did well. However, the stock was trading a whole lot lower at that time.In this note, we will run the deal through our ECM framework and talk about the deal dynamics.Our previous coverage on Hygeia
Hygeia Healthcare (海吉亚) Pre-IPO: The making of Jinxin in the oncology segment
Hygeia Healthcare (海吉亚) Pre-IPO: PHIP Updates and Thoughts on Valuation
Hygeia Healthcare (海吉亚) IPO: Hot Deal but Expect Tiny Allocation
Hygeia Healthcare (海吉亚) IPO Trading: Upside Might Take Time to Crystalize


Hygeia Healthcare Placement - Past Deals Have Done Well but the Shares Are Now Very Expensive

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

<p>The presentation today would mainly include the following parts:</p>
<ul>
<li>2020 and 2021Q1 financial results</li>
<li>Market potential </li>
<li>Business analysis </li>
<li>Financial Analysis (<a href="https://www.smartkarma.com/entities/topchoice-medical-corporation" target="_blank" data-smartkarma-citation="entities:1102:1" rel="noopener">Topchoice Medical (600763 CH)</a> vs <a href="https://www.smartkarma.com/entities/aier-eye-hospital-group-co-ltd" target="_blank" data-smartkarma-citation="entities:1103:1" rel="noopener">Aier Eye Hospital Group (300015 CH)</a>)</li>
<li>Summary</li>
<li>Risk disclosure</li>
</ul>

The presentation today would mainly include the following parts:

2020 and 2021Q1 financial results
Market potential 
Business analysis 
Financial Analysis (Topchoice Medical (600763 CH) vs Aier Eye Hospital Group (300015 CH))
Summary
Risk disclosure


Presentation on Apr.12: 2021 High Conviction Ideas - Topchoice Medical (600763.CH)

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.

<p>Chaoju Eye Care Holdings Limited is a leading ophthalmic medical service provider based in Northern China. The company is looking to raise up to USD 200m to list in Hong Kong.</p><p>In previous note, we discuss that Chaoju is an eye specialist hospital with a geographical focus in the Northern region in China. The company started in 1988 as an ophthalmic clinic and currently operates 17 hospitals with a total GFA of 87,146 sqm as of January 2021. The company recorded revenue growth of 13% p.a. between FY18 and FY19. Having said that, around 60% of the total revenue came from three hospitals, namely Baotou Hospital, Hohhot Hospital, and Chifeng Hospital. The company plans to open 11 new hospitals in Inner Mongolia, Zhejiang, and Jiangsu in the next three years, representing a 9% GFA CAGR. Another notable driver for the company is a higher mix of consumer ophthalmic services, which have a higher gross margin than other segments. We are of the view that the company doesn't have strong backing from investors. Its growth prospects in terms of hospital expansion are only moderate despite a strong momentum in the ophthalmic sector in China. </p><p>In this note, we compare the company with industry leader Aier Eye Hospital. We also assess the company's preliminary valuation.</p><h2>Our previous coverage on Chaoju Eye Care</h2><ul><li><a href="https://www.smartkarma.com/insights/chaoju-eye-care-pre-ipo-growth-prospect-far-from-being-impressive" target="_blank" rel="noopener">Chaoju Eye Care (朝聚眼科) Pre-IPO: Growth Prospect Far from Being Impressive</a></li></ul>

Chaoju Eye Care Holdings Limited is a leading ophthalmic medical service provider based in Northern China. The company is looking to raise up to USD 200m to list in Hong Kong.In previous note, we discuss that Chaoju is an eye specialist hospital with a geographical focus in the Northern region in China. The company started in 1988 as an ophthalmic clinic and currently operates 17 hospitals with a total GFA of 87,146 sqm as of January 2021. The company recorded revenue growth of 13% p.a. between FY18 and FY19. Having said that, around 60% of the total revenue came from three hospitals, namely Baotou Hospital, Hohhot Hospital, and Chifeng Hospital. The company plans to open 11 new hospitals in Inner Mongolia, Zhejiang, and Jiangsu in the next three years, representing a 9% GFA CAGR. Another notable driver for the company is a higher mix of consumer ophthalmic services, which have a higher gross margin than other segments. We are of the view that the company doesn't have strong backing from investors. Its growth prospects in terms of hospital expansion are only moderate despite a strong momentum in the ophthalmic sector in China. In this note, we compare the company with industry leader Aier Eye Hospital. We also assess the company's preliminary valuation.Our previous coverage on Chaoju Eye CareChaoju Eye Care (朝聚眼科) Pre-IPO: Growth Prospect Far from Being Impressive

Chaoju Eye Care (朝聚眼科) Pre-IPO: How Does It Fare Against Industry Leader

<p>On January 4<sup>th</sup>, 2021, <a href="https://www.smartkarma.com/entities/chaoju-eye-care-holdings-limited" target="_blank" data-smartkarma-citation="entities:31119:1" rel="noopener">Chaoju Eye Care Holdings (CEC HK)</a> filed a prospectus with the Hong Kong Stock Exchange for listing on the Main Board. The Company's history could be traced back to the time when Zhang Xinghuan, the father of Chaoju's  founder, began his practice as a traditional Chinese medicine practitioner and then established a Chinese medicine clinic in 1921. Following in the footsteps of his father, Zhang Chaoju, as a pioneer of modern ophthalmology in Inner Mongolia and an entrepreneur in the field of ophthalmology services in China, founded a clinic that provided ophthalmology services in Baotou City, Inner Mongolia in 1988. Since then, Chaoju Eye Care has established an extensive network of ophthalmic hospitals and optical centers in North China. Regardless of the long history and professional background, how about this Company? The following mainly analyzed both the strengths and concerns for Chaoju.</p>

On January 4th, 2021, Chaoju Eye Care Holdings (CEC HK) filed a prospectus with the Hong Kong Stock Exchange for listing on the Main Board. The Company's history could be traced back to the time when Zhang Xinghuan, the father of Chaoju's  founder, began his practice as a traditional Chinese medicine practitioner and then established a Chinese medicine clinic in 1921. Following in the footsteps of his father, Zhang Chaoju, as a pioneer of modern ophthalmology in Inner Mongolia and an entrepreneur in the field of ophthalmology services in China, founded a clinic that provided ophthalmology services in Baotou City, Inner Mongolia in 1988. Since then, Chaoju Eye Care has established an extensive network of ophthalmic hospitals and optical centers in North China. Regardless of the long history and professional background, how about this Company? The following mainly analyzed both the strengths and concerns for Chaoju.

Pre-IPO Chaoju Eye Care Holdings - Here Are the Strength and the Concerns

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 Dongxiang (3818 HK): Lower-Than-Expected Dividends but Still A Marvelous FY21

China Dongxiang has delivered impressive FY21 result with good recovery in sportswear and surge in investment income. At 47% discount to book...

Osbert Tang, CFA

Hygeia Healthcare Placement - Past Deals Have Done Well but the Shares Are Now Very Expensive

Warburg Pincus aims to raise around US$216m via selling 3.2% of Hygeia Healthcare. This won’t be the first selldown by Warburg.

Sumeet Singh

Presentation on Apr.12: 2021 High Conviction Ideas - Topchoice Medical (600763.CH)

This article analyzed Top Choice in terms of the 2020 and 2021Q1 financial results, market potential, business model, financial position compared...

Xinyao (Criss) Wang

Chaoju Eye Care (朝聚眼科) Pre-IPO: How Does It Fare Against Industry Leader

We compare Chaoju Eye Care with industry leader Aier Eye Hospital (A-share). We also assess the company's preliminary valuation.

Ke Yan, CFA, FRM

Pre-IPO Chaoju Eye Care Holdings - Here Are the Strength and the Concerns

This article analyzed Chaoju Eye Care in terms of both the strength (market position, financial position) and the concerns (risk of future...

Xinyao (Criss) Wang

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