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 the weekly Hong Kong Connect flows with our data engine for holding position as of February 9th.</li>
<li>The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.</li>
<li>We highlight the weekly Hong Kong connect flows for Tencent.</li>
</ul>


We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of February 9th.
The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.
We highlight the weekly Hong Kong connect flows for Tencent.


Hong Kong Connect Flows (Feb 9th): Tencent

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

<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

Beijing Tong Ren Tang Chinese Medicine / Equity Bottom-Up

<ul>
<li>Tong Ren Tang Chinese Medicine’s performance declined in 22H1 due to the pandemic, which led to the short supply of the core products and a serious setback of production/operation.</li>
<li>The recovery of the Company’s performance in 2022H2 depends not only on the alleviation of the pandemic, but also on the sustainability of the demand for non-rigid medical products.</li>
<li>In the long run, whether the overseas sales except those in Hong Kong and the Mainland can have breakthrough is the main supporting logic for raising the valuation.</li>
</ul>


Tong Ren Tang Chinese Medicine’s performance declined in 22H1 due to the pandemic, which led to the short supply of the core products and a serious setback of production/operation.
The recovery of the Company’s performance in 2022H2 depends not only on the alleviation of the pandemic, but also on the sustainability of the demand for non-rigid medical products.
In the long run, whether the overseas sales except those in Hong Kong and the Mainland can have breakthrough is the main supporting logic for raising the valuation.


Beijing Tong Ren Tang Chinese Medicine (3613.HK) 22H1 - Performance Recovery in 22H2 Is Uncertain

Beijing Tongrentang Co A / Equity Bottom-Up

<ul>
<li>2018 was a watershed for Tongrentang. After the incident of using expired honey was exposed and the corruption scandal afterwards, Tongrentang's performance declined significantly and didn’t recover until 2021.</li>
<li>Angong Niuhuang Pill is the major performance driver and also Tongrentang’s core product. Due to the economic downturn, the price increase of Angong Niuhuang Pills could lead to inventory overstocking.</li>
<li>The high growth in 2021 may not be sustained. We lowered our forecast for 2022. Without core competitiveness and high moat, we are conservative about Tongrentang’s long-term outlook.</li>
</ul>


2018 was a watershed for Tongrentang. After the incident of using expired honey was exposed and the corruption scandal afterwards, Tongrentang's performance declined significantly and didn’t recover until 2021.
Angong Niuhuang Pill is the major performance driver and also Tongrentang’s core product. Due to the economic downturn, the price increase of Angong Niuhuang Pills could lead to inventory overstocking.
The high growth in 2021 may not be sustained. We lowered our forecast for 2022. Without core competitiveness and high moat, we are conservative about Tongrentang’s long-term outlook.


Beijing Tongrentang (600085.CH)- Neither Brand Nor Angong Niuhuang Pills Can Secure Future Prospects

<ul>
<li>After a downturn in 2019,Consun has turned things around and achieved amazing results in 2021. Its core business was not affected by VBP. Consun will continue to make further progress.</li>
<li>Consun is undervalued if compared with industry average, the peers and considering its large cash balance. Share prices have decent upside potential, driven by fundamentals, promising outlook and favorable policies.</li>
<li>Wanbangde’s intention to acquire Consun’s shares at high price would also be a catalyst. We recommended investors to follow Consun closely, which has certain investment value based on our analysis.</li>
</ul>


After a downturn in 2019,Consun has turned things around and achieved amazing results in 2021. Its core business was not affected by VBP. Consun will continue to make further progress.
Consun is undervalued if compared with industry average, the peers and considering its large cash balance. Share prices have decent upside potential, driven by fundamentals, promising outlook and favorable policies.
Wanbangde’s intention to acquire Consun’s shares at high price would also be a catalyst. We recommended investors to follow Consun closely, which has certain investment value based on our analysis.


Consun Pharmaceutical (1681HK)- High-Priced Acquisition & Good Performance Show Big Upside Potential

Hong Kong

Beijing Tong Ren Tang Chinese Medicine Co. Ltd. is a Chinese medicine manufacturer. The Company mainly develops and produces health products, including patent medicines and health-care products.

Beijing Tong Ren Tang Chinese Medicine (3613 HK)

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Beijing Tong Ren Tang Chinese Medicine (3613 HK)

Hong Kong Connect Flows (Feb 9th): Tencent

We have analyzed southbound Hong Kong connect flows in the past week and highlighted Hong Kong connect flows for Tencent.

Ke Yan, CFA, FRM

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

The high-priced acquisition of Consun was terminated. However, Consun has solid business performance and its growth would continue this year. The...

Xinyao (Criss) Wang