Global Healthcare Analyst

Tina Banerjee

Equity Bottom-Up

<ul>
<li>During 2022, <a href="https://www.smartkarma.com/entities/bnc-korea-co-ltd" target="_blank" data-smartkarma-citation="entities:34785:1" rel="noopener">BNC Korea (256840 KS)</a> reported gross profit margin of 48.3%, lower than 51.9% reported in 2021, as increasing competition is leading to price erosion of botulinum toxin products.</li>
<li>In March 2023, prosecutors have indicted BNC Korea for allegedly selling botulinum toxin injections to exporters without the approval of the MFDS from December 2015 to December 2021.</li>
<li>With the pandemic on a downward trend for more than a year now, we are skeptical about BNC Korea’s in-licensed COVID-19 drug candidate for a milestone payment of $15M.</li>
</ul>


During 2022, BNC Korea (256840 KS) reported gross profit margin of 48.3%, lower than 51.9% reported in 2021, as increasing competition is leading to price erosion of botulinum toxin products.
In March 2023, prosecutors have indicted BNC Korea for allegedly selling botulinum toxin injections to exporters without the approval of the MFDS from December 2015 to December 2021.
With the pandemic on a downward trend for more than a year now, we are skeptical about BNC Korea’s in-licensed COVID-19 drug candidate for a milestone payment of $15M.


BNC Korea (256840 KS): Margin Pressure; Base Business Faces Regulatory Risk; COVID Drug in Doldrum

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

<ul>
<li>With 3 trading days left in the review period for the June rebalance, we see 8 potential changes and 2 close adds for the <a href="https://www.smartkarma.com/entities/kosdaq-150-index" target="_blank" data-smartkarma-citation="entities:31077:1" rel="noopener">KOSDAQ 150 Index (KOSDQ150 INDEX)</a>. </li>
<li>There are two potential transfers from the KOSDAQ Market to KOSPI Market that could lead to more changes in May and/or June.</li>
<li>Nearly all potential deletions are trading near their lows and short interest has been increasing on some of the stocks. That will be covered closer to implementation of the rebalance.</li>
</ul>


With 3 trading days left in the review period for the June rebalance, we see 8 potential changes and 2 close adds for the KOSDAQ 150 Index (KOSDQ150 INDEX). 
There are two potential transfers from the KOSDAQ Market to KOSPI Market that could lead to more changes in May and/or June.
Nearly all potential deletions are trading near their lows and short interest has been increasing on some of the stocks. That will be covered closer to implementation of the rebalance.


KOSDAQ150 Index Rebalance Preview: Adds Starting to Crack (After Huge Outperformance)

<ul>
<li>End December was the end of the review cutoff for a lot of indices that will rebalance within the next couple of months.</li>
<li>
<a href="https://www.smartkarma.com/entities/pexa-group-ltd" target="_blank" data-smartkarma-citation="entities:34716:1" rel="noopener">PEXA Group (PXA AU)</a> replaces <a href="https://www.smartkarma.com/entities/pendal-group-ltd" target="_blank" data-smartkarma-citation="entities:15795:1" rel="noopener">Pendal Group (PDL AU)</a> in the <a href="https://www.smartkarma.com/entities/s-p-asx-200" target="_blank" data-smartkarma-citation="entities:22901:1" rel="noopener">S&amp;P/ASX 200 (AS51 INDEX)</a> at the close on 12 January.</li>
<li>There were big outflows from Hong Kong and China focused ETFs led by <a href="https://www.smartkarma.com/entities/hang-seng-china-enterprises-index-etf" target="_blank" data-smartkarma-citation="entities:25:1" rel="noopener">Hang Seng H Share Index ETF (2828 HK)</a> and <a href="https://www.smartkarma.com/entities/tracker-fund-of-hong-kong-ltd" target="_blank" data-smartkarma-citation="entities:29257:1" rel="noopener">Tracker Fund of Hong Kong Ltd (2800 HK)</a>.</li>
</ul>


End December was the end of the review cutoff for a lot of indices that will rebalance within the next couple of months.

PEXA Group (PXA AU) replaces Pendal Group (PDL AU) in the S&amp;P/ASX 200 (AS51 INDEX) at the close on 12 January.
There were big outflows from Hong Kong and China focused ETFs led by Hang Seng H Share Index ETF (2828 HK) and Tracker Fund of Hong Kong Ltd (2800 HK).


Index Rebalance & ETF Flow Recap: HSCEI, HSTECH, HSI, HSCI, KS200, KQ150, CSI300, SENSEX, LQ45, PSEi

<ul>
<li>
<a href="https://www.smartkarma.com/entities/bnc-korea-co-ltd" target="_blank" data-smartkarma-citation="entities:34785:1" rel="noopener">BNC Korea (256840 KS)</a> has been found guilty for the violation of the Pharmaceutical Affairs Act. Consequently, production of its Bienox injection has temporarily been halted till May 30, 2023.</li>
<li>The company’s in-licensed COVID-19 drug candidate could not secure emergency use approval from the FDA, which has asked for further clinical trial demonstrating efficacy and safety.</li>
<li>BNC Korea is not a bottom fishing idea, due to lack of any strong growth engine in near-term. Despite attractive valuation, we still like to avoid the stock.     </li>
</ul>



BNC Korea (256840 KS) has been found guilty for the violation of the Pharmaceutical Affairs Act. Consequently, production of its Bienox injection has temporarily been halted till May 30, 2023.
The company’s in-licensed COVID-19 drug candidate could not secure emergency use approval from the FDA, which has asked for further clinical trial demonstrating efficacy and safety.
BNC Korea is not a bottom fishing idea, due to lack of any strong growth engine in near-term. Despite attractive valuation, we still like to avoid the stock.     


BNC Korea (256840 KS): Base Business Faces Regulatory Headwind; Delay in COVID Drugs Approval

<ul>
<li>One third of the way through the review period for the June rebalance, we see 9 potential changes to the <a href="https://www.smartkarma.com/entities/kosdaq-150-index" target="_blank" data-smartkarma-citation="entities:31077:1" rel="noopener">KOSDAQ 150 Index (KOSDQ150 INDEX)</a>. </li>
<li>One way turnover is estimated at 3.3% and the impact on the expected deletions is a lot higher than the impact on the expected inclusions.</li>
<li>The potential adds have massively outperformed the potential deletes over the last year. We'd wait for a reversal before entering a trade here - worth monitoring.</li>
</ul>


One third of the way through the review period for the June rebalance, we see 9 potential changes to the KOSDAQ 150 Index (KOSDQ150 INDEX). 
One way turnover is estimated at 3.3% and the impact on the expected deletions is a lot higher than the impact on the expected inclusions.
The potential adds have massively outperformed the potential deletes over the last year. We'd wait for a reversal before entering a trade here - worth monitoring.


KOSDAQ150 Index Rebalance Preview (June): Changes Keep Rolling In

South Korea

BNC Korea Co, Ltd operates as a biological development company. The Company develops, manufactures and sells hyaluronic acid filler and other products. BNC Korea markets its products throughout Korea.

BNC Korea (256840 KS)