HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Capital Markets

China Medical System / Equity Capital Markets

<ul>
<li>CMS announced proposed secondary listing on the SGX-ST. The Company is undergoing pipeline adjustments and strategic transformation. Its growth logic is shifting from "dependence on generic drugs" to "innovation-driven drugs".</li>
<li>However, the valuation logic has changed. The capital market will give high valuations to companies that achieve overseas licensing-out deals, rather than the attractive DCF model based on traditional business.</li>
<li>After 2023/2024 performance downturn, revenue growth is expected to return to positive in 2025. But in essence, CMS’s current business model is license-in, which will affect the future valuation performance. </li>
</ul>


CMS announced proposed secondary listing on the SGX-ST. The Company is undergoing pipeline adjustments and strategic transformation. Its growth logic is shifting from "dependence on generic drugs" to "innovation-driven drugs".
However, the valuation logic has changed. The capital market will give high valuations to companies that achieve overseas licensing-out deals, rather than the attractive DCF model based on traditional business.
After 2023/2024 performance downturn, revenue growth is expected to return to positive in 2025. But in essence, CMS’s current business model is license-in, which will affect the future valuation performance. 


Pre-IPO China Medical System (867 HK) - About the IPO in Singapore and Concerns on Valuation Outlook

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

YiChang HEC ChangJiang Pharmaceutical / Event-Driven

YiChang HEC ChangJiang Pharmaceutical (1558 HK)

<ul>
<li>The precondition for Sunshine Lake Pharma's privatisation of HEC Pharma was satisfied on 27 June. The offer is 0.263614 new offeror H Share per HEC share and HK$1.50 special dividend.</li>
<li>The vote on 21 July is low-risk as no independent H Shareholder comes close to the blocking stake, which is 4.61% of the outstanding shares (6.20% of H Shares).</li>
<li>The appraised value is HK$19.36, but this is a finger-in-the-sky valuation as it marginally increased from HK$19.30 despite the offeror’s weak 2024 results and limited progress on commercialising its pipeline.</li>
</ul>


The precondition for Sunshine Lake Pharma's privatisation of HEC Pharma was satisfied on 27 June. The offer is 0.263614 new offeror H Share per HEC share and HK$1.50 special dividend.
The vote on 21 July is low-risk as no independent H Shareholder comes close to the blocking stake, which is 4.61% of the outstanding shares (6.20% of H Shares).
The appraised value is HK$19.36, but this is a finger-in-the-sky valuation as it marginally increased from HK$19.30 despite the offeror’s weak 2024 results and limited progress on commercialising its pipeline.


HEC ChangJiang Pharma (1558 HK): Finally a Vote, but the Offer Value Is Wrapped in Uncertainty

<ul>
<li>Leading Chinese biotech firms are among the few sub-sectors sustaining rapid growth. However, RemeGen stands as a negative example, with its business model and investment rationale proving flawed.</li>
<li>“Increasing revenue without increasing profits” is actually a “denial” of a company's business model. Even though the losses decreased in 24H1, this doesn’t change our negative expectations for Zai Lab.</li>
<li>Genor Biopharma and Edding Group are merging through a reverse takeover, benefiting both companies by boosting Genor's valuation and allowing Edding to achieve its goal of going public.</li>
</ul>


Leading Chinese biotech firms are among the few sub-sectors sustaining rapid growth. However, RemeGen stands as a negative example, with its business model and investment rationale proving flawed.
“Increasing revenue without increasing profits” is actually a “denial” of a company's business model. Even though the losses decreased in 24H1, this doesn’t change our negative expectations for Zai Lab.
Genor Biopharma and Edding Group are merging through a reverse takeover, benefiting both companies by boosting Genor's valuation and allowing Edding to achieve its goal of going public.


China Healthcare Weekly (Oct.13)-Genor to Acquire Edding, RemeGen's Bleak Outlook, Zai Lab's Trouble

Healthcare Equity Analyst - Emerging & Dev Markets, daaimon

Avien Pillay

Healthcare Equity Analyst - Emerging & Dev Markets

daaimon

daaimon is an independent research company focusing on healthcare and consumer sectors across developed and emerging markets. We produce insightful research which challenges conventional thinking. In particular, we look for new ideas by testing consensus forecasts and markets expectations.

Equity Bottom-Up

<ul>
<li>A high disease burden, high demand for chronic treatment, and an ageing population makes China an excellent opportunity for an established pharma company.</li>
<li>With 1/3 of the market cap in cash, a healthy payout ratio, and a FPE of under 8, CMS is one of the bargain beneficiaries in the Chinese healthcare space.</li>
<li>The founder/CEO recently purchased 8m shares. He last bought shares in 2020-2021. The share price almost tripled afterwards.</li>
</ul>


A high disease burden, high demand for chronic treatment, and an ageing population makes China an excellent opportunity for an established pharma company.
With 1/3 of the market cap in cash, a healthy payout ratio, and a FPE of under 8, CMS is one of the bargain beneficiaries in the Chinese healthcare space.
The founder/CEO recently purchased 8m shares. He last bought shares in 2020-2021. The share price almost tripled afterwards.


UPDATE: China Medical System (CMS, 867 HK) – A Cheap Play on China’s Pending Health Care Crisis

<ul>
<li>A high disease burden, high demand for chronic treatment, and an ageing population makes China an excellent opportunity for an established pharma company.</li>
<li>A transition period following the inclusion of four large drugs in the NDRL creates an opportunity following a big de-rating.</li>
<li>With 1/3 of the market cap in cash, a healthy payout ratio, and a FPE of under 8, CMS is one of the bargain beneficiaries in the Chinese healthcare space.</li>
</ul>


A high disease burden, high demand for chronic treatment, and an ageing population makes China an excellent opportunity for an established pharma company.
A transition period following the inclusion of four large drugs in the NDRL creates an opportunity following a big de-rating.
With 1/3 of the market cap in cash, a healthy payout ratio, and a FPE of under 8, CMS is one of the bargain beneficiaries in the Chinese healthcare space.


China Medical System (CMS, 867 HK) – A Cheap Play on China’s Pending Health Care Crisis

China

China Medical System is a specialty pharmaceutical company focused on the research and development, manufacturing, marketing, and sales of pharmaceutical products in China. The company offers a diverse portfolio across therapeutic areas such as cardio-cerebrovascular, gastroenterology, ophthalmology, dermatology, and medical aesthetics. It was founded in 1995 and is headquartered in North Point, Hong Kong.

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China Medical System (867 HK)

Pre-IPO China Medical System (867 HK) - About the IPO in Singapore and Concerns on Valuation Outlook

Listing in SGX opens a new chapter and CMS is undergoing pipeline adjustments and strategic transformation. But as valuation logic changes, license...

Xinyao (Criss) Wang

HEC ChangJiang Pharma (1558 HK): Finally a Vote, but the Offer Value Is Wrapped in Uncertainty

The vote is low-risk. However, the appraised value is a finger-in-the-sky valuation, and perplexingly, marginally increased despite the offeror's...

Arun George

China Healthcare Weekly (Oct.13)-Genor to Acquire Edding, RemeGen's Bleak Outlook, Zai Lab's Trouble

Genor/Edding are merging through a reverse takeover, but valuation is unsatisfactory. Remegen is negative example among China Biotech.Weak...

Xinyao (Criss) Wang

UPDATE: China Medical System (CMS, 867 HK) – A Cheap Play on China’s Pending Health Care Crisis

A derating as a result of a transition period creates an excellent investment opportunity in a market that desperately needs to increase healthcare...

daaimon

China Medical System (CMS, 867 HK) – A Cheap Play on China’s Pending Health Care Crisis

A derating as a result of a transition period creates an excellent investment opportunity in a market that desperately needs to increase healthcare...

daaimon

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