HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Event-Driven

China Traditional Chinese Medicine / Event-Driven

<ul>
<li>We have seen positive progress of the privatization of China TCM, which is still considered an important project on the agenda. CNPGC’s new leadership is very supportive of the deal.</li>
<li>The SAMR process has begun. There should be no problem to meet the Pre-Conditions. If the approval process takes more time, Long Stop Date would be extended.</li>
<li>Considering China Resources has decided to acquire Tasly, we think the integration of TCM business by CNPGC is expected to accelerate. We remain optimistic and this deal will get up. </li>
</ul>


We have seen positive progress of the privatization of China TCM, which is still considered an important project on the agenda. CNPGC’s new leadership is very supportive of the deal.
The SAMR process has begun. There should be no problem to meet the Pre-Conditions. If the approval process takes more time, Long Stop Date would be extended.
Considering China Resources has decided to acquire Tasly, we think the integration of TCM business by CNPGC is expected to accelerate. We remain optimistic and this deal will get up. 


China TCM (570.HK) Privatization Update- Pre-Conditions Won't Be “An Obstacle” to the Entire Process

<ul>
<li>China TCM’s 24H1 results is weaker-than-expected. Net profit YoY growth for the whole year of 2024 could be negative. Based on calculation, without privatization, HK$3.26/share is fair for China TCM.</li>
<li>The remedial tax is a "one-time expenditure" to clear the "obstacle" so as to smooth the completion of privatization. Weak financial performance in 24H1 should help the shareholder vote. </li>
<li>Due to the low base in 2024, 2025 is expected to see an obvious performance rebound.Long-term outlook of TCM granules business is still promising, reasonable share price is above HK$5/share.</li>
</ul>


China TCM’s 24H1 results is weaker-than-expected. Net profit YoY growth for the whole year of 2024 could be negative. Based on calculation, without privatization, HK$3.26/share is fair for China TCM.
The remedial tax is a "one-time expenditure" to clear the "obstacle" so as to smooth the completion of privatization. Weak financial performance in 24H1 should help the shareholder vote. 
Due to the low base in 2024, 2025 is expected to see an obvious performance rebound.Long-term outlook of TCM granules business is still promising, reasonable share price is above HK$5/share.


China TCM (570.HK) Update - The Disappointing 24H1 Results Will Not Affect the Privatization Process

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-traditional-chinese-medicine" target="_blank" data-smartkarma-citation="entities:351:1" rel="noopener">China Traditional Chinese Medicine (570 HK)</a> flagged a 60-70% drop in its 1H24E net profit versus 1H23, due to reduced sales/profit of TCM concentrate, bad debt provisions, and remedial taxes. </li>
<li>
MAC triggers? No - Sinopharm won't exercise such right, even if one was ostensibly triggered. I'd be surprised if Sinopharm wasn't fully aware of TCM's underlying operations. </li>
<li>
Get involved on any dips today. Trading wide at a 11.7%/38.7% gross/annualised spread, assuming Dec-end payment.</li>
</ul>



China Traditional Chinese Medicine (570 HK) flagged a 60-70% drop in its 1H24E net profit versus 1H23, due to reduced sales/profit of TCM concentrate, bad debt provisions, and remedial taxes. 

MAC triggers? No - Sinopharm won't exercise such right, even if one was ostensibly triggered. I'd be surprised if Sinopharm wasn't fully aware of TCM's underlying operations. 

Get involved on any dips today. Trading wide at a 11.7%/38.7% gross/annualised spread, assuming Dec-end payment.


TCM (570 HK): Profit Warning Is No Biggie

<ul>
<li>What disappoints investors is that privatization progress is slower-than-expected. Since approval is in "advanced stage", August update is eye-catching. Investors may need more patience with this type of SOE deal. </li>
<li>The key to the success of this privatization lies in whether CNPGC is willing to abide by its commitments. If yes, CNPGC will take all measures to solve the problems.</li>
<li>According to our valuation calculation, even without this privatization, HK$3.5/share is fair for China TCM. Reasonable share price is above HK$5/share. Don't forget, the privatization is still on the agenda.</li>
</ul>


What disappoints investors is that privatization progress is slower-than-expected. Since approval is in "advanced stage", August update is eye-catching. Investors may need more patience with this type of SOE deal. 
The key to the success of this privatization lies in whether CNPGC is willing to abide by its commitments. If yes, CNPGC will take all measures to solve the problems.
According to our valuation calculation, even without this privatization, HK$3.5/share is fair for China TCM. Reasonable share price is above HK$5/share. Don't forget, the privatization is still on the agenda.


China TCM (570.HK) Privatization Update - Things Are Still Manageable

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.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-traditional-chinese-medicine" target="_blank" data-smartkarma-citation="entities:351:1" rel="noopener">China Traditional Chinese Medicine (570 HK)</a> profit warning notes that the 1H24 net profit would decrease by 60%-70% YoY due to pricing pressure, higher impairment losses and remedial taxes. </li>
<li>The profit warning could pose a risk to the scheme, as the consortium can withdraw if there is an adverse material change in China TCM's profits or prospects.</li>
<li>If there were a danger of triggering the MAC clause, the consortium would not have made the regulatory submissions. The flip side is that the warning helps the shareholders vote. </li>
</ul>



China Traditional Chinese Medicine (570 HK) profit warning notes that the 1H24 net profit would decrease by 60%-70% YoY due to pricing pressure, higher impairment losses and remedial taxes. 
The profit warning could pose a risk to the scheme, as the consortium can withdraw if there is an adverse material change in China TCM's profits or prospects.
If there were a danger of triggering the MAC clause, the consortium would not have made the regulatory submissions. The flip side is that the warning helps the shareholders vote. 


China Traditional Chinese Medicine (570 HK): Never a Dull Moment as Profit Warning Lands

Hong Kong

China Traditional Chinese Medicine Co. Limited, through its subsidiaries, manufactures and sells medicine and pharmaceutical products in China.

China Traditional Chinese Medicine (570 HK)

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China Traditional Chinese Medicine (570 HK)

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TCM (570 HK): Profit Warning Is No Biggie

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