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

China Traditional Chinese Medicine / Event-Driven

<ul>
<li>Shockingly, the Sinopharm-led consortium’s offer for <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> has lapsed as the precondition long stop date has not been extended.</li>
<li>This deal break caught many, including me, off guard. There are lessons to be learnt and questions to be asked. </li>
<li>Shareholders will have a bruising Monday. Our analysis suggests a deal break price of around HK$3.44, a 10% downside to the last close.</li>
</ul>


Shockingly, the Sinopharm-led consortium’s offer for China Traditional Chinese Medicine (570 HK) has lapsed as the precondition long stop date has not been extended.
This deal break caught many, including me, off guard. There are lessons to be learnt and questions to be asked. 
Shareholders will have a bruising Monday. Our analysis suggests a deal break price of around HK$3.44, a 10% downside to the last close.


China Traditional Chinese Medicine (570 HK): Disaster as Offer Lapses, Potential Deal Break Price

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

<ul>
<li>We once again heard privatization rumor of China TCM, but China TCM denied it at this stage. We still recommend investors to remain vigilant until receive definite official announcement.</li>
<li>One important background of privatization is the integration of SOE carried out in recent years. We do not rule out the possibility that Taiji Group would drive this privatization.</li>
<li>It may not be an optimal time for the proposal of privatization by major shareholders. Other shareholders may not want to give up high-quality stocks, which makes privatization challenging.</li>
</ul>


We once again heard privatization rumor of China TCM, but China TCM denied it at this stage. We still recommend investors to remain vigilant until receive definite official announcement.
One important background of privatization is the integration of SOE carried out in recent years. We do not rule out the possibility that Taiji Group would drive this privatization.
It may not be an optimal time for the proposal of privatization by major shareholders. Other shareholders may not want to give up high-quality stocks, which makes privatization challenging.


China Traditional Chinese Medicine (570.HK) - Will This Privatization Rumor Come True ?

Equity Bottom-Up

China Traditional Chinese Medicine / Equity Bottom-Up

<ul>
<li>The sharp performance decline of China TCM in 2024 is actually in line with our expectation. The current valuation has not yet reached its lowest point. </li>
<li>China TCM can still achieve an average annual profit of RMB1 billion in the future. Together with the new management, we expect the Company to come out of the trough.</li>
<li>Instead of betting on privatization again, it's better to focus more on whether China TCM's fundamentals would improve, which is the key factor that can support a sustainable valuation rebound.</li>
</ul>


The sharp performance decline of China TCM in 2024 is actually in line with our expectation. The current valuation has not yet reached its lowest point. 
China TCM can still achieve an average annual profit of RMB1 billion in the future. Together with the new management, we expect the Company to come out of the trough.
Instead of betting on privatization again, it's better to focus more on whether China TCM's fundamentals would improve, which is the key factor that can support a sustainable valuation rebound.


China TCM (570.HK) - About the Profit Warning and the Valuation Outlook

<ul>
<li>The Medical Insurance Bureau of Hubei Province issued two documents on the VBP of TCM patent medicines.Shineway’s core product Qing Kai Ling is included, which would bring pressure on performance.</li>
<li>It's time to be cautious about the outlook for GLP-1s. We may need to be mentally prepared in advance that the actual market size of GLP-1s is only US$100 billion.</li>
<li>Recent changes at the top of CNPGC have left some investors hopeful that China TCM will resolve horizontal competition as scheduled next year,but current bet on shares reversal isn't wise.</li>
</ul>


The Medical Insurance Bureau of Hubei Province issued two documents on the VBP of TCM patent medicines.Shineway’s core product Qing Kai Ling is included, which would bring pressure on performance.
It's time to be cautious about the outlook for GLP-1s. We may need to be mentally prepared in advance that the actual market size of GLP-1s is only US$100 billion.
Recent changes at the top of CNPGC have left some investors hopeful that China TCM will resolve horizontal competition as scheduled next year,but current bet on shares reversal isn't wise.


China Healthcare Weekly (Dec.8) - TCM VBP Update, GLP-1's Good Story Broke, China TCM's Sudden Rally

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>On the 26th March, <strong><a href="https://www.smartkarma.com/entities/enn-energy-holdings-ltd" target="_blank" data-smartkarma-citation="entities:316:1" rel="noopener">ENN Energy (2688 HK)</a></strong> announced a cash/scrip Offer from <strong><a href="https://www.smartkarma.com/entities/enn-natural-gas-co-ltd" target="_blank" data-smartkarma-citation="entities:16456:1" rel="noopener">ENN Natural Gas (600803 CH)</a></strong> (ENN-NG), its largest shareholder.</li>
<li>The pushback is that the scrip portion pivots off the value of newly-listed ENN-NG H-shares. And the IFA's theoretical assessment on such leaves a lot to be desired.</li>
<li>A redacted version of ENN-NG's application proof is now out. Curiously, the share ratio - new ENN-NG H Shares for each ENN shares - is noticeably absent</li>
</ul>


On the 26th March, ENN Energy (2688 HK) announced a cash/scrip Offer from ENN Natural Gas (600803 CH) (ENN-NG), its largest shareholder.
The pushback is that the scrip portion pivots off the value of newly-listed ENN-NG H-shares. And the IFA's theoretical assessment on such leaves a lot to be desired.
A redacted version of ENN-NG's application proof is now out. Curiously, the share ratio - new ENN-NG H Shares for each ENN shares - is noticeably absent


ENN Energy (2688 HK): ENN Natural Gas' Application Proof Is Out. Interesting For What Is Not Present

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)