HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

Shenyang Xingqi Pharmaceutical / Equity Bottom-Up

Shenyang Xingqi Pharmaceutical (300573 CH)

<ul>
<li>A document titled "<em>Soliciting Opinions on the Implementation Plan for Supporting the Development of Innovative Drugs throughout the Whole Chain</em>" would completely change the outlook/investment logic of China's innovative drugs.</li>
<li>We predict that due to the early opening of TCM formula granules VBP in some provinces and intensifying competition, the market pattern of TCM formula granules would face reshaping.</li>
<li>After the atropine eye drops is approved by the NMPA, Xingqi’s performance growth will accelerate. Supported by favorable policies, its market value is expected to reach above RMB30 billion.</li>
</ul>


A document titled "Soliciting Opinions on the Implementation Plan for Supporting the Development of Innovative Drugs throughout the Whole Chain" would completely change the outlook/investment logic of China's innovative drugs.
We predict that due to the early opening of TCM formula granules VBP in some provinces and intensifying competition, the market pattern of TCM formula granules would face reshaping.
After the atropine eye drops is approved by the NMPA, Xingqi’s performance growth will accelerate. Supported by favorable policies, its market value is expected to reach above RMB30 billion.


China Healthcare Weekly (Mar.15)- New Policy of Innovative Drug, TCM Formula Granules, Xingqi Pharma

Event-Driven

China Traditional Chinese Medicine / Event-Driven

China Traditional Chinese Medicine (570 HK)

<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 ?

China Traditional Chinese Medicine / Equity Bottom-Up

<ul>
<li>China TCM released Profit Warning. The Company would shift from a profit into a loss in 2025, mainly due to concentrated TCM granules VBP/intensified market competition, assets impairment, remedial taxes.</li>
<li>Based on news, Taiji will collaborate with CNPGC to promote the resolution of horizontal competition.Such commitment will expire on April 14, 2026. In fact, we've seen some progress last year. </li>
<li>China TCM’s valuation is rarely driven by strong fundamentals, but more by privatization rumors. The catalyst for China TCM’s share price in 2026 is CNPGC’s announcement within three months.</li>
</ul>


China TCM released Profit Warning. The Company would shift from a profit into a loss in 2025, mainly due to concentrated TCM granules VBP/intensified market competition, assets impairment, remedial taxes.
Based on news, Taiji will collaborate with CNPGC to promote the resolution of horizontal competition.Such commitment will expire on April 14, 2026. In fact, we've seen some progress last year. 
China TCM’s valuation is rarely driven by strong fundamentals, but more by privatization rumors. The catalyst for China TCM’s share price in 2026 is CNPGC’s announcement within three months.


China TCM (570.HK) - About the 2025 Profit Warning and the Outlook

<ul>
<li>China TCM is still in the adjustment period due to CTCMG VBP and goodwill impairment loss. However, the new management is pushing for internal reforms, which is a good phenomenon.</li>
<li>Rebound will come after China TCM fully digest the impact of VBP. Looking forward, annual profit of RMB1bn is still expected. Reasonable valuation is RMB10-15bn, which is just conservative estimate.</li>
<li>As CNPGC still commits to resolving the horizontal competition issue, investors have reignited interest in betting on privatization of China TCM and potential merger with Taiji, which is a catalyst.</li>
</ul>


China TCM is still in the adjustment period due to CTCMG VBP and goodwill impairment loss. However, the new management is pushing for internal reforms, which is a good phenomenon.
Rebound will come after China TCM fully digest the impact of VBP. Looking forward, annual profit of RMB1bn is still expected. Reasonable valuation is RMB10-15bn, which is just conservative estimate.
As CNPGC still commits to resolving the horizontal competition issue, investors have reignited interest in betting on privatization of China TCM and potential merger with Taiji, which is a catalyst.


China TCM (570.HK) - Performance Is Expected to Rebound

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>Almost a year in, Changhong Group has yet to secure the regulatory approvals for its HK$1.223 scheme offer for <a href="https://www.smartkarma.com/entities/changhong-jiahua-holdings-ltd" target="_blank" data-smartkarma-citation="entities:5849:1" rel="noopener">Changhong Jiahua (3991 HK)</a>.</li>
<li>The offer will be effectively blocked, not by a Sichuan NDRC/Commerce rejection with stated reasons, but by the approval process failing to conclude by the 20 September long stop date.</li>
<li>On a deal break, I expect little-to-no downside due to improving fundamentals, significant peer re-rating and significant discount to the undisturbed price. </li>
</ul>


Almost a year in, Changhong Group has yet to secure the regulatory approvals for its HK$1.223 scheme offer for Changhong Jiahua (3991 HK).
The offer will be effectively blocked, not by a Sichuan NDRC/Commerce rejection with stated reasons, but by the approval process failing to conclude by the 20 September long stop date.
On a deal break, I expect little-to-no downside due to improving fundamentals, significant peer re-rating and significant discount to the undisturbed price. 


Changhong Jiahua (3991 HK): The Upcoming Long Stop Date Sets the Pretext for a Deal Break

Hong Kong

China Traditional Chinese Medicine Holdings Co. Ltd. is an investment holding company engaged in the research, development, production, and sale of traditional Chinese medicine (TCM) and pharmaceutical products. It offers concentrated TCM granules, healthcare products, decoction pieces, and finished drugs, as well as Chinese medical healthcare solutions. The company was founded in 1905 and is headquartered in Hong Kong.

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China Traditional Chinese Medicine (570 HK)

China Healthcare Weekly (Mar.15)- New Policy of Innovative Drug, TCM Formula Granules, Xingqi Pharma

New policy of innovative drug is a big deal. We've reasons to start being optimistic.The market pattern of TCM formula granules will face...

Xinyao (Criss) Wang