HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

China Traditional Chinese Medicine / Equity Bottom-Up

China Traditional Chinese Medicine (570 HK)

<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

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

Index Rebalance

Guotai Haitong Securities / Index Rebalance

<ul>
<li>There could be 23 changes for the CSI A500 Index at the December rebalance. Turnover is estimated at 2.9% and the round-trip trade is around US$1.6bn.</li>
<li>There is a fair amount of balance between sectors with Consumer Discretionary and Health Care expected to lose index spots to Industrials, Information Technology and Materials.</li>
<li>The forecast adds outperformed the forecast deletes from June-September but have given up gains since then. Position in stocks that will have same-way flows from passive trackers of other indices.</li>
</ul>


There could be 23 changes for the CSI A500 Index at the December rebalance. Turnover is estimated at 2.9% and the round-trip trade is around US$1.6bn.
There is a fair amount of balance between sectors with Consumer Discretionary and Health Care expected to lose index spots to Industrials, Information Technology and Materials.
The forecast adds outperformed the forecast deletes from June-September but have given up gains since then. Position in stocks that will have same-way flows from passive trackers of other indices.


CSI A500 Index Rebalance Preview: Bunch of Changes to Lead to US$1.6bn Trade

<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

Chongqing Taiji Industry (Group) A / Equity Bottom-Up

Chongqing Taiji Industry (Group) A (600129 CH)

<ul>
<li>According to the disclosure in 25H1 report, CNPGC will still fulfill its commitment to resolving the issue of horizontal competition.So, the merger of China TCM and Taiji remains an option.</li>
<li>Although Taiji’s performance declined sharply in 25H1, the announcement of the stock repurchase indicates that the Company remains optimistic about its prospects and tries to protect the interests of shareholders.</li>
<li>There’s high possibility of performance recovery in 2026.In 2027, Taiji would enter a new round of growth. So, 2025 is the low point, which provides a good opportunity to buy.</li>
</ul>


According to the disclosure in 25H1 report, CNPGC will still fulfill its commitment to resolving the issue of horizontal competition.So, the merger of China TCM and Taiji remains an option.
Although Taiji’s performance declined sharply in 25H1, the announcement of the stock repurchase indicates that the Company remains optimistic about its prospects and tries to protect the interests of shareholders.
There’s high possibility of performance recovery in 2026.In 2027, Taiji would enter a new round of growth. So, 2025 is the low point, which provides a good opportunity to buy.


Chongqing Taiji Industry (Group) (600129.CH) 25H1- CNPGC Commits to Resolving Horizontal Competition

<ul>
<li>The current channel inventory digestion has been ongoing for nearly a year. If the terminal sales data in 25Q3 improves, it is expected to support the revenue recovery in 25Q4.</li>
<li>China TCM and CNPGC had signed relevant agreement on the free transfer of equity. Investors think this is paving the way for the future integration of China TCM and Taiji.</li>
<li>Investors have reignited interest in betting on China TCM's privatization and merger with Taiji .According to Taiji, CNPGC will still fulfill its commitment to resolving the issue of horizontal competition</li>
</ul>


The current channel inventory digestion has been ongoing for nearly a year. If the terminal sales data in 25Q3 improves, it is expected to support the revenue recovery in 25Q4.
China TCM and CNPGC had signed relevant agreement on the free transfer of equity. Investors think this is paving the way for the future integration of China TCM and Taiji.
Investors have reignited interest in betting on China TCM's privatization and merger with Taiji .According to Taiji, CNPGC will still fulfill its commitment to resolving the issue of horizontal competition


Chongqing Taiji Industry (Group) (600129 CH) - Investors Are Betting on the Merger with China TCM

China

Chongqing Taiji Industry (Group) Co., Ltd. manufactures and markets medicines, healthcare products, medical packing products, and medical instruments.  The Company also imports and exports Chinese medicine materials and medical packing materials.

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Chongqing Taiji Industry (Group) A (600129 CH)

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

China TCM will shift from a profit into a loss in 2025, mainly due to VBP/impairment. Taiji will collaborate with CNPGC to resolve horizontal...

Xinyao (Criss) Wang

CSI A500 Index Rebalance Preview: Bunch of Changes to Lead to US$1.6bn Trade

There could be 23 changes for the CSI A500 Index at the Dec rebal. Estimated turnover is 2.9% and round-trip trade is US$1.6bn. Adds outperformed...

Brian Freitas

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

The rise in China TCM’s share price recently is related to investors' renewed interest in betting on privatization as it has been a year since the...

Xinyao (Criss) Wang

Chongqing Taiji Industry (Group) (600129.CH) 25H1- CNPGC Commits to Resolving Horizontal Competition

According to 25H1 report, CNPGC will fulfill its commitment to resolving the issue of horizontal competition. So, the merger of China TCM and Taiji...

Xinyao (Criss) Wang

Chongqing Taiji Industry (Group) (600129 CH) - Investors Are Betting on the Merger with China TCM

Ongoing channel inventory digestion may lead to revenue recovery in 25Q4. Investors anticipate China TCM's merger with Taiji after China TCM and...

Xinyao (Criss) Wang

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

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

​China TCM will shift from a profit into a loss in 2025, mainly due to VBP/impairment. Taiji will collaborate with CNPGC to resolve horizontal...

Xinyao (Criss) Wang

CSI A500 Index Rebalance Preview: Bunch of Changes to Lead to US$1.6bn Trade

There could be 23 changes for the CSI A500 Index at the Dec rebal. Estimated turnover is 2.9% and round-trip trade is US$1.6bn. Adds outperformed...

Brian Freitas

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

The rise in China TCM’s share price recently is related to investors' renewed interest in betting on privatization as it has been a year since the...

Xinyao (Criss) Wang

Chongqing Taiji Industry (Group) (600129.CH) 25H1- CNPGC Commits to Resolving Horizontal Competition

According to 25H1 report, CNPGC will fulfill its commitment to resolving the issue of horizontal competition. So, the merger of China TCM and Taiji...

Xinyao (Criss) Wang

Chongqing Taiji Industry (Group) (600129 CH) - Investors Are Betting on the Merger with China TCM

Ongoing channel inventory digestion may lead to revenue recovery in 25Q4. Investors anticipate China TCM's merger with Taiji after China TCM and...

Xinyao (Criss) Wang

China TCM will shift from a profit into a loss in 2025, mainly due to VBP/impairment. Taiji will collaborate with CNPGC to resolve horizontal...