HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

Simcere Pharmaceutical Group / Equity Bottom-Up

<ul>
<li>Simcere’s profit was mainly driven by the income of non-recurring items (investment business). Due to unfriendly external environment, investors are recommended to be prepared for further decline in net profit. </li>
<li>The overall quality of Simcere’s pipeline is not high, which would be difficult to bring decent revenue in the next few years. Simcere’s transformation is not as smooth as expected.</li>
<li>In fact, over the years, Simcere's strongest capability lies in the sales rather than R&amp;D. Since the game rule changes, we are bearish on Simcere.</li>
</ul>


Simcere’s profit was mainly driven by the income of non-recurring items (investment business). Due to unfriendly external environment, investors are recommended to be prepared for further decline in net profit. 
The overall quality of Simcere’s pipeline is not high, which would be difficult to bring decent revenue in the next few years. Simcere’s transformation is not as smooth as expected.
In fact, over the years, Simcere's strongest capability lies in the sales rather than R&amp;D. Since the game rule changes, we are bearish on Simcere.


Simcere Pharmaceutical Group (2096.HK) 22H1 - Gloomy Outlook and Risks in Profits

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

Chow Tai Fook Jewellery / Index Rebalance

<ul>
<li>The inclusion of <a href="https://www.smartkarma.com/entities/china-shenhua-energy-co-h" target="_blank" data-smartkarma-citation="entities:382:1" rel="noopener">China Shenhua Energy Co H (1088 HK)</a>, <a href="https://www.smartkarma.com/entities/chow-tai-fook-jewellery-group" target="_blank" data-smartkarma-citation="entities:549:1" rel="noopener">Chow Tai Fook Jewellery (1929 HK)</a>, <a href="https://www.smartkarma.com/entities/hansoh-pharmaceutical-group" target="_blank" data-smartkarma-citation="entities:23675:1" rel="noopener">Hansoh Pharmaceutical (3692 HK)</a> and <a href="https://www.smartkarma.com/entities/baidu-inc-a55ca720-5968-48f0-8194-ac94390d065c" target="_blank" data-smartkarma-citation="entities:32212:1" rel="noopener">Baidu (9888 HK)</a> takes us to 73 index constituents.</li>
<li>Changes to the stocks, number of shares, float and capping result in an estimated one-way turnover of 5.09% and will result in a one-way trade of HK$10,562m.</li>
<li>There are large shorts on <a href="https://www.smartkarma.com/entities/chow-tai-fook-jewellery-group" target="_blank" data-smartkarma-citation="entities:549:1" rel="noopener">Chow Tai Fook Jewellery (1929 HK)</a> and <a href="https://www.smartkarma.com/entities/hansoh-pharmaceutical-group" target="_blank" data-smartkarma-citation="entities:23675:1" rel="noopener">Hansoh Pharmaceutical (3692 HK)</a> and there could be some short covering from now to implementation.</li>
</ul>


The inclusion of China Shenhua Energy Co H (1088 HK), Chow Tai Fook Jewellery (1929 HK), Hansoh Pharmaceutical (3692 HK) and Baidu (9888 HK) takes us to 73 index constituents.
Changes to the stocks, number of shares, float and capping result in an estimated one-way turnover of 5.09% and will result in a one-way trade of HK$10,562m.
There are large shorts on Chow Tai Fook Jewellery (1929 HK) and Hansoh Pharmaceutical (3692 HK) and there could be some short covering from now to implementation.


HSI Index Rebalance: Another Small Step Towards 80 Members, But BIG Impact

Thematic (Sector/Industry)

<ul>
<li>IVD field ushered in the largest centralized procurement in history - the liver function biochemical testing reagents,which would bring great reshuffle effect to the competition pattern of biochemical diagnostics market.</li>
<li>
<a href="https://www.smartkarma.com/entities/innovent-biologics-inc" target="_blank" data-smartkarma-citation="entities:27452:1" rel="noopener">Innovent Biologics Inc (1801 HK) </a>and Sanofi reached two major cooperation. Meanwhile, Innovent’s CCO Liu Min resigned. We deep dived the logic and impact behind. </li>
<li>For HK IPO, market participants have come up with ways to reduce issuance scale in an attempt to stabilize the performance of new shares after IPO, which wouldn’t help.</li>
</ul>


IVD field ushered in the largest centralized procurement in history - the liver function biochemical testing reagents,which would bring great reshuffle effect to the competition pattern of biochemical diagnostics market.

Innovent Biologics Inc (1801 HK) and Sanofi reached two major cooperation. Meanwhile, Innovent’s CCO Liu Min resigned. We deep dived the logic and impact behind. 
For HK IPO, market participants have come up with ways to reduce issuance scale in an attempt to stabilize the performance of new shares after IPO, which wouldn’t help.


China Healthcare Weekly (Aug.5) - HK IPO, Innovent, BeiGene, the Largest IVD Centralized Procurement

<ul>
<li>The Development and Reform Commission of Shenzhen Municipality issued a document about the subsidy for VBP, which is a positive policy and is good for innovation.</li>
<li>The approval of Genuine Biotech’s Azvudine could greatly increase the unpredictability of the approval of domestic innovative drugs, thus greatly increasing the unpredictable risk of domestic innovative drug enterprises.</li>
<li>In terms of internationalization, we summarized what Chinese pharmaceutical companies could do at the current stage. But they are hard to become the mainstream in pharmaceuticals globally in short term.</li>
</ul>


The Development and Reform Commission of Shenzhen Municipality issued a document about the subsidy for VBP, which is a positive policy and is good for innovation.
The approval of Genuine Biotech’s Azvudine could greatly increase the unpredictability of the approval of domestic innovative drugs, thus greatly increasing the unpredictable risk of domestic innovative drug enterprises.
In terms of internationalization, we summarized what Chinese pharmaceutical companies could do at the current stage. But they are hard to become the mainstream in pharmaceuticals globally in short term.


China Healthcare Weekly (July.29)-Subsidy for VBP, Unpredictable NMPA, Ways for Internationalization

Global Healthcare Analyst

Tina Banerjee

CSPC Pharmaceutical Group / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/cspc-pharmaceutical-group-ltd" target="_blank" data-smartkarma-citation="entities:229:1" rel="noopener">CSPC Pharmaceutical Group (1093 HK)</a> reported Q1 results, with revenue growth of 17% y/y to RMB8 billion, driven by a 15% y/y growth in finished drugs revenue.</li>
<li>Oncology, with 34% contribution to finished drug revenue remained the main growth engine. Oncology revenue grew 15% y/y. The company has launched one new innovative oncology drug in Q1.</li>
<li>CSPC’s net profit declined 5% y/y to RMB1.40 billion, dragged by fair-value losses of RMB133 million on its financial assets. Without considering one-off charge, net profit would have increased 10%.</li>
</ul>



CSPC Pharmaceutical Group (1093 HK) reported Q1 results, with revenue growth of 17% y/y to RMB8 billion, driven by a 15% y/y growth in finished drugs revenue.
Oncology, with 34% contribution to finished drug revenue remained the main growth engine. Oncology revenue grew 15% y/y. The company has launched one new innovative oncology drug in Q1.
CSPC’s net profit declined 5% y/y to RMB1.40 billion, dragged by fair-value losses of RMB133 million on its financial assets. Without considering one-off charge, net profit would have increased 10%.


CSPC Pharmaceutical (1093 HK): 1Q22 Result: Double-Digit Revenue Growth; One-Off Charges Drag Profit

China

CSPC Pharmaceutical Group Limited, through its subsidiaries, manufactures and sells pharmaceutical products.  The Company's products include vitamin C, antibiotics and common generic drugs. The Company is also engages in the development of innovative drugs and antibiotics.

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CSPC Pharmaceutical Group (1093 HK)

Simcere Pharmaceutical Group (2096.HK) 22H1 - Gloomy Outlook and Risks in Profits

Simcere’s profit was driven by investment business, which will further decline due to unfriendly macro. The pipeline quality is not high, leading...

Xinyao (Criss) Wang

HSI Index Rebalance: Another Small Step Towards 80 Members, But BIG Impact

There are 4 adds to the index in September - China Shenhua, Chow Tai Fook, Baidu & Hansoh Pharma. There will be big impact on some of the stocks...

Brian Freitas

China Healthcare Weekly (Aug.5) - HK IPO, Innovent, BeiGene, the Largest IVD Centralized Procurement

IVD field ushered in the largest VBP in history. Innovent/Sanofi reached major cooperation, and Innovent’s CCO resigned. We deep dived the logic...

Xinyao (Criss) Wang

China Healthcare Weekly (July.29)-Subsidy for VBP, Unpredictable NMPA, Ways for Internationalization

The policy about subsidy for VBP is a positive sign for innovation. NMPA is unpredictable, increasing the uncertainty of drug approval. Here's what...

Xinyao (Criss) Wang

CSPC Pharmaceutical (1093 HK): 1Q22 Result: Double-Digit Revenue Growth; One-Off Charges Drag Profit

In Q1, CSPC continued its double-digit revenue growth. The company reported lower net profit due to one-off charges. In February, CSPC has launched...

Tina Banerjee

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