Founder

Kemp Dolliver, CFA

Cherrystone Hill Research

Equity Bottom-Up

North China Pharmaceutical Co. Ltd. (600812 CH) announced that it resumed production on Sunday after a 51-day production halt.  Management estimates that the halt caused lost profit of RMB11 million (possibly as much as 20% of net income).We assume that other companies such as SSY Group (2005 HK), CSPC Pharmaceutical (1093 HK), and China Shineway (2877 HK) will resume production in the near future. SSY derives nearly all of its revenue from factories based in Shijiazhuang. In addition, SSY's 89…

North China Pharmaceutical Co. Ltd. (600812 CH) announced that it resumed production on Sunday after a 51-day production halt.  Management estimates that the halt caused lost profit of RMB11 million (possibly as much as 20% of net income).We assume that other companies such as SSY Group (2005 HK), CSPC Pharmaceutical (1093 HK), and China Shineway (2877 HK) will resume production in the near future. SSY derives nearly all of its revenue from factories based in Shijiazhuang. In addition, SSY's 89…

Air quality in Shijiazhuang City, Hebei Province continues to deteriorate as colder weather causes a sharp uptick in coal burning to heat buildings. As a result, the risk of longer production suspensions for pharmaceutical companies is increasing. The headline below from the SCMP is scary enough (PM2.5 and PM10 of 1,000+). The article mentions that conditions could improve in a few days, but this year's "smog season" (for lack of a better term) is proving to be worse than expected:<a href="http://www.scmp.com/news/china/society/article/2055810/air-pollution-hebei-climbs-past-1000-mark" target="_blank">Air Pollution</a>…

Air quality in Shijiazhuang City, Hebei Province continues to deteriorate as colder weather causes a sharp uptick in coal burning to heat buildings. As a result, the risk of longer production suspensions for pharmaceutical companies is increasing. The headline below from the SCMP is scary enough (PM2.5 and PM10 of 1,000+). The article mentions that conditions could improve in a few days, but this year's "smog season" (for lack of a better term) is proving to be worse than expected:Air Pollution…

Our prior Insight regarding production halts in Shijiazhuang City highlighted the differences between the impacted companies' disclosures. SSY Group (2005 HK) has particularly high exposure to the halt because their factories in Shijiazhuang City generate 90%+ of revenue.Management had hoped to receive approval to resume production by the end of November (which apparently hasn't occured). Shenzhen-listed Shijiazhuang Yiling Pharmaceutical Co., Ltd. (002603:CN) filed a disclosure on 1 December that not only provides additional general perspective, but suggests that some companies are preparing for the production ban to continue into January 2017.

Our prior Insight regarding production halts in Shijiazhuang City highlighted the differences between the impacted companies' disclosures. SSY Group (2005 HK) has particularly high exposure to the halt because their factories in Shijiazhuang City generate 90%+ of revenue.Management had hoped to receive approval to resume production by the end of November (which apparently hasn't occured). Shenzhen-listed Shijiazhuang Yiling Pharmaceutical Co., Ltd. (002603:CN) filed a disclosure on 1 December that not only provides additional general perspective, but suggests that some companies are preparing for the production ban to continue into January 2017.

Shijiazhuang City in Hebei Province (China) recently ordered local manufacturing companies to halt production activities in order to reduce air pollution. Four pharmaceutical companies -- North China Pharmaceutical (600812 CH), CSPC Pharmaceutical (1093 HK), SSY Group (2877 HK), and China Shineway (2877 HK) -- disclosed production halts and played down the potential financial impact (assuming that the halts are brief).  The market has largely given the companies the benefit of the doubt, but the reality is that neither the companies nor the government is in control of the situation. As a result, production halts could be longer than assumed with negative effects on earnings.

Shijiazhuang City in Hebei Province (China) recently ordered local manufacturing companies to halt production activities in order to reduce air pollution. Four pharmaceutical companies -- North China Pharmaceutical (600812 CH), CSPC Pharmaceutical (1093 HK), SSY Group (2877 HK), and China Shineway (2877 HK) -- disclosed production halts and played down the potential financial impact (assuming that the halts are brief).  The market has largely given the companies the benefit of the doubt, but the reality is that neither the companies nor the government is in control of the situation. As a result, production halts could be longer than assumed with negative effects on earnings.

SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Asia’s leading multi-asset exchange

Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

Thematic (Sector/Industry)

<ul><li>From a demand perspective, Asia’s population is growing as is longevity. On the supply side, Asia’s number of doctors, nurses, hospitals and medical equipment diverge across the region, and still trail the per capita averages of the 34 OECD member countries. </li><li>For a shorter-term perspective, over the past five weeks, four Healthcare stocks (Cordlife Group, iX Biopharma, UG Healthcare Corporation &amp; Health Management International) have released Annual Reports whilst a secondary listing (Techcomp Holdings) has released an Interim Report.</li><li>Within these reports, there are examples of how the Healthcare Sector is adapting to Asia Pacific demographics, maintaining an ongoing focus on Research &amp; Development, monitoring pharmaceutical &amp; food regulation trends, collaborating with communities to build business channels, expansion of production lines and pursuing value chain management in manufacturing and distribution. </li></ul>

From a demand perspective, Asia’s population is growing as is longevity. On the supply side, Asia’s number of doctors, nurses, hospitals and medical equipment diverge across the region, and still trail the per capita averages of the 34 OECD member countries. For a shorter-term perspective, over the past five weeks, four Healthcare stocks (Cordlife Group, iX Biopharma, UG Healthcare Corporation &amp; Health Management International) have released Annual Reports whilst a secondary listing (Techcomp Holdings) has released an Interim Report.Within these reports, there are examples of how the Healthcare Sector is adapting to Asia Pacific demographics, maintaining an ongoing focus on Research &amp; Development, monitoring pharmaceutical &amp; food regulation trends, collaborating with communities to build business channels, expansion of production lines and pursuing value chain management in manufacturing and distribution. 

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)

Manufacturing Gearing Up: Go Flat

North China Pharmaceutical Co. Ltd. (600812 CH) announced that it resumed production on Sunday after a 51-day production halt. Management...

Kemp Dolliver, CFA

Conspiracy of the Weather Gods

Air quality in Shijiazhuang City, Hebei Province continues to deteriorate as colder weather causes a sharp uptick in coal burning to heat...

Kemp Dolliver, CFA

"Temporary" Looking Longer Here

Our prior Insight regarding production halts in Shijiazhuang City highlighted the differences between the impacted companies' disclosures. SSY...

Kemp Dolliver, CFA

What's the Definition Of "Temporary"?

Shijiazhuang City in Hebei Province (China) recently ordered local manufacturing companies to halt production activities in order to reduce air...

Kemp Dolliver, CFA

Key Drivers of Asia's Healthcare Sector

From a demand perspective, Asia’s population is growing as is longevity. On the supply side, Asia’s number of doctors, nurses, hospitals and...

Singapore Exchange Ltd (SGX)

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