HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

<ul>
<li>Dong-E-E-Jiao's performance is exciting. The first-ever equity incentive plan fully demonstrates the new management team's confidence in the future development of the Company. There's potential for another leap in valuation.</li>
<li>Our 2024 forecast is net profit to reach RMB1.4 billion, up 20% YoY. Reasonable valuation is 25-30x P/E.If market value falls below RMB35 billion, this is a great buying opportunity.</li>
<li>Dong-E-E-Jiao is worth long-term holding due to attractive dividend policy. China Resources may further improve dividend payout, which is in line with the major trend for SOE to increase dividends.</li>
</ul>


Dong-E-E-Jiao's performance is exciting. The first-ever equity incentive plan fully demonstrates the new management team's confidence in the future development of the Company. There's potential for another leap in valuation.
Our 2024 forecast is net profit to reach RMB1.4 billion, up 20% YoY. Reasonable valuation is 25-30x P/E.If market value falls below RMB35 billion, this is a great buying opportunity.
Dong-E-E-Jiao is worth long-term holding due to attractive dividend policy. China Resources may further improve dividend payout, which is in line with the major trend for SOE to increase dividends.


Dong E E Jiao (000423.CH) - Big Dividends and Potential Leap in Valuation Are Highly Anticipated

<ul>
<li>Some investors are disappointed with 23Q3 performance, but we think Dong-E-E-Jiao is getting back on track. The de-stocking has achieved great results and pressure on distribution channels has been alleviated.</li>
<li>Since Dong-E-E-Jiao’s contract liabilities hit a record high, we are optimistic about the performance in 23Q4 and 24Q1. China Resources could further improve Dong-E-E-Jiao’s dividend rate, making it more attractive.</li>
<li>Since Dong-E-E-Jiao’s performance is continuously improving, valuation still has room to grow. A significant increase in valuation in the short term depends on whether there would be M&amp;A deal emerges.</li>
</ul>


Some investors are disappointed with 23Q3 performance, but we think Dong-E-E-Jiao is getting back on track. The de-stocking has achieved great results and pressure on distribution channels has been alleviated.
Since Dong-E-E-Jiao’s contract liabilities hit a record high, we are optimistic about the performance in 23Q4 and 24Q1. China Resources could further improve Dong-E-E-Jiao’s dividend rate, making it more attractive.
Since Dong-E-E-Jiao’s performance is continuously improving, valuation still has room to grow. A significant increase in valuation in the short term depends on whether there would be M&amp;A deal emerges.


Dong E E Jiao Co Ltd (000423.CH) - The Situation Is Getting Better and Better

Equity Capital Markets

Xiamen Yan Palace Bioengineering / Equity Capital Markets

Xiamen Yan Palace Bioengineering (XIAMEN HK)

<ul>
<li>From 2020 to 2022, Yan Palace has spent RMB831 million on advertising and promotion, while total net profit of the Company during the same period was only about RMB500 million.</li>
<li>OneNest is the main product with the highest gross margin, which is driven by price increase strategy.However, raising price may not work. Revenue growth in 2023H2/2024 could further slow down.</li>
<li>The question is are investors really satisfied with such low-margin business for a company with strong consumption attributes? Valuation of Yan Palace should be lower than <a href="https://www.smartkarma.com/entities/dong-e-e-jiaoco-ltd-a" target="_blank" data-smartkarma-citation="entities:8470:1" rel="noopener">Dong E E Jiao</a>.</li>
</ul>


From 2020 to 2022, Yan Palace has spent RMB831 million on advertising and promotion, while total net profit of the Company during the same period was only about RMB500 million.
OneNest is the main product with the highest gross margin, which is driven by price increase strategy.However, raising price may not work. Revenue growth in 2023H2/2024 could further slow down.
The question is are investors really satisfied with such low-margin business for a company with strong consumption attributes? Valuation of Yan Palace should be lower than Dong E E Jiao.


Pre-IPO Xiamen Yan Palace Bioengineering (PHIP Updates) - Some Points Worth the Attention

<ul>
<li>Although Yan Palace prioritizes R&amp;D capabilities in prospectus, its revenue growth and business model are mainly relied on large investment in marketing/promotion.The root cause is the efficacy problem of EBN.</li>
<li>Whether Yan Palace's future performance growth can be sustained is a question mark if marketing/promotion cannot drive growth anymore. Net profit margin is low. EBN is not a profitable business.</li>
<li>Yan Palace's products do not have core competitiveness or high moat. Compliance risks are also worth being vigilant about. The valuation of Yan Palace should be lower than <a href="https://www.smartkarma.com/entities/giant-biogene-holding-co-ltd" target="_blank" data-smartkarma-citation="entities:35950:1" rel="noopener">Giant Biogene</a>.</li>
</ul>


Although Yan Palace prioritizes R&amp;D capabilities in prospectus, its revenue growth and business model are mainly relied on large investment in marketing/promotion.The root cause is the efficacy problem of EBN.
Whether Yan Palace's future performance growth can be sustained is a question mark if marketing/promotion cannot drive growth anymore. Net profit margin is low. EBN is not a profitable business.
Yan Palace's products do not have core competitiveness or high moat. Compliance risks are also worth being vigilant about. The valuation of Yan Palace should be lower than Giant Biogene.


Pre-IPO Xiamen Yan Palace Bioengineering - Concerns About Profitability and Growth Sustainability

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

<ul>
<li>Two thirds of the way through the review period for the June rebalance of the CSI500 Index, we forecast 50 changes (the maximum permitted) at the close on 8 December.</li>
<li>There is a big sector skew in the potential changes. We estimate a one-way turnover of 10.1% at the December rebalance resulting in a one-way trade of CNY 6.75bn.</li>
<li>The potential adds have outperformed the potential deletes and the CSI500 Index over the last six weeks. There could be more outperformance till nearer the end of the review period.</li>
</ul>


Two thirds of the way through the review period for the June rebalance of the CSI500 Index, we forecast 50 changes (the maximum permitted) at the close on 8 December.
There is a big sector skew in the potential changes. We estimate a one-way turnover of 10.1% at the December rebalance resulting in a one-way trade of CNY 6.75bn.
The potential adds have outperformed the potential deletes and the CSI500 Index over the last six weeks. There could be more outperformance till nearer the end of the review period.


CSI500 Index Rebalance Preview: Potential Adds Outperforming Potential Deletes

China

Dong-E-E-Jiao Co., Ltd. primarily manufactures and sells traditional Chinese medicine, health care products, health foods, and bio-medicine. The company also engages in gelatin products manufacturing.

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Dong E E Jiaoco Ltd A (000423 CH)

Dong E E Jiao (000423.CH) - Big Dividends and Potential Leap in Valuation Are Highly Anticipated

Exciting performance/confidence in future growth drive potential for valuation leap at Dong-E-E-Jiao. Forecasted net profit increase and...

Xinyao (Criss) Wang

Dong E E Jiao Co Ltd (000423.CH) - The Situation Is Getting Better and Better

Dong-E-E-Jiao’s successful de-stocking helps form a new supply-demand relationship.Strong support provided by China Resources/high dividends would...

Xinyao (Criss) Wang

Pre-IPO Xiamen Yan Palace Bioengineering (PHIP Updates) - Some Points Worth the Attention

As Yan palace's revenue growth further declines, effectiveness of marketing activities has already decrease. Huge selling expenses erode profit...

Xinyao (Criss) Wang

Pre-IPO Xiamen Yan Palace Bioengineering - Concerns About Profitability and Growth Sustainability

Since the efficacy/actual value of EBN is questionable, marketing/promotion alone cannot drive future performance growth.Yan Palace's profit model...

Xinyao (Criss) Wang

CSI500 Index Rebalance Preview: Potential Adds Outperforming Potential Deletes

We see 50 changes a side for the CSI500 in Dec. The Industrials sector could take a lot of index spots from Materials as one-way turnover exceeds...

Brian Freitas

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Dong E E Jiao (000423.CH) - Big Dividends and Potential Leap in Valuation Are Highly Anticipated

​Exciting performance/confidence in future growth drive potential for valuation leap at Dong-E-E-Jiao. Forecasted net profit increase and...

Xinyao (Criss) Wang

Dong E E Jiao Co Ltd (000423.CH) - The Situation Is Getting Better and Better

Dong-E-E-Jiao’s successful de-stocking helps form a new supply-demand relationship.Strong support provided by China Resources/high dividends would...

Xinyao (Criss) Wang

Pre-IPO Xiamen Yan Palace Bioengineering (PHIP Updates) - Some Points Worth the Attention

As Yan palace's revenue growth further declines, effectiveness of marketing activities has already decrease. Huge selling expenses erode profit...

Xinyao (Criss) Wang

Pre-IPO Xiamen Yan Palace Bioengineering - Concerns About Profitability and Growth Sustainability

Since the efficacy/actual value of EBN is questionable, marketing/promotion alone cannot drive future performance growth.Yan Palace's profit model...

Xinyao (Criss) Wang

CSI500 Index Rebalance Preview: Potential Adds Outperforming Potential Deletes

We see 50 changes a side for the CSI500 in Dec. The Industrials sector could take a lot of index spots from Materials as one-way turnover exceeds...

Brian Freitas

Exciting performance/confidence in future growth drive potential for valuation leap at Dong-E-E-Jiao. Forecasted net profit increase and...