Fundamental Short Selling Research

Eric Fernandez, CFA

TwoRiversAnalytics

Equity Bottom-Up

<ul>
<li>Liquidity shorts can be great short candidates.  The key characteristic is that the company may not be viable, economically, given their cash flows and cash requirements. </li>
<li>Liquidity shorts have built-in catalysts, have moderate to higher betas,  and can have strong down moves if a crisis develops.  They can go bankrupt, pushing the stock price near zero.</li>
<li>Today we are flagging Carvana, Exact Sciences, Inspire Med, Freshpet, Enviva .</li>
</ul>


Liquidity shorts can be great short candidates.  The key characteristic is that the company may not be viable, economically, given their cash flows and cash requirements. 
Liquidity shorts have built-in catalysts, have moderate to higher betas,  and can have strong down moves if a crisis develops.  They can go bankrupt, pushing the stock price near zero.
Today we are flagging Carvana, Exact Sciences, Inspire Med, Freshpet, Enviva .


Liquidity Risk Short Candidates: Carvana, Exact Sciences, Inspire Med, Freshpet, Enviva

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

New Horizon Health reported 1H21 results. We attended the post-result management call this morning and remain optimistic about the prospect of the company. We continue to like the company and believe the current weakness presents opportunities to accumulate the stock. Our valuation suggests a 105% upside from the current share price.<h2>Our previous coverage on the company</h2><ul>
<li dir="ltr" aria-level="1"><a href="https://www.smartkarma.com/insights/new-horizon-health-pre-ipo-a-hot-medical-device-deal-in-making" target="_blank" rel="noopener">New Horizon Health (诺辉健康) Pre-IPO: A Hot Medical Device Deal in Making</a></li>
<li dir="ltr" aria-level="1"><a href="https://www.smartkarma.com/insights/new-horizon-health-pre-ipo-comparison-with-exact-sciences" target="_blank" rel="noopener">New Horizon Health (诺辉健康) Pre-IPO: Comparison with Exact Sciences</a></li>
<li dir="ltr" aria-level="1"><a href="https://www.smartkarma.com/insights/new-horizon-health-pre-ipo-thoughts-on-valuation" target="_blank" rel="noopener">New Horizon Health (诺辉健康) Pre-IPO: Thoughts on valuation</a></li>
<li dir="ltr" aria-level="1"><a href="https://www.smartkarma.com/insights/new-horizon-health-ipo-room-to-fly" target="_blank" rel="noopener">New Horizon Health (诺辉健康) IPO: Room to Fly</a></li>
<li dir="ltr" aria-level="1"><a href="https://www.smartkarma.com/insights/new-horizon-health-ipo-trading-supply-demand-imbalance" target="_blank" rel="noopener">New Horizon Health (诺辉健康) IPO Trading: Supply-Demand Imbalance</a></li>
</ul>

New Horizon Health reported 1H21 results. We attended the post-result management call this morning and remain optimistic about the prospect of the company. We continue to like the company and believe the current weakness presents opportunities to accumulate the stock. Our valuation suggests a 105% upside from the current share price.Our previous coverage on the company
New Horizon Health (诺辉健康) Pre-IPO: A Hot Medical Device Deal in Making
New Horizon Health (诺辉健康) Pre-IPO: Comparison with Exact Sciences
New Horizon Health (诺辉健康) Pre-IPO: Thoughts on valuation
New Horizon Health (诺辉健康) IPO: Room to Fly
New Horizon Health (诺辉健康) IPO Trading: Supply-Demand Imbalance


New Horizon Health 1H21: On Track to a Strong Year

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

On February 18, 2021, when <a href="https://www.smartkarma.com/entities/new-horizon-health-limited" target="_blank" data-smartkarma-citation="entities:31039:1" rel="noopener">New Horizon Health (6606 HK)</a> listed in HKEX, its share price jumped 215%, with a market value of about HK$35.1 billion. As the first company in China’s colorectal cancer screening market that listed in HKEX, together with the strong market sentiment during that period of time, it was not surprising to see the stock price of New Horizon Health skyrocketed on the first day of IPO, but how far and how long can it go? Actually, in the first three quarters of 2020, the Company's revenue was only RMB35.3 million and its net loss was RMB534 million. The relatively small scale of revenue and large losses are also quite common for other domestic companies in this industry. Although China’s market of early screening and detection is attractive, the industry still has some concerns to address.

On February 18, 2021, when New Horizon Health (6606 HK) listed in HKEX, its share price jumped 215%, with a market value of about HK$35.1 billion. As the first company in China’s colorectal cancer screening market that listed in HKEX, together with the strong market sentiment during that period of time, it was not surprising to see the stock price of New Horizon Health skyrocketed on the first day of IPO, but how far and how long can it go? Actually, in the first three quarters of 2020, the Company's revenue was only RMB35.3 million and its net loss was RMB534 million. The relatively small scale of revenue and large losses are also quite common for other domestic companies in this industry. Although China’s market of early screening and detection is attractive, the industry still has some concerns to address.

New Horizon Health (6606.HK) - Still Has a Long Way to Go

Equity Analyst, LightStream Research

Shifara Samsudeen, FCMA, CGMA

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Equity Capital Markets

New Horizon Health  / Equity Capital Markets

<a href="https://www.smartkarma.com/entities/new-horizon-health-limited" target="_blank" data-smartkarma-citation="entities:31039:1" rel="noopener">New Horizon Health (NHH HK)</a>  is the pioneer in China’s colorectal cancer screening market. The company currently has two proprietary cancer screening products, ColoClear and Pupu Tube that are developed for screening colorectal cancer. Colorectal cancer screening tests have huge market potential in China given China has the highest colorectal cancer incidence in the world.The company’s proprietary, non-invasive, multi-target, FIT-DNA test is the first and only molecular screening test that is approved in China by the NMPA. ColoClear targets a high-risk colorectal cancer population of 120m in China.The company has set the terms for its IPO, where it plans to raise net proceeds of US$176-208m (approx. HK$1.4-1.6bn) through the issuance of 76.6m shares at an indicative IPO price range of HK$22.66-26.66 per share.

New Horizon Health (NHH HK)  is the pioneer in China’s colorectal cancer screening market. The company currently has two proprietary cancer screening products, ColoClear and Pupu Tube that are developed for screening colorectal cancer. Colorectal cancer screening tests have huge market potential in China given China has the highest colorectal cancer incidence in the world.The company’s proprietary, non-invasive, multi-target, FIT-DNA test is the first and only molecular screening test that is approved in China by the NMPA. ColoClear targets a high-risk colorectal cancer population of 120m in China.The company has set the terms for its IPO, where it plans to raise net proceeds of US$176-208m (approx. HK$1.4-1.6bn) through the issuance of 76.6m shares at an indicative IPO price range of HK$22.66-26.66 per share.

New Horizon Health IPO Valuation: Healthy Valuation

Founder

Kemp Dolliver, CFA

Cherrystone Hill Research

<a href="https://www.smartkarma.com/entities/new-horizon-health-limited" target="_blank" data-smartkarma-citation="entities:31039:1" rel="noopener">New Horizon Health (NHH HK)</a> has announced terms of its US$263MM IPO with a pre-money valuation of US$960 million to US$1.17 billion. The updated filings show a strong recovery in volumes from COVID-19 disruptions. We think the valuation is reasonable using undemanding assumptions and would participate in the offering.

New Horizon Health (NHH HK) has announced terms of its US$263MM IPO with a pre-money valuation of US$960 million to US$1.17 billion. The updated filings show a strong recovery in volumes from COVID-19 disruptions. We think the valuation is reasonable using undemanding assumptions and would participate in the offering. 

New Horizon IPO: Only Undemanding Assumptions Needed

United States

Exact Sciences Corp., is focused on developing and commercializing a non-invasive molecular screening test for the early detection and prevention of colorectal cancer. The Company's test is a stool-based DNA test that identifies both pre-cancer and cancer by detecting genetic mutations in colorectal cancer cells.

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Exact Sciences (EXAS US)

Liquidity Risk Short Candidates: Carvana, Exact Sciences, Inspire Med, Freshpet, Enviva

Liquidity risk short candidates may not be economically viable given cash flows and capital requirements. This week we flag Carvana, Exact...

Eric Fernandez, CFA

New Horizon Health 1H21: On Track to a Strong Year

Post 1H21 results, we continue to like the company and believe the current weakness presents opportunities to accumulate the stock.

Ke Yan, CFA, FRM

New Horizon Health (6606.HK) - Still Has a Long Way to Go

The article analyzed the major concerns in China’s market of early screening (difficulty in BD, pricing, payment systems, etc.), which would...

Xinyao (Criss) Wang

New Horizon Health IPO Valuation: Healthy Valuation

The company has set the terms for its IPO, where it plans to raise net proceeds of US$176-208m (approx. HK$1.4-1.6bn) through the issuance of 76.6m...

Shifara Samsudeen, FCMA, CGMA

New Horizon IPO: Only Undemanding Assumptions Needed

We think the proposed valuation of New Horizon Health's (NHH HK) IPO is reasonable using undemanding assumptions and would participate in the...

Kemp Dolliver, CFA

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