Asia Pac ECM and Index Rebal, Shenton Research

Ke Yan, CFA, FRM

Asia Pac ECM and Index Rebal

Asia Pac IPO & Placement Research, China Biotech

DZT Research

DZT Research is an independent Asia Pacific equity specialist. Our quantitative research covers index rebalancing flows, alongside exchange data analytics accross Asia Pacific. On the equity capital markets side, we focus on Asia Pacific ECM, especially biotech and TMT. Our lead analyst is frequently cited by international media.

Equity Capital Markets

Kindstar Globalgene Technology / Equity Capital Markets

Kindstar is a leading esoteric test service provider in China. The company has a dominant market in the independent hematological test segment and is looking to raise up to USD 200m in  H-share listing in Hong Kong. In our previous note, we discussed Kindstar's business segment. The company has a strong footprint in the hematology test segment with the majority of its revenue is derived from the hematological tests, particularly for lymphoma and myeloma related diseases. The company is relatively weak in other areas such as oncology and maternity related businesses. We think the company can continue to grow the existing pie of hematological tests for which the public hospitals do not want to invest in the test equipment and processes but it will be challenging for the company to expand the business into the area where public hospitals are willing to invest in. We think the company has a decent line-up of investors but there is still a lack of international healthcare investors. The management's experience is also decent.In this note, we compare the company's key financial metrics with other leading listed ICL. We also discuss the company's pre-IPO valuation in the context of its growth potential and concerns we raised in our previous note.<h2>Our previous coverage on Kindstar</h2><ul><li><a href="https://www.smartkarma.com/insights/kindstar-pre-ipo-issues-with-scalability" target="_blank" rel="noopener">Kindstar (康圣环球) Pre-IPO: Issues with Scalability</a></li></ul>

Kindstar is a leading esoteric test service provider in China. The company has a dominant market in the independent hematological test segment and is looking to raise up to USD 200m in  H-share listing in Hong Kong. In our previous note, we discussed Kindstar's business segment. The company has a strong footprint in the hematology test segment with the majority of its revenue is derived from the hematological tests, particularly for lymphoma and myeloma related diseases. The company is relatively weak in other areas such as oncology and maternity related businesses. We think the company can continue to grow the existing pie of hematological tests for which the public hospitals do not want to invest in the test equipment and processes but it will be challenging for the company to expand the business into the area where public hospitals are willing to invest in. We think the company has a decent line-up of investors but there is still a lack of international healthcare investors. The management's experience is also decent.In this note, we compare the company's key financial metrics with other leading listed ICL. We also discuss the company's pre-IPO valuation in the context of its growth potential and concerns we raised in our previous note.Our previous coverage on KindstarKindstar (康圣环球) Pre-IPO: Issues with Scalability

Kindstar (康圣环球) Pre-IPO: Is It Worth the Premium?

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

Guangzhou Kingmed Diagnostics / Equity Bottom-Up

Guangzhou Kingmed Diagnostics (603882 CH)

With the deepening of medical reform and the implementation of hierarchical diagnosis and treatment, medical institutions are facing greater demands for clinical auxiliary diagnosis. At the same time, the DRG (Diagnosis Related Groups) policy has been simulated in 30 pilot cities across the country, and will be implemented in 2021. With the continuous promotion of medical insurance fee control policies such as DRG, the clinical labs in hospitals have been transformed from profit centers to cost centers. As a result, more and more hospitals have begun to consider outsourcing some high-cost inspection projects to independent clinical laboratory (ICL). In ICL, in terms of the current scale, operation capability and the performance in COVID-19, <a href="https://www.smartkarma.com/entities/guangzhou-kingmed-diagnostics" target="_blank" data-smartkarma-citation="entities:30257:1" rel="noopener">Guangzhou Kingmed Diagnostics (603882 CH)</a> and <a href="https://www.smartkarma.com/entities/zhejiang-dian-diagnostics-a" target="_blank" data-smartkarma-citation="entities:19115:1" rel="noopener">Zhejiang Dian Diagnostics A (300244 CH)</a> are top two companies in China. So what is the difference between the two and which one is better?

With the deepening of medical reform and the implementation of hierarchical diagnosis and treatment, medical institutions are facing greater demands for clinical auxiliary diagnosis. At the same time, the DRG (Diagnosis Related Groups) policy has been simulated in 30 pilot cities across the country, and will be implemented in 2021. With the continuous promotion of medical insurance fee control policies such as DRG, the clinical labs in hospitals have been transformed from profit centers to cost centers. As a result, more and more hospitals have begun to consider outsourcing some high-cost inspection projects to independent clinical laboratory (ICL). In ICL, in terms of the current scale, operation capability and the performance in COVID-19, Guangzhou Kingmed Diagnostics (603882 CH) and Zhejiang Dian Diagnostics A (300244 CH) are top two companies in China. So what is the difference between the two and which one is better?

Kingmed Diagnostics (603882 CH) Vs Dian Diagnostics (300244 CH) - Which One Is Better?

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Index Rebalance

Beijing Kingsoft Office Softwa / Index Rebalance

Beijing Kingsoft Office Softwa (688111 CH)

The <a href="https://www.smartkarma.com/entities/shanghai-shenzhen-csi-300-index" target="_blank" data-smartkarma-citation="entities:22906:1" rel="noopener">Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX)</a> consists of stocks from the Shanghai Stock Exchange and the Shenzhen Stock Exchange and is one of the most widely tracked A-share indices with passive tracking products listed in multiple markets globally. There are CFFEX listed futures that trade actively as well.China Securities Index Co (CSI) will announce the changes end May/beginning June and the changes will be effective after the close of trading on 11 June.There were 21 changes to the index at the June 2020 review and 26 changes at the December 2020 review. We expect 30 changes at the upcoming June 2021 index review - this is the maximum number of changes that are permitted at a single review. Estimated one-way turnover is 4.56%.With passive tracking products holding around US$32bn of AUM, plus another US$53bn in open interest on the listed futures, plus active managers benchmarked to the <a href="https://www.smartkarma.com/entities/shanghai-shenzhen-csi-300-index" target="_blank" data-smartkarma-citation="entities:22906:1" rel="noopener">Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX)</a>, there could be significant moves in the inclusion/exclusion names from now to the end of the review period. There will only be 9-10 trading days between the announcement of the changes and the implementation, so having a pre-position should pay off. There should not be too many changes in the possible list of inclusions and exclusions due to the averaging process over the last year of trading.

The Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX) consists of stocks from the Shanghai Stock Exchange and the Shenzhen Stock Exchange and is one of the most widely tracked A-share indices with passive tracking products listed in multiple markets globally. There are CFFEX listed futures that trade actively as well.China Securities Index Co (CSI) will announce the changes end May/beginning June and the changes will be effective after the close of trading on 11 June.There were 21 changes to the index at the June 2020 review and 26 changes at the December 2020 review. We expect 30 changes at the upcoming June 2021 index review - this is the maximum number of changes that are permitted at a single review. Estimated one-way turnover is 4.56%.With passive tracking products holding around US$32bn of AUM, plus another US$53bn in open interest on the listed futures, plus active managers benchmarked to the Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX), there could be significant moves in the inclusion/exclusion names from now to the end of the review period. There will only be 9-10 trading days between the announcement of the changes and the implementation, so having a pre-position should pay off. There should not be too many changes in the possible list of inclusions and exclusions due to the averaging process over the last year of trading.

CSI300 Index Rebalance Preview: Maxing Out the Number of Changes

China

Guangzhou Kingmed Diagnostics Group Co., Ltd. operates as a medical laboratory. The Company provides clinical testing, pathology diagnosis outsourcing, and other services. Guangzhou Kingmed Diagnostics Group provides services to various medical institutions including hospitals, maternal, child health centers, health centers, and other places.

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Guangzhou Kingmed Diagnostics (603882 CH)

Kindstar (康圣环球) Pre-IPO: Is It Worth the Premium?

We compare the company's key financial metrics with other leading listed ICL. We also discuss the company's pre-IPO valuation in the context of its...

Ke Yan, CFA, FRM

Kingmed Diagnostics (603882 CH) Vs Dian Diagnostics (300244 CH) - Which One Is Better?

This article analyzed Kingmed and Dian in terms of business scope (no. of labs & testing items...), revenue, profitability, debt...

Xinyao (Criss) Wang

CSI300 Index Rebalance Preview: Maxing Out the Number of Changes

We see 30 potential inclusions/exclusions to the CSI300 index at the June review that will become effective COB 11 June. With a lot of benchmarked...

Brian Freitas

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