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

<ul>
<li>PegBio is looking to raise at least USD 100m via its Hong Kong IPO.</li>
<li>In this note, we looked at the company’s fundamentals, particularly its core product PB-117.</li>
<li>We think the story might look simple as a straightforward GLP-1 challenger but there are quite a number of concerns as we dig into the company’s story.</li>
</ul>


PegBio is looking to raise at least USD 100m via its Hong Kong IPO.
In this note, we looked at the company’s fundamentals, particularly its core product PB-117.
We think the story might look simple as a straightforward GLP-1 challenger but there are quite a number of concerns as we dig into the company’s story.


PegBio 派格生物 IPO: A (Supposedly) Straightforward GLP-1 Challenger Story

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Event-Driven

<ul>
<li>Fosun Pharma is just “a platform” and its performance mainly relies on the contributions of subsidiaries. However, such investment-driven business model has led to the current performance difficulties.</li>
<li>Although the motivation/underlying logic for Fosun Pharma to privatize Henlius are solid, we don’t know how this privatization ranks in terms of strategic significance of capital operations within Fosun's system.</li>
<li>If, for example, Fosun Pharma finds more important acquisitions/capital expenditures, the priority of Henlius’ privatization could fall. So, we think if it takes too long, there may be more uncertainties.</li>
</ul>


Fosun Pharma is just “a platform” and its performance mainly relies on the contributions of subsidiaries. However, such investment-driven business model has led to the current performance difficulties.
Although the motivation/underlying logic for Fosun Pharma to privatize Henlius are solid, we don’t know how this privatization ranks in terms of strategic significance of capital operations within Fosun's system.
If, for example, Fosun Pharma finds more important acquisitions/capital expenditures, the priority of Henlius’ privatization could fall. So, we think if it takes too long, there may be more uncertainties.


Shanghai Fosun Pharmaceutical (2196.HK) - Performance Pain Points and Henlius’ Privatization Outlook

Hangzhou Jiuyuan Genetic Biopharmaceutical / Equity Capital Markets

Hangzhou Jiuyuan Genetic Biopharmaceutical (2566 HK)

Hangzhou Jiuyuan Genetic Biopharmaceutical

<ul>
<li>Based on current performance, Jiuyuan has lost growth momentum, showing signs of stagnant growth. The main reason is VBP. So far, Jiouting, Yinuojia, Jifuwei have been included in VBP.</li>
<li>Guyoudao is facing competitive pressure from both domestic and international competitors and could be finally included in VBP. JY29-2 is the next blockbuster product, but the prospects are not clear.</li>
<li>Jiuyuan’s market value is expected to be higher than Qyuns. Future valuation performance will depend on the progress of JY29-2 and the overall market situation of GLP-1s at that time</li>
</ul>


Based on current performance, Jiuyuan has lost growth momentum, showing signs of stagnant growth. The main reason is VBP. So far, Jiouting, Yinuojia, Jifuwei have been included in VBP.
Guyoudao is facing competitive pressure from both domestic and international competitors and could be finally included in VBP. JY29-2 is the next blockbuster product, but the prospects are not clear.
Jiuyuan’s market value is expected to be higher than Qyuns. Future valuation performance will depend on the progress of JY29-2 and the overall market situation of GLP-1s at that time


Pre-IPO Hangzhou Jiuyuan Gene Engineering (PHIP Updates) - The Future Prospects Are Not Optimistic

Qyuns Therapeutics / Equity Capital Markets

<ul>
<li>The sales scale of drugs for autoimmune diseases in China is much lower than that in overseas markets. So, internationalization is inevitable for companies in this industry.</li>
<li>Qyuns’s candidates have to face fierce competition, with no advantage in R&amp;D progress.Since Qyuns mainly do clinical trials in China, its future valuation is hard to have big expansion potential.</li>
<li>Many investors may still “live in the illusion” for China biotech. We think Qyuns would not finally transform into a biopharma. Its valuation should be lower than Keymed.</li>
</ul>


The sales scale of drugs for autoimmune diseases in China is much lower than that in overseas markets. So, internationalization is inevitable for companies in this industry.
Qyuns’s candidates have to face fierce competition, with no advantage in R&amp;D progress.Since Qyuns mainly do clinical trials in China, its future valuation is hard to have big expansion potential.
Many investors may still “live in the illusion” for China biotech. We think Qyuns would not finally transform into a biopharma. Its valuation should be lower than Keymed.


Pre-IPO Qyuns Therapeutics - Conservative About the Outlook

Equity Bottom-Up

Huadong Medicine Co Ltd A / Equity Bottom-Up

<ul>
<li>We have discovered something interesting from the innovative drug evaluations disclosed by the NMPA over the years. It’s recommended to establish rational expectations for the investment return of biopharmaceutical industry.</li>
<li>We analyzed the different situations faced by Biotech in IPO/M&amp;A process, so as to help investors make rational judgments. R&amp;D team is likely to be cut regardless of the circumstances.</li>
<li>We updated views on Huadong. Its old businesses dragged down valuation. It may need to wait until Huadong delivers better-than-expected sales/profit growth in weight-loss management business before further boosting valuation.</li>
</ul>


We have discovered something interesting from the innovative drug evaluations disclosed by the NMPA over the years. It’s recommended to establish rational expectations for the investment return of biopharmaceutical industry.
We analyzed the different situations faced by Biotech in IPO/M&amp;A process, so as to help investors make rational judgments. R&amp;D team is likely to be cut regardless of the circumstances.
We updated views on Huadong. Its old businesses dragged down valuation. It may need to wait until Huadong delivers better-than-expected sales/profit growth in weight-loss management business before further boosting valuation.


China Healthcare Weekly (Sep.29) - Be Rational About Biotech Investment, R&D Team Layoffs, Huadong

China

Huadong Medicine Co., Ltd. wholesales and retails medicines, pharmaceutical preparations, biological products, and medical instruments.  Through its subsidiaries, the Company also manufactures antibiotic medicines and biochemical products.

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52-week Range	0.00 - 0.00
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Huadong Medicine Co Ltd A (000963 CH)

PegBio 派格生物 IPO: A (Supposedly) Straightforward GLP-1 Challenger Story

PegBio plans to raise $100m in Hong Kong IPO, with focus on core product PB-117 as a GLP-1 challenger, but concerns arise upon closer examination...

Ke Yan, CFA, FRM

Shanghai Fosun Pharmaceutical (2196.HK) - Performance Pain Points and Henlius’ Privatization Outlook

Fosun Pharma's investment-driven business model relies heavily on subsidiaries.Privatization of Henlius may face uncertainties if not prioritized...

Xinyao (Criss) Wang

Pre-IPO Hangzhou Jiuyuan Gene Engineering (PHIP Updates) - The Future Prospects Are Not Optimistic

Jiuyuan's growth momentum is stalling due to VBP. Guyoudao and JY29-2 face competition and uncertainty. Market value may surpass Qyuns. Future...

Xinyao (Criss) Wang

Pre-IPO Qyuns Therapeutics - Conservative About the Outlook

Qyuns’s pipeline lacks competitiveness, facing fierce competition.Together with bleak internationalization outlook, peak sales have obvious...

Xinyao (Criss) Wang

China Healthcare Weekly (Sep.29) - Be Rational About Biotech Investment, R&D Team Layoffs, Huadong

It’s advised to establish rational expectation for Biotech's investment return. R&D team will be cut eventually during M&A/IPO. Huadong's valuation...

Xinyao (Criss) Wang

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

PegBio 派格生物 IPO: A (Supposedly) Straightforward GLP-1 Challenger Story

​PegBio plans to raise $100m in Hong Kong IPO, with focus on core product PB-117 as a GLP-1 challenger, but concerns arise upon closer examination...

Ke Yan, CFA, FRM

Shanghai Fosun Pharmaceutical (2196.HK) - Performance Pain Points and Henlius’ Privatization Outlook

​Fosun Pharma's investment-driven business model relies heavily on subsidiaries.Privatization of Henlius may face uncertainties if not prioritized...

Xinyao (Criss) Wang

Pre-IPO Hangzhou Jiuyuan Gene Engineering (PHIP Updates) - The Future Prospects Are Not Optimistic

​Jiuyuan's growth momentum is stalling due to VBP. Guyoudao and JY29-2 face competition and uncertainty. Market value may surpass Qyuns. Future...

Xinyao (Criss) Wang

Pre-IPO Qyuns Therapeutics - Conservative About the Outlook

Qyuns’s pipeline lacks competitiveness, facing fierce competition.Together with bleak internationalization outlook, peak sales have obvious...

Xinyao (Criss) Wang

China Healthcare Weekly (Sep.29) - Be Rational About Biotech Investment, R&D Team Layoffs, Huadong

It’s advised to establish rational expectation for Biotech's investment return. R&D team will be cut eventually during M&A/IPO. Huadong's valuation...

Xinyao (Criss) Wang

PegBio plans to raise $100m in Hong Kong IPO, with focus on core product PB-117 as a GLP-1 challenger, but concerns arise upon closer examination...

Fosun Pharma's investment-driven business model relies heavily on subsidiaries.Privatization of Henlius may face uncertainties if not prioritized...

Jiuyuan's growth momentum is stalling due to VBP. Guyoudao and JY29-2 face competition and uncertainty. Market value may surpass Qyuns. Future...