HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Capital Markets

Hutchison Whampoa / Equity Capital Markets

<ul>
<li>HUTCHMED announced the disposal of 45% equity interest in SHPL for US$608 million, including selling 35% equity interest to GP Health Service Capital and 10% equity interest to Shanghai Pharma.</li>
<li>There’re synergies between SHPL and Shanghai Pharma regarding TCM business. It's necessary for HUTCHMED to sell non-core JV to reserve cash flow in advance to focus on innovative drug business.</li>
<li>The entire valuation of SHPL reaches RMB10 billion, or about 15x P/E. If HUTCHMED’s innovative drug business can bear fruit, its valuation has more room to grow in the future.</li>
</ul>


HUTCHMED announced the disposal of 45% equity interest in SHPL for US$608 million, including selling 35% equity interest to GP Health Service Capital and 10% equity interest to Shanghai Pharma.
There’re synergies between SHPL and Shanghai Pharma regarding TCM business. It's necessary for HUTCHMED to sell non-core JV to reserve cash flow in advance to focus on innovative drug business.
The entire valuation of SHPL reaches RMB10 billion, or about 15x P/E. If HUTCHMED’s innovative drug business can bear fruit, its valuation has more room to grow in the future.


HUTCHMED to Divest 45% Stake in Non-Core Joint Venture with Shanghai Pharma

Ascentage Pharma / Equity Capital Markets

<ul>
<li>Ascentage has filed with the SEC to raise up to US$100 million in a US IPO. We think its future market value is expected to surpass that of Hutchmed.</li>
<li>The outlook of olverembatinib is clear. Takeda can give more possibilities to olverembatinib. 2025 Sales of olverembatinib is expected to reach RMB500 million.Market value contribution from olverembatinib is US$1-1.5 billion. </li>
<li>Investors have higher expectations on APG-2575 to be out-licensed to MNCs. We think the peak sales of APG-2575 is expected to surpass that of olverembatinib in overseas markets. </li>
</ul>


Ascentage has filed with the SEC to raise up to US$100 million in a US IPO. We think its future market value is expected to surpass that of Hutchmed.
The outlook of olverembatinib is clear. Takeda can give more possibilities to olverembatinib. 2025 Sales of olverembatinib is expected to reach RMB500 million.Market value contribution from olverembatinib is US$1-1.5 billion. 
Investors have higher expectations on APG-2575 to be out-licensed to MNCs. We think the peak sales of APG-2575 is expected to surpass that of olverembatinib in overseas markets. 


Pre-IPO Ascentage Pharma - The US Stock Listing Will Stimulate Future Growth Potential

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.

Quantitative Analysis

<ul>
<li>We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of December 20th.</li>
<li>The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.</li>
<li>We highlight flows for Alibaba, CCB, China Mobile, ICBC, Ping An Insurance, Meituan, Tencent.</li>
</ul>


We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of December 20th.
The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.
We highlight flows for Alibaba, CCB, China Mobile, ICBC, Ping An Insurance, Meituan, Tencent.


Hong Kong Connect Flows (Dec 20th): Alibaba, CCB, China Mobile, ICBC, Ping An Insurance, Meituan

Event-Driven

<ul>
<li>2024 NRDL negotiation results were released. Some eye-catching drugs were included this time, which will bring challenges to companies such as <a href="https://www.smartkarma.com/entities/innovent-biologics-inc" target="_blank" data-smartkarma-citation="entities:27452:1" rel="noopener">Innovent</a>, RemeGen, <a href="https://www.smartkarma.com/entities/gan-lee-pharmaceuticals-co-ltd" target="_blank" data-smartkarma-citation="entities:36237:1" rel="noopener">Gan &amp; Lee Pharmaceuticals</a>, <a href="https://www.smartkarma.com/entities/xizang-haisco-pharmaceutical-group-coltd" target="_blank" data-smartkarma-citation="entities:4779:1" rel="noopener">Haisco Pharmaceutical</a>, etc..</li>
<li>There have been a big “expectation gap” for biotech companies in Hong Kong stock market - It's a mismatch between what the market thinks and what's actually happening.</li>
<li>The progress of Henlius’ privatization is still slower-than-expected. We also do not know how this privatization ranks in terms of strategic significance of capital operations within Fosun Pharma's system.</li>
</ul>


2024 NRDL negotiation results were released. Some eye-catching drugs were included this time, which will bring challenges to companies such as Innovent, RemeGen, Gan &amp; Lee Pharmaceuticals, Haisco Pharmaceutical, etc..
There have been a big “expectation gap” for biotech companies in Hong Kong stock market - It's a mismatch between what the market thinks and what's actually happening.
The progress of Henlius’ privatization is still slower-than-expected. We also do not know how this privatization ranks in terms of strategic significance of capital operations within Fosun Pharma's system.


China Healthcare Weekly (Dec.1)- 2024 NRDL Result, Expectation Gap for Biotech, Henlius' Wide Spread

Equity Bottom-Up

<ul>
<li>Hansoh’s 24H1 results beat the expectations. Product revenue (excluding BD cooperation revenue) would achieve double-digit growth in 2024 full year, among which revenue of Ameile would maintain 20%+ YoY growth.</li>
<li>Total product revenue would be about RMB14-14.5 billion in the future. Based on P/S of 5, market value is RMB70-72.5 billion, which is the lower end of market value range.</li>
<li>There is still certain gap in terms of R&amp;D capability/globalization outlook between Hansoh and those leading biotech in China. So, we think valuation of Hansoh would be lower than them.</li>
</ul>


Hansoh’s 24H1 results beat the expectations. Product revenue (excluding BD cooperation revenue) would achieve double-digit growth in 2024 full year, among which revenue of Ameile would maintain 20%+ YoY growth.
Total product revenue would be about RMB14-14.5 billion in the future. Based on P/S of 5, market value is RMB70-72.5 billion, which is the lower end of market value range.
There is still certain gap in terms of R&amp;D capability/globalization outlook between Hansoh and those leading biotech in China. So, we think valuation of Hansoh would be lower than them.


Hansoh Pharmaceutical Group (3692.HK) - Successful Business Transformation Opens up Valuation Upside

Hong Kong

Hutchison Whampoa is an investment holding company with diverse global operations in ports and related services, property and hotels, retail, infrastructure, energy, and telecommunications. It operates port and container terminals, develops real estate, and provides mobile telecommunications services. The company is headquartered in Hong Kong and traces its roots back to 1862.

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Hutchison Whampoa (13 HK)

HUTCHMED to Divest 45% Stake in Non-Core Joint Venture with Shanghai Pharma

HUTCHMED sells 45% stake in SHPL for US$608 million to focus on innovative drug business, which is a right strategic move. If innovative drug...

Xinyao (Criss) Wang

Pre-IPO Ascentage Pharma - The US Stock Listing Will Stimulate Future Growth Potential

Ascentage aims to raise $100 million in US IPO, with potential valuation surpassing Hutchmed. Olverembatinib's outlook is certain. Catalyst is...

Xinyao (Criss) Wang

Hong Kong Connect Flows (Dec 20th): Alibaba, CCB, China Mobile, ICBC, Ping An Insurance, Meituan

We analyzed southbound Hong Kong connect flows in the past week and highlighted flows for Alibaba, CCB, China Mobile, ICBC, Ping An Insurance,...

Ke Yan, CFA, FRM

China Healthcare Weekly (Dec.1)- 2024 NRDL Result, Expectation Gap for Biotech, Henlius' Wide Spread

2024 NRDL results released, posing new challenges. Expectation gap for biotech in HK provides opportunities. Henlius' privatization progress is...

Xinyao (Criss) Wang

Hansoh Pharmaceutical Group (3692.HK) - Successful Business Transformation Opens up Valuation Upside

Hansoh's strong 24H1 results secure double-digit growth in 2024. However, valuation could be lower than leading biotech due to gap in R&D...

Xinyao (Criss) Wang

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

HUTCHMED to Divest 45% Stake in Non-Core Joint Venture with Shanghai Pharma

​HUTCHMED sells 45% stake in SHPL for US$608 million to focus on innovative drug business, which is a right strategic move. If innovative drug...

Xinyao (Criss) Wang

Pre-IPO Ascentage Pharma - The US Stock Listing Will Stimulate Future Growth Potential

​Ascentage aims to raise $100 million in US IPO, with potential valuation surpassing Hutchmed. Olverembatinib's outlook is certain. Catalyst is...

Xinyao (Criss) Wang

Hong Kong Connect Flows (Dec 20th): Alibaba, CCB, China Mobile, ICBC, Ping An Insurance, Meituan

We analyzed southbound Hong Kong connect flows in the past week and highlighted flows for Alibaba, CCB, China Mobile, ICBC, Ping An Insurance,...

Ke Yan, CFA, FRM

China Healthcare Weekly (Dec.1)- 2024 NRDL Result, Expectation Gap for Biotech, Henlius' Wide Spread

​2024 NRDL results released, posing new challenges. Expectation gap for biotech in HK provides opportunities. Henlius' privatization progress is...

Xinyao (Criss) Wang

Hansoh Pharmaceutical Group (3692.HK) - Successful Business Transformation Opens up Valuation Upside

​Hansoh's strong 24H1 results secure double-digit growth in 2024. However, valuation could be lower than leading biotech due to gap in R&D...

Xinyao (Criss) Wang

HUTCHMED sells 45% stake in SHPL for US$608 million to focus on innovative drug business, which is a right strategic move. If innovative drug...

Ascentage aims to raise $100 million in US IPO, with potential valuation surpassing Hutchmed. Olverembatinib's outlook is certain. Catalyst is...

2024 NRDL results released, posing new challenges. Expectation gap for biotech in HK provides opportunities. Henlius' privatization progress is...

Hansoh's strong 24H1 results secure double-digit growth in 2024. However, valuation could be lower than leading biotech due to gap in R&D...