HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

<p>Recently, Hygeia released its 2020 financial results. The Company achieved revenue of RMB1.402 billion, up 29.1% YoY. Net profit was RMB177 million, up 345% YoY. The results beat expectations. In fact, there's increasing certainty about the Hygeia's performance, and the rally of stock price on March 30<sup>th</sup>, 2021 was the market's best feedback on its financial results. </p>
<p>The insights on the market potential and business model of Hygeia was in the article: <a href="https://www.smartkarma.com/compose/insight/49960/Hygeia%20Healthcare%20Group%20(6078%20HK)%20-%20Good%20Business%20Model%20with%20Large%20Market%20Potential.%20Read%20more:%20https:/skr.ma/BTYr2" target="_blank" rel="noopener">Hygeia Healthcare Group (6078 HK) - Good Business Model with Large Market Potential. Read more: https://skr.ma/BTYr2</a>. The following mainly analyzed the investment logic, operation situation, key catalyst and risk factors.</p>

Recently, Hygeia released its 2020 financial results. The Company achieved revenue of RMB1.402 billion, up 29.1% YoY. Net profit was RMB177 million, up 345% YoY. The results beat expectations. In fact, there's increasing certainty about the Hygeia's performance, and the rally of stock price on March 30th, 2021 was the market's best feedback on its financial results. 
The insights on the market potential and business model of Hygeia was in the article: Hygeia Healthcare Group (6078 HK) - Good Business Model with Large Market Potential. Read more: https://skr.ma/BTYr2. The following mainly analyzed the investment logic, operation situation, key catalyst and risk factors.

Hygeia Healthcare Group (6078.HK) - The Investment Logic, the Key Catalyst and the Risk Factors

<p>The number of cancer patients in China continues to grow, which brings huge market demand and promotes the rapid development of the oncology medical service market. With the support of policies, private hospitals have grown rapidly in recent years. With a strong network of oncology hospitals and radiotherapy centers, as well as a highly qualified medical team, <a href="https://www.smartkarma.com/entities/hygeia-healthcare-group" target="_blank" data-smartkarma-citation="entities:28875:1" rel="noopener">Hygeia Healthcare Group (6078 HK)</a> has become a leader in the field of oncology medical services. At the same time, the standardized operation and management mode enables the Company to continue to expand rapidly, and is expected to continue to maintain a leading edge in the future development. </p>

The number of cancer patients in China continues to grow, which brings huge market demand and promotes the rapid development of the oncology medical service market. With the support of policies, private hospitals have grown rapidly in recent years. With a strong network of oncology hospitals and radiotherapy centers, as well as a highly qualified medical team, Hygeia Healthcare Group (6078 HK) has become a leader in the field of oncology medical services. At the same time, the standardized operation and management mode enables the Company to continue to expand rapidly, and is expected to continue to maintain a leading edge in the future development. 

Hygeia Healthcare Group (6078 HK) - Good Business Model with Large Market Potential

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

<p><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> , the pioneer in China’s colorectal cancer screening market has filed for an IPO on the Hong Kong Stock Exchange and according to Bloomberg, the company plans to raise about US$300m through the IPO.</p><p>The company is a commercial stage biotech company with two proprietary cancer screening products, ColoClear and Pupu Tube developed for screening colorectal cancer.</p><p>ColoClear is the first and only molecular cancer screening test approved by NMPA, and as of the latest practicable date, there was no other colorectal cancer screening candidate in the market or carried out prospective clinical trial in China.</p><p>China has the highest colorectal cancer incidence in the world thus presenting huge market opportunity for screening tests. If detected early, colorectal cancer is one of the most curable and preventable cancers which creates huge demand for colorectal cancer screening tests.</p><p>In addition to the company’s two core proprietary screening tests, there are two other screening product candidates that are in the development pipeline.</p>

New Horizon Health (NHH HK) , the pioneer in China’s colorectal cancer screening market has filed for an IPO on the Hong Kong Stock Exchange and according to Bloomberg, the company plans to raise about US$300m through the IPO.The company is a commercial stage biotech company with two proprietary cancer screening products, ColoClear and Pupu Tube developed for screening colorectal cancer.ColoClear is the first and only molecular cancer screening test approved by NMPA, and as of the latest practicable date, there was no other colorectal cancer screening candidate in the market or carried out prospective clinical trial in China.China has the highest colorectal cancer incidence in the world thus presenting huge market opportunity for screening tests. If detected early, colorectal cancer is one of the most curable and preventable cancers which creates huge demand for colorectal cancer screening tests.In addition to the company’s two core proprietary screening tests, there are two other screening product candidates that are in the development pipeline.

New Horizon Health IPO: Aiming to Become Pioneer in Cancer Screening

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Hygeia Healthcare / Equity Capital Markets

<div>
<p>For primary listings in Hong Kong, there are standard rules as to the lock-up duration. There are exceptions - lock-ups can be entered into and negotiated with underwriters, as is often the case for secondary listings.</p>
<p>There are other quirks such as specific lock-ups with respect to share incentive schemes, such as in <a href="https://www.smartkarma.com/entities/shenzhen-hepalink-pharmaceutical-h" target="_blank" data-smartkarma-citation="entities:29142:1" rel="noopener">Shenzhen HepaLink Pharmaceutical (H) (9989 HK)</a>, which have their own unique lock-up period - although in this case, the % of shares out (0.31%) affected  is largely immaterial. </p>
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<p>According to <a href="https://en-rules.hkex.com.hk/rulebook/1007-0" target="_blank" rel="noopener">Main Board Rule 10.07(1)</a> (or <a href="https://en-rules.hkex.com.hk/rulebook/1316a" target="_blank" rel="noopener">GEM rule 13.16A(1)</a>), if a person/group of persons is/are listed as the controlling shareholder(s) of the issuer's listing application, they must adhere to a 6-month lock-up from the date of listing.</p>
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<p>For cornerstone investors, the following is often stated in the share offer document:</p>
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<blockquote>
<p>Each of the Cornerstone Investors has agreed that it will not, whether directly or indirectly, at any time during the period of six months from and including the Listing Date (the “Lock-up Period”), dispose of any of the Offer Shares they have purchased pursuant to the relevant Cornerstone Investment Agreements, save for certain limited circumstances ... <br>Hepalink's <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0624/2020062400097.pdf" target="_blank" rel="noopener">Global Offering Doc</a> (page 403)</p>
</blockquote>
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<p>Every week in my <a href="https://www.smartkarma.com/compose/insight/46538/Last%20Week%20in%20Event%20SPACE:%20Japan%20Post,%20JD.com,%20Toyota,%20NTT,%20Jardines,%20Indices/Exec.%20Orders,%20Tianneng.%20Read%20more:%20https:/skr.ma/vhr6W" target="_blank" rel="noopener">Event SPACE</a> wrap, I flag large moves (~10%) in CCASS holdings over the past week or so, moves that are often outside normal market transactions.  These may be indicative of share pledges.  Or potential takeovers. Or simply help understand volume swings. </p>
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<p>Large movement(s) concerning recently listed companies are likely lock-up related. </p>
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<p>This monthly insight looks at companies that have been listed for around six months, as a guide to when insiders/controlling shareholders are permitted to sell, potentially creating an overhang which could depress prices.</p>
<p>I've also constructed a chart highlighting the performance of IPOs leading up to their lock-up, and compared this to the HSI index. The results are interesting. Spoiler - recent IPOs underperform. </p>
</div>
<div>
<p>A summary of Main Board listings in 2020 is also attached at the bottom of this insight.</p>
<p>More below the fold.</p>
</div>


For primary listings in Hong Kong, there are standard rules as to the lock-up duration. There are exceptions - lock-ups can be entered into and negotiated with underwriters, as is often the case for secondary listings.
There are other quirks such as specific lock-ups with respect to share incentive schemes, such as in Shenzhen HepaLink Pharmaceutical (H) (9989 HK), which have their own unique lock-up period - although in this case, the % of shares out (0.31%) affected  is largely immaterial. 


According to Main Board Rule 10.07(1) (or GEM rule 13.16A(1)), if a person/group of persons is/are listed as the controlling shareholder(s) of the issuer's listing application, they must adhere to a 6-month lock-up from the date of listing.


For cornerstone investors, the following is often stated in the share offer document:



Each of the Cornerstone Investors has agreed that it will not, whether directly or indirectly, at any time during the period of six months from and including the Listing Date (the “Lock-up Period”), dispose of any of the Offer Shares they have purchased pursuant to the relevant Cornerstone Investment Agreements, save for certain limited circumstances ...  Hepalink's Global Offering Doc (page 403)



Every week in my Event SPACE wrap, I flag large moves (~10%) in CCASS holdings over the past week or so, moves that are often outside normal market transactions.  These may be indicative of share pledges.  Or potential takeovers. Or simply help understand volume swings. 


Large movement(s) concerning recently listed companies are likely lock-up related. 


This monthly insight looks at companies that have been listed for around six months, as a guide to when insiders/controlling shareholders are permitted to sell, potentially creating an overhang which could depress prices.
I've also constructed a chart highlighting the performance of IPOs leading up to their lock-up, and compared this to the HSI index. The results are interesting. Spoiler - recent IPOs underperform. 


A summary of Main Board listings in 2020 is also attached at the bottom of this insight.
More below the fold.


Hong Kong IPOs: Lock-Up Expiries (December 2020 Edition)

<p>Established in 2008, <a href="https://www.smartkarma.com/entities/remegen-ltd" target="_blank" data-smartkarma-citation="entities:29191:1" rel="noopener">Remegen Ltd (1788976D CH)</a>  is a commercial-ready biopharmaceutical company for the treatment of autoimmune, oncology and ophthalmic diseases.</p><p>Two of the company’s core product candidates Telitacicept (RC18) and Disitamab Vedotin (RC48) have been accepted by NMPA and were granted priority review. The company expects to receive approval from the NMPA for the above two drug candidates in 4Q2020 and 2Q2021 respectively.</p><p>The company has filed to list its shares on the Hong Kong Exchange and plans to raise around US$400m. In this insight, we examine the company’s product pipeline, its core drug candidates and their potential.</p>

Established in 2008, Remegen Ltd (1788976D CH)  is a commercial-ready biopharmaceutical company for the treatment of autoimmune, oncology and ophthalmic diseases.Two of the company’s core product candidates Telitacicept (RC18) and Disitamab Vedotin (RC48) have been accepted by NMPA and were granted priority review. The company expects to receive approval from the NMPA for the above two drug candidates in 4Q2020 and 2Q2021 respectively.The company has filed to list its shares on the Hong Kong Exchange and plans to raise around US$400m. In this insight, we examine the company’s product pipeline, its core drug candidates and their potential.

RemeGen IPO: Key Drugs Show Promising Potential

China

Hygeia Healthcare is a prominent oncology healthcare group in China, dedicated to enhancing the accessibility and affordability of cancer treatment services. The company operates a network of oncology hospitals, providing comprehensive services from screening and diagnosis to various treatment modalities like chemotherapy, immunotherapy, and radiotherapy. It also offers radiotherapy consulting and equipment licensing. Hygeia Healthcare was founded in 2009 and is headquartered in Shanghai, China.

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Hygeia Healthcare (6078 HK)

Hygeia Healthcare Group (6078.HK) - The Investment Logic, the Key Catalyst and the Risk Factors

This article analyzed the newly released 2020 financial results, the investment logic, the operation situation, the key catalyst, and the risk...

Xinyao (Criss) Wang

Hygeia Healthcare Group (6078 HK) - Good Business Model with Large Market Potential

This article analyzed Hygeia in terms of market potential for China oncology medical services and analysis on major types of business (the hospital...

Xinyao (Criss) Wang

New Horizon Health IPO: Aiming to Become Pioneer in Cancer Screening

New Horizon Health, the pioneer in China’s colorectal cancer screening market has filed for an IPO on the Hong Kong Stock Exchange and the company...

Shifara Samsudeen, FCMA, CGMA

Hong Kong IPOs: Lock-Up Expiries (December 2020 Edition)

There exist the "moral hazard" around the expiry of lock-up periods. In 2020, IPO's have on average underperformed the HSI heading into the lock...

David Blennerhassett

RemeGen IPO: Key Drugs Show Promising Potential

RemeGen is a commercial-ready biopharmaceutical company who has filed for an IPO on the HKEX. In this insight, we explore the company's core drug...

Shifara Samsudeen, FCMA, CGMA

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