HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Thematic (Sector/Industry)

<ul>
<li>The rebounds in healthcare sector is more due to oversold. Unfriendly macro environment could make stock price fluctuate largely.Investors would find better places to long than the current valuation level.</li>
<li>The new document about payment management measures for new technology out of CHS-DRG payment scope is an important “policy correction” signal, but there are still problems remain to be solved.</li>
<li>We analyzed our top picks and investment logic in CXO, pharmaceuticals and medical device industry. Overall, as a “defensive sector”, China healthcare has investment value in such complicated external environment.</li>
</ul>


The rebounds in healthcare sector is more due to oversold. Unfriendly macro environment could make stock price fluctuate largely.Investors would find better places to long than the current valuation level.
The new document about payment management measures for new technology out of CHS-DRG payment scope is an important “policy correction” signal, but there are still problems remain to be solved.
We analyzed our top picks and investment logic in CXO, pharmaceuticals and medical device industry. Overall, as a “defensive sector”, China healthcare has investment value in such complicated external environment.


2022H2 China Healthcare Investment Strategy and Top Picks

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.

Quantitative Analysis

<ul>
<li>We analyzed the latest HK SFC report for aggregate short position as of Jul 8th.</li>
<li>Top short increases and decreases were tabulated for one week and four week period. </li>
<li>We highlight short interest changes in Innovent Biologics, Yeahka, CR Beer, Great Wall Motor.</li>
</ul>


We analyzed the latest HK SFC report for aggregate short position as of Jul 8th.
Top short increases and decreases were tabulated for one week and four week period. 
We highlight short interest changes in Innovent Biologics, Yeahka, CR Beer, Great Wall Motor.


HK Short Interest: Innovent Biologics, Yeahka, CR Beer, Great Wall Motor

<ul>
<li>The increasing expenditure for pandemic prevention and quarantine adds further pressure on the medical insurance fund. So, the NHSA will have more incentive to reduce payment standard.</li>
<li>We analyzed our interpretation on the new policies/bidding rules/impact on companies of 2022 NRDL adjustment, which would be very intense as more high-priced drugs voluntarily reduce prices to enter NRDL.</li>
<li>This year's NRDL negotiations will take place between September and October. The results will be announced in November.Investors can pay attention to relevant time nodes and get prepared in advance.</li>
</ul>


The increasing expenditure for pandemic prevention and quarantine adds further pressure on the medical insurance fund. So, the NHSA will have more incentive to reduce payment standard.
We analyzed our interpretation on the new policies/bidding rules/impact on companies of 2022 NRDL adjustment, which would be very intense as more high-priced drugs voluntarily reduce prices to enter NRDL.
This year's NRDL negotiations will take place between September and October. The results will be announced in November.Investors can pay attention to relevant time nodes and get prepared in advance.


Policy Interpretation of 2022 National Medical Insurance (NRDL) Negotiation

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Index Rebalance

<ul>
<li>Currently at 69 constituents, it is unlikely that we reach 80 member by year end. Hang Seng Indexes is finding it tough to reach the target by excluding unprofitable companies.</li>
<li>We list 11 stocks that could be added to the index in September - with one-way turnover just over 5%, the actual number of inclusions will be lower.</li>
<li>There are a few potential inclusions where short interest is over 5% of the free float. These stocks could see short covering ahead of announcement of the changes.</li>
</ul>


Currently at 69 constituents, it is unlikely that we reach 80 member by year end. Hang Seng Indexes is finding it tough to reach the target by excluding unprofitable companies.
We list 11 stocks that could be added to the index in September - with one-way turnover just over 5%, the actual number of inclusions will be lower.
There are a few potential inclusions where short interest is over 5% of the free float. These stocks could see short covering ahead of announcement of the changes.


HSI Index Rebalance Preview: Finding the Balance

<ul>
<li>The 7th national VBP is about to start. The competition would be more intense. Due to the adjustment of bidding rules, it’s more difficult for companies to win at high price.</li>
<li>Recently, the State released an exposure draft stipulating that third-party digital healthcare platforms shall not directly participate in online drug sales activities. We analyzed the impact.</li>
<li>National Health Commission issued a new document to remove the threshold for the qualification of medical institutions on OK lens business, which could lead to accelerated development of this industry.</li>
</ul>


The 7th national VBP is about to start. The competition would be more intense. Due to the adjustment of bidding rules, it’s more difficult for companies to win at high price.
Recently, the State released an exposure draft stipulating that third-party digital healthcare platforms shall not directly participate in online drug sales activities. We analyzed the impact.
National Health Commission issued a new document to remove the threshold for the qualification of medical institutions on OK lens business, which could lead to accelerated development of this industry.


China Healthcare Weekly (Jun.24)-7th National VBP, Online Pharmacy New Policy, OK Lens Rules Relaxed

China

Innovent Biologics, Inc. operates as a biopharmaceutical company. The Company develops, manufactures, and distributes monoclonal antibody drug candidates for the treatment of oncology, ophthalmology, autoimmune, cardiovascular, and other diseases. Innovent Biologics serves customers in China.

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Innovent Biologics Inc (1801 HK)

2022H2 China Healthcare Investment Strategy and Top Picks

We analyze the investment strategy,top picks and logic in CXO,pharmaceuticals and medical device industry.As a “defensive sector”,China healthcare...

Xinyao (Criss) Wang

HK Short Interest: Innovent Biologics, Yeahka, CR Beer, Great Wall Motor

We highlight week on week short interest changes in Innovent Biologics, Yeahka, CR Beer, Great Wall Motor based on the latest HK SFC short...

Ke Yan, CFA, FRM

Policy Interpretation of 2022 National Medical Insurance (NRDL) Negotiation

We analyzed the new policies, bidding rules, logic and impact on companies of 2022 NRDL adjustment,which will be very intense.The results will be...

Xinyao (Criss) Wang

HSI Index Rebalance Preview: Finding the Balance

There could be up to 5 inclusions as Hang Seng works its way up to 80 index members. We highlight the probable inclusions and find that some of...

Brian Freitas

China Healthcare Weekly (Jun.24)-7th National VBP, Online Pharmacy New Policy, OK Lens Rules Relaxed

7th national VBP is coming,with more competition. New policy that third-party digital healthcare platforms can't directly participate in online...

Xinyao (Criss) Wang

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