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 analyze statistics on top repurchases over one week, one month, one quarter and one year periods ended on Nov 7th based on HKEx daily reports.</li>
<li>In the past 7 days, the top 3 companies that repurchased the most shares from the market were Cosco Shipping (1919 HK), China Feihe (6186 HK), Sinopec (386 HK).</li>
<li>In the past 30 days, the top 3 companies that repurchased the most shares from the market were Tencent (700 HK), Xiaomi (1810 HK), China Feihe (6186 HK).</li>
</ul>


We analyze statistics on top repurchases over one week, one month, one quarter and one year periods ended on Nov 7th based on HKEx daily reports.
In the past 7 days, the top 3 companies that repurchased the most shares from the market were Cosco Shipping (1919 HK), China Feihe (6186 HK), Sinopec (386 HK).
In the past 30 days, the top 3 companies that repurchased the most shares from the market were Tencent (700 HK), Xiaomi (1810 HK), China Feihe (6186 HK).


Hong Kong Buybacks Weekly (Nov 7th): Cosco Shipping, China Feihe, Sinopec

Global Healthcare Analyst

Tina Banerjee

Thematic (Sector/Industry)

<ul>
<li>Fosun Pharmaceutical’s marketing application of acute lymphoblastic leukemia drug was accepted by the NMPA. CSPC Pharma obtained approval to conduct clinical trial for Leqembi biosimilar in China.</li>
<li>Celltrion is acquiring Eli Lilly’s New Jersey biopharmaceutical production plant for KRW460B. Lotus Pharmaceutical is acquiring Alvogen US, a privately held, fully integrated pharmaceutical company.</li>
<li>Glenmark Pharmaceutical entered into an exclusive license and collaboration agreement with Hengrui Pharma for Trastuzumab Rezetecan, a next-generation HER2-targeting antibody drug conjugate (ADC) for an upfront payment of $18M.</li>
</ul>


Fosun Pharmaceutical’s marketing application of acute lymphoblastic leukemia drug was accepted by the NMPA. CSPC Pharma obtained approval to conduct clinical trial for Leqembi biosimilar in China.
Celltrion is acquiring Eli Lilly’s New Jersey biopharmaceutical production plant for KRW460B. Lotus Pharmaceutical is acquiring Alvogen US, a privately held, fully integrated pharmaceutical company.
Glenmark Pharmaceutical entered into an exclusive license and collaboration agreement with Hengrui Pharma for Trastuzumab Rezetecan, a next-generation HER2-targeting antibody drug conjugate (ADC) for an upfront payment of $18M.


APAC Healthcare Weekly (September 28) – Fosun Pharma, CSPC Pharma, Celltrion, Lotus Pharma, Glenmark

<ul>
<li>We analyze statistics on top repurchases over one week, one month, one quarter and one year periods ended on Aug 1st based on HKEx daily reports.</li>
<li>In the past 7 days, the top 3 companies that repurchased the most shares from the market were Vitasoy (345 HK), Shoucheng (697 HK), Yum China (9987 HK).</li>
<li>In the past 30 days, the top 3 companies that repurchased the most shares from the market were Tencent (700 HK), AIA (1299 HK), Wuxi Biologics (2269 HK).</li>
</ul>


We analyze statistics on top repurchases over one week, one month, one quarter and one year periods ended on Aug 1st based on HKEx daily reports.
In the past 7 days, the top 3 companies that repurchased the most shares from the market were Vitasoy (345 HK), Shoucheng (697 HK), Yum China (9987 HK).
In the past 30 days, the top 3 companies that repurchased the most shares from the market were Tencent (700 HK), AIA (1299 HK), Wuxi Biologics (2269 HK).


Hong Kong Buybacks Weekly (Aug 1st): Vitasoy, Shoucheng, Yum China

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Equity Capital Markets

Hygeia Healthcare Group / 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>
</div>
<div>
<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>
</div>
<div>
<p>For cornerstone investors, the following is often stated in the share offer document:</p>
</div>
<div>
<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>
</div>
<div>
<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>
</div>
<div>
<p>Large movement(s) concerning recently listed companies are likely lock-up related. </p>
</div>
<div>
<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)

APAC IPOs & Placements

Zhen Zhou, Toh

<p><a href="https://www.smartkarma.com/entities/ivd-medical-holding-ltd" target="_blank" data-smartkarma-citation="entities:28143:1" rel="noopener">IVD Medical (1931 HK)</a> raised US$131m at HK$3.07 per share, the bottom end of its IPO price range. We have previously covered the IPO in our note:</p><ul><li>
<a href="https://www.smartkarma.com/insights/ivd-medical-ipo-review-more-than-70-of-ipo-proceeds-used-for-dividend-and-acquisition" target="_blank" data-smartkarma-citation="insights:30742" rel="noopener">IVD Medical (華檢醫療) IPO Review - More than 70% of IPO Proceeds Used for Dividend and Acquisition</a> </li></ul><p>In this insight, we will update on the deal dynamics, implied valuation, and include a valuation sensitivity table.</p>

IVD Medical (1931 HK) raised US$131m at HK$3.07 per share, the bottom end of its IPO price range. We have previously covered the IPO in our note:
IVD Medical (華檢醫療) IPO Review - More than 70% of IPO Proceeds Used for Dividend and Acquisition In this insight, we will update on the deal dynamics, implied valuation, and include a valuation sensitivity table.

IVD Medical (華檢醫療) Trading Update - Concentrated Shareholding, Tiny Adjusted Free-Float

China

IVD Medical Holding Limited operates as a holding company. The Company, through its subsidiaries, focuses on distribution of IVD products includes analysers, reagents, and other consumables. IVD Medical Holding serves customers in Hong Kong.

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IVD Medical (1931 HK)

Hong Kong Buybacks Weekly (Nov 7th): Cosco Shipping, China Feihe, Sinopec

We analyzed the Hong Kong buyback data in the past week and highlight the top 3 companies that repurchased the most shares were Cosco Shipping...

Ke Yan, CFA, FRM

APAC Healthcare Weekly (September 28) – Fosun Pharma, CSPC Pharma, Celltrion, Lotus Pharma, Glenmark

CSPC Pharma got trial approval for Leqembi biosimilar. Celltrion is acquiring Lilly’s plant. Lotus Pharmaceutical is acquiring Alvogen US. Hengrui...

Tina Banerjee

Hong Kong Buybacks Weekly (Aug 1st): Vitasoy, Shoucheng, Yum China

We analyzed the Hong Kong buyback data in the past week and highlight the top 3 companies that repurchased the most shares were Vitasoy (345 HK),...

Ke Yan, CFA, FRM

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

IVD Medical (華檢醫療) Trading Update - Concentrated Shareholding, Tiny Adjusted Free-Float

IVD Medical (1931 HK) raised US$131m at HK$3.07 per share, the bottom end of its IPO price range. We have previously covered the IPO in our...

Zhen Zhou, Toh

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