Overseas Chinese Equities, Aequitas Research

Ming Lu

Overseas Chinese Equities

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.

Equity Bottom-Up

<ul>
<li>New Medical Product Rule banned online direct sales of medical products.</li>
<li>Koolearn’s stock price plunged after surging, as Tencent reduced its shareholdings.</li>
<li>Alibaba dismissed employees in Freshippo and JD.com downsized its community group purchase.</li>
</ul>


New Medical Product Rule banned online direct sales of medical products.
Koolearn’s stock price plunged after surging, as Tencent reduced its shareholdings.
Alibaba dismissed employees in Freshippo and JD.com downsized its community group purchase.


China Internet Weekly (27Jun22): Koolearn’ Up & Down, New Rule on Medical Apps

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

JD Health International  / Equity Bottom-Up

<ul>
<li>The exposure draft about online drug sales activities on third-party digital healthcare platforms would add uncertainties on JD Health’s business. We analyzed the potential impact and the logic behind.</li>
<li>Keeping both self-run and third-party business is the optimal option because JD Health cannot afford losing either one. The exact impact will have to wait until policy details are released.</li>
<li>As main revenue contributor, there are concerns on JD Pharmacy in terms of profitability and policy risks. Before second growth point emerges, expectation on long-term valuation expansion would be discounted.</li>
</ul>


The exposure draft about online drug sales activities on third-party digital healthcare platforms would add uncertainties on JD Health’s business. We analyzed the potential impact and the logic behind.
Keeping both self-run and third-party business is the optimal option because JD Health cannot afford losing either one. The exact impact will have to wait until policy details are released.
As main revenue contributor, there are concerns on JD Pharmacy in terms of profitability and policy risks. Before second growth point emerges, expectation on long-term valuation expansion would be discounted.


JD Health (6618.HK) - Logic Change Due to the New Policy?

Ping An Healthcare and Technology / Equity Bottom-Up

<ul>
<li>Just as we analyzed before, things get worse for PAGD. The loss expanded and gross margin declined. The gap between PAGD and its peers (JD Health, Alibaba Health) is widening. </li>
<li>PAGD’s Achilles' heel is its business model/profit model is untenable. The new HMO services system would not help turn things around because China's national condition is different from the US.</li>
<li>Being on the wrong track, PAGD’s financial performance is expected to further weaken. We are conservative about PAGD’s outlook. Any brief upwards movement is just dead cat bounce.</li>
</ul>


Just as we analyzed before, things get worse for PAGD. The loss expanded and gross margin declined. The gap between PAGD and its peers (JD Health, Alibaba Health) is widening. 
PAGD’s Achilles' heel is its business model/profit model is untenable. The new HMO services system would not help turn things around because China's national condition is different from the US.
Being on the wrong track, PAGD’s financial performance is expected to further weaken. We are conservative about PAGD’s outlook. Any brief upwards movement is just dead cat bounce.


Ping An Healthcare and Technology (1833.HK) - Untenable Business Model Worsen the Logic and Outlook

Equity Capital Markets

Beijing Yuanxin Technology Group Co Ltd / Equity Capital Markets

<ul>
<li>Based on the business analysis, <a href="https://www.smartkarma.com/entities/beijing-yuanxin-technology-group-co-ltd" target="_blank" data-smartkarma-citation="entities:34685:1" rel="noopener">Beijing Yuanxin Technology Group Co Ltd (1865453D CH)</a> is more of a traditional offline chain drugstores than a healthcare technology company.</li>
<li>Yuanxin has been suffering from loss for years. With a gross margin of lower than 10%, it's going to be tough to turn a profit, leading to concerns on survival. </li>
<li>Due to the fierce competition in each of its businesses, homogeneous business model, weak financial position, lack of high moat, policy risks, etc., we are conservative about the Company’s outlook.</li>
</ul>


Based on the business analysis, Beijing Yuanxin Technology Group Co Ltd (1865453D CH) is more of a traditional offline chain drugstores than a healthcare technology company.
Yuanxin has been suffering from loss for years. With a gross margin of lower than 10%, it's going to be tough to turn a profit, leading to concerns on survival. 
Due to the fierce competition in each of its businesses, homogeneous business model, weak financial position, lack of high moat, policy risks, etc., we are conservative about the Company’s outlook.


Pre-IPO Beijing Yuanxin Technology Group - Conservative About the Outlook

Thematic (Sector/Industry)

<ul>
<li>The gradual lifting of the lockdown in two major cities means that China's industries are recovering. In healthcare, there are both opportunities and challenges worth discussing.</li>
<li>As China restores normal production and life, we analyzed the impact/logic on nucleic acid testing business, local fiscal expenditure, pharmaceutical/medical device companies, IVD, hospital operations, global supply chain, digital healthcare.</li>
<li>Due to geopolitical conflicts, negative impact of lockdown on economy, resource shortage,inflation, the priority of healthcare may decline.The performance/returns on advanced technology/pharmaceuticals/devices or nonrigid demand could be lower than expected. </li>
</ul>


The gradual lifting of the lockdown in two major cities means that China's industries are recovering. In healthcare, there are both opportunities and challenges worth discussing.
As China restores normal production and life, we analyzed the impact/logic on nucleic acid testing business, local fiscal expenditure, pharmaceutical/medical device companies, IVD, hospital operations, global supply chain, digital healthcare.
Due to geopolitical conflicts, negative impact of lockdown on economy, resource shortage,inflation, the priority of healthcare may decline.The performance/returns on advanced technology/pharmaceuticals/devices or nonrigid demand could be lower than expected. 


China Reopen - Opportunities and Challenges in China Healthcare

China

JD Health International Inc. operates drug stores. The Company retails Chinese and Western medicines, nutrition products, health care products, and other products. JD Health International markets its products throughout China.

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JD Health International (6618 HK)

China Internet Weekly (27Jun22): Koolearn’ Up & Down, New Rule on Medical Apps

New Medical Product Rule banned online direct sales of medical products. Koolearn’s stock price plunged after surging, as Tencent reduced its...

Ming Lu

JD Health (6618.HK) - Logic Change Due to the New Policy?

The policy about online drug sales on third-party digital platforms will add uncertainties on JD Health.Before new growth point emerges,...

Xinyao (Criss) Wang

Ping An Healthcare and Technology (1833.HK) - Untenable Business Model Worsen the Logic and Outlook

PAGD’s Achilles' heel is its business/profit model is untenable.The new HMO services will not turn things around.PAGD will enter a vicious circle...

Xinyao (Criss) Wang

Pre-IPO Beijing Yuanxin Technology Group - Conservative About the Outlook

Yuanxin is more of a traditional offline drugstores than a healthcare technology company. The fierce competition/homogeneous business model/weak...

Xinyao (Criss) Wang

China Reopen - Opportunities and Challenges in China Healthcare

As China restores normal production/life, we analyzed positive/negative impact on different healthcare sectors. There could be policy shifts. What...

Xinyao (Criss) Wang

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52-week Range

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