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 Shanghai/Shenzhen northbound Connect flows with our data engine.</li>
<li>Consumer discretionary, information technology and healthcare led the outflows of USD 969 million last week.</li>
<li>We highlight inflows into Sungrow Power and outflows from Jiangsu Hengrui, Ganfeng Lithium, and Cosco Shipping.</li>
</ul>


We analyze the weekly Shanghai/Shenzhen northbound Connect flows with our data engine.
Consumer discretionary, information technology and healthcare led the outflows of USD 969 million last week.
We highlight inflows into Sungrow Power and outflows from Jiangsu Hengrui, Ganfeng Lithium, and Cosco Shipping.


Northbound Flows: Sungrow Power, Hengrui, Ganfeng, Cosco Shipping

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

<ul>
<li>The biggest characteristic of <a href="https://www.smartkarma.com/entities/innovent-biologics-inc" target="_blank" data-smartkarma-citation="entities:27452:1" rel="noopener">Innovent Biologics Inc (1801 HK)</a> is its strong ability of resources integration. Besides, when it comes to execution, clinical efficiency and R&amp;D productivity, Innovent deserves credit.</li>
<li>If having 10 big commercialized drugs are the threshold for becoming a biopharma, Innovent's upgrade from biotech to biopharma is almost complete. </li>
<li>Innovent has enough cash flow over the next few years to support development, and may even turn losses into profits. So, we think that Innovent could get through “this winter”. </li>
</ul>


The biggest characteristic of Innovent Biologics Inc (1801 HK) is its strong ability of resources integration. Besides, when it comes to execution, clinical efficiency and R&amp;D productivity, Innovent deserves credit.
If having 10 big commercialized drugs are the threshold for becoming a biopharma, Innovent's upgrade from biotech to biopharma is almost complete. 
Innovent has enough cash flow over the next few years to support development, and may even turn losses into profits. So, we think that Innovent could get through “this winter”. 


Innovent Biologics Inc (1801.HK) - Capable of Surviving “this Winter”

Global Healthcare Analyst

Tina Banerjee

<ul>
<li>
<a href="https://www.smartkarma.com/entities/shanghai-junshi-bioscience-h" target="_blank" data-smartkarma-citation="entities:27760:1" rel="noopener">Shanghai Junshi Bioscience Co. Ltd. (1877 HK)'s</a> oncology drug candidate toripalimab marketing application is currently under priority review by the FDA, with a target action date of April 30, 2022.</li>
<li>However, FDA may reject toripalimab application, as it is predominantly based on China clinical trial data. Toripalimab may also face delay in FDA decision due to delayed regulatory inspection.</li>
<li>PD-1 drug market in the U.S. is intensely competitive, making the commercialization prospect of a new drug quite difficult. Toripalimab reported muted performance in China due to pricing headwind.</li>
</ul>



Shanghai Junshi Bioscience Co. Ltd. (1877 HK)'s oncology drug candidate toripalimab marketing application is currently under priority review by the FDA, with a target action date of April 30, 2022.
However, FDA may reject toripalimab application, as it is predominantly based on China clinical trial data. Toripalimab may also face delay in FDA decision due to delayed regulatory inspection.
PD-1 drug market in the U.S. is intensely competitive, making the commercialization prospect of a new drug quite difficult. Toripalimab reported muted performance in China due to pricing headwind.


Shanghai Junshi Bioscience (1877 HK): Uncertainties Prevailing Ahead of First U.S. Drug Approval

<ul>
<li>Due to the lack of differentiated and frontier enough target layout, the commercialization potential would be more easily questioned, with high uncertainty of having the next NBP level products.</li>
<li>CSPC has made easy money from a few large varieties/generic drugs for many years, but is destined to make the business transformation more difficult, because the “opportunity cost” is high.</li>
<li>CSPC's products have lost their pricing power. Therefore, when its valuation is very low or the entire sector is moving upward, this stock could be traded due to positive momentum.</li>
</ul>


Due to the lack of differentiated and frontier enough target layout, the commercialization potential would be more easily questioned, with high uncertainty of having the next NBP level products.
CSPC has made easy money from a few large varieties/generic drugs for many years, but is destined to make the business transformation more difficult, because the “opportunity cost” is high.
CSPC's products have lost their pricing power. Therefore, when its valuation is very low or the entire sector is moving upward, this stock could be traded due to positive momentum.


CSPC Pharmaceutical Group (1093.HK) - Conservative About the Business Transformation Outlook

Jiangsu Hengrui Medicine / Equity Bottom-Up

<ul>
<li>Entering 2022, Hengrui’s stock price has gone through continuous correction. The market is not that optimistic about the performance of Hengrui in 2021 full year and 2021Q4.</li>
<li>We analyzed the possible future development trajectory of Hengrui's performance, which would be up and down due to VBP and NRDL negotiation. Investors could get prepared in advance.</li>
<li>Due to Hengrui’s  "DNA"  and development mode, it could have “stable growth” after getting out of the difficult situation, but hard to achieve “explosive growth or significant return”.</li>
</ul>


Entering 2022, Hengrui’s stock price has gone through continuous correction. The market is not that optimistic about the performance of Hengrui in 2021 full year and 2021Q4.
We analyzed the possible future development trajectory of Hengrui's performance, which would be up and down due to VBP and NRDL negotiation. Investors could get prepared in advance.
Due to Hengrui’s  "DNA"  and development mode, it could have “stable growth” after getting out of the difficult situation, but hard to achieve “explosive growth or significant return”.


Jiangsu Hengrui Medicine (600276.CH) - Here’s when Hengrui May Recover

China

Jiangsu Hengrui Medicine Co., Ltd. develops, manufactures, and markets a variety of medicines and medicine packing materials. The Company's products include anti-tumor medicines, pain-killers, anti-infection medicines, aluminum foil, and other related products.

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Jiangsu Hengrui Medicine (600276 CH)

Northbound Flows: Sungrow Power, Hengrui, Ganfeng, Cosco Shipping

We highlight HK Connect northbound inflows into Sungrow Power and outflows from Jiangsu Hengrui, Ganfeng Lithium, and Cosco Shipping this week.

Ke Yan, CFA, FRM

Innovent Biologics Inc (1801.HK) - Capable of Surviving “this Winter”

After continuous pullback, investors may lose interest in Innovent. However, it still has investment value based on pipeline, resources, R&D and...

Xinyao (Criss) Wang

Shanghai Junshi Bioscience (1877 HK): Uncertainties Prevailing Ahead of First U.S. Drug Approval

Going by the FDA’s recent action, Junshi Bioscience’s toripalimab has a chance to get rejected by the FDA. It may miss the approval timeline....

Tina Banerjee

CSPC Pharmaceutical Group (1093.HK) - Conservative About the Business Transformation Outlook

With unproven R&D capabilities, expired patent and negative policy, it's hard for CSPC to achieve successful transformation, or sacrifice immediate...

Xinyao (Criss) Wang

Jiangsu Hengrui Medicine (600276.CH) - Here’s when Hengrui May Recover

We analyzed the possible future development trajectory of Hengrui's performance. Due to its "DNA" and development mode, after recovering,...

Xinyao (Criss) Wang

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