HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Thematic (Sector/Industry)

1. Industry viewpoints:<ul>
<li>The National Healthcare Security Administration (NHSA) released new interim procedures about the medical insurance coverage for the retail pharmacies, which will come into effect on February 1st, 2021.</li>
<li>The epidemic since the end of 2019 has brought a large demand for blood products.</li>
<li>With the improvement of affordability, the expansion of medical insurance coverage and the increase of R&amp;D investment, the biological drug market size is expected to further expand.</li>
</ul>2. Company news:News about the progress of new drugs and new license agreement of Fosun Kite, <a href="https://www.smartkarma.com/entities/beigene-ltd" target="_blank" data-smartkarma-citation="entities:27352:1" rel="noopener">BeiGene Ltd (6160 HK)</a>, <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> and <a href="https://www.smartkarma.com/entities/betta-pharmaceuticals-co-ltd" target="_blank" data-smartkarma-citation="entities:25883:1" rel="noopener">Betta Pharmaceuticals (300558 CH)</a>.3. Market review:Last week, stock price for healthcare sector in A share decreased 2.41%, while CSI 300 decreased 0.68% over the same period of time.4. Risk disclosure:Policy risk, R&amp;D risk, Company risk and COVID-19 risk.

1. Industry viewpoints:
The National Healthcare Security Administration (NHSA) released new interim procedures about the medical insurance coverage for the retail pharmacies, which will come into effect on February 1st, 2021.
The epidemic since the end of 2019 has brought a large demand for blood products.
With the improvement of affordability, the expansion of medical insurance coverage and the increase of R&amp;D investment, the biological drug market size is expected to further expand.
2. Company news:News about the progress of new drugs and new license agreement of Fosun Kite, BeiGene Ltd (6160 HK), Innovent Biologics Inc (1801 HK) and Betta Pharmaceuticals (300558 CH).3. Market review:Last week, stock price for healthcare sector in A share decreased 2.41%, while CSI 300 decreased 0.68% over the same period of time.4. Risk disclosure:Policy risk, R&amp;D risk, Company risk and COVID-19 risk.

Equity Capital Markets

JD Health International  / Equity Capital Markets

On Dec 8th, <a href="https://www.smartkarma.com/entities/jd-health-international" target="_blank" data-smartkarma-citation="entities:29677:1" rel="noopener">JD Health (6618 HK)</a> went public on Hong Kong Stock Exchange, making it the largest IPO in Asia in 2020. Stock price of JD Health jumped more than 55% on the first day of trading. As of December 11th, its closing price was HK$112, with a total market value of HK$381.5 billion, not only more than the market value of <a href="https://www.smartkarma.com/entities/alibaba-health-information-technology-ltd" target="_blank" data-smartkarma-citation="entities:453:1" rel="noopener">Alibaba Health Information Technology (241 HK)</a> and <a href="https://www.smartkarma.com/entities/ping-an-healthcare-and-technology-company-limited" target="_blank" data-smartkarma-citation="entities:27008:1" rel="noopener">Ping An Healthcare and Technology Company Limited (1833 HK),</a> but also surpassed a third of <a href="https://www.smartkarma.com/entities/jd-com-inc" target="_blank" data-smartkarma-citation="entities:29043:1" rel="noopener">JD.com (HK) (9618 HK)</a>'s latest market value of about HK$1 trillion. Getting the favor of the capital markets is only the first step on the journey. After the COVID-19, will its performance continue to achieve such high growth? In addition to online pharmacy business, how could JD Health find new and sustainable business growth points so as to establish its core competitive advantages?

On Dec 8th, JD Health (6618 HK) went public on Hong Kong Stock Exchange, making it the largest IPO in Asia in 2020. Stock price of JD Health jumped more than 55% on the first day of trading. As of December 11th, its closing price was HK$112, with a total market value of HK$381.5 billion, not only more than the market value of Alibaba Health Information Technology (241 HK) and Ping An Healthcare and Technology Company Limited (1833 HK), but also surpassed a third of JD.com (HK) (9618 HK)'s latest market value of about HK$1 trillion. Getting the favor of the capital markets is only the first step on the journey. After the COVID-19, will its performance continue to achieve such high growth? In addition to online pharmacy business, how could JD Health find new and sustainable business growth points so as to establish its core competitive advantages? 

JD Health (6618.HK) - Opportunities Coexist with Challenges

With the deepening of medical reform and the continuous promotion of medical insurance fee control policies such as the consistency evaluation and volume-based purchase policy, the process of prescription outflow is accelerated. The decline in in-hospital drug sales has been accompanied by a shift in sales channels to out-of-hospital market, such as the retail pharmacies. Besides, with the improvement of public healthcare demand and the increase of commercial insurance coverage, there is a growing demand for various kinds of drugs. It is expected that retail pharmacies will become a necessary and indispensable trend.

With the deepening of medical reform and the continuous promotion of medical insurance fee control policies such as the consistency evaluation and volume-based purchase policy, the process of prescription outflow is accelerated. The decline in in-hospital drug sales has been accompanied by a shift in sales channels to out-of-hospital market, such as the retail pharmacies. Besides, with the improvement of public healthcare demand and the increase of commercial insurance coverage, there is a growing demand for various kinds of drugs. It is expected that retail pharmacies will become a necessary and indispensable trend.

Industry Report - Investment Opportunity in China Retail Pharmacy Market

1.Industry viewpoints:<ul>
<li>Recently, the National Medical Products Administration has released a new policy (draft version) about the online drug sales.</li>
<li>Vaccine is a hot topic in 2020, so let’s talk about vaccine.</li>
<li>The upsurge in the application of AI in medical imaging in China provides a new direction for the development, which may be the most promising field for China to surpass foreign countries.</li>
</ul>2. Company news:News about the updated progress of new drugs and the marketing approval of new products from <a href="https://www.smartkarma.com/entities/betta-pharmaceuticals-co-ltd" target="_blank" data-smartkarma-citation="entities:25883:1" rel="noopener">Betta Pharmaceuticals (300558 CH)</a>, <a href="https://www.smartkarma.com/entities/beigene-ltd" target="_blank" data-smartkarma-citation="entities:27352:1" rel="noopener">BeiGene Ltd (6160 HK)</a> , Kangpu Biopharmaceuticals, and <a href="https://www.smartkarma.com/entities/venus-medtech-hangzhou-inc" target="_blank" data-smartkarma-citation="entities:28257:1" rel="noopener">Venus MedTech (2500 HK).</a>3. Market review:Last week, stock price for healthcare sector in A share decreased 1.43%, while CSI 300 increased 1.78% over the same period of time.4. Risk Disclosure:Policy risk, R&amp;D risk, Company risk and COVID-19 risk.

1.Industry viewpoints:
Recently, the National Medical Products Administration has released a new policy (draft version) about the online drug sales.
Vaccine is a hot topic in 2020, so let’s talk about vaccine.
The upsurge in the application of AI in medical imaging in China provides a new direction for the development, which may be the most promising field for China to surpass foreign countries.
2. Company news:News about the updated progress of new drugs and the marketing approval of new products from Betta Pharmaceuticals (300558 CH), BeiGene Ltd (6160 HK) , Kangpu Biopharmaceuticals, and Venus MedTech (2500 HK).3. Market review:Last week, stock price for healthcare sector in A share decreased 1.43%, while CSI 300 increased 1.78% over the same period of time.4. Risk Disclosure:Policy risk, R&amp;D risk, Company risk and COVID-19 risk.

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

For now we view the recent pullback as a countertrend move that helped correct the extended and overbought conditions we noted over the past two weeks. Overhead resistance on the MSCI EM, EAFE, and ACWI ex-US indexes (all priced in local currency) is something to be aware of, however if the ACWI-US is above $70 our bullish outlook remains appropriate.  In today's report we highlight attractive charts in both defensive and cyclical Sectors. On the semi-defensive side, Sectors covered include Health Care and Services. On the cyclical side, Sectors covered include Energy, Financials, Materials, and Transportation

For now we view the recent pullback as a countertrend move that helped correct the extended and overbought conditions we noted over the past two weeks. Overhead resistance on the MSCI EM, EAFE, and ACWI ex-US indexes (all priced in local currency) is something to be aware of, however if the ACWI-US is above $70 our bullish outlook remains appropriate.  In today's report we highlight attractive charts in both defensive and cyclical Sectors. On the semi-defensive side, Sectors covered include Health Care and Services. On the cyclical side, Sectors covered include Energy, Financials, Materials, and Transportation

Global Equity Strategy: Short-Term Bullish Trends Clash With Longer-Term Resistance

China

Laobaixing Pharmacy Chain JSC wholesales and distributes medical products. The Company provides Chinese herbal medicines, antibiotic preparations, biochemical drugs, and other products. Laobaixing Pharmacy Chain also provides medical equipment.

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Laobaixing Pharmacy Chain (603883 CH)

China Healthcare Weekly (Jan.15)

This article analyzed the new interim procedures released by NHSA, trend of blood products and biological drug market, and also include company...

Xinyao (Criss) Wang

JD Health (6618.HK) - Opportunities Coexist with Challenges

This article analyzed JD Health's current business model, the industry, its opportunities and challenges, the future development direction and...

Xinyao (Criss) Wang

Industry Report - Investment Opportunity in China Retail Pharmacy Market

The article analyzed China retail pharmacy market, retail pharmacy chain, related policy, and highlight good investment opportunity such as...

Xinyao (Criss) Wang

China Healthcare Weekly (Nov. 20)

The article summarized the new healthcare policy released, major industry viewpoints, company news and capital market review in China healthcare...

Xinyao (Criss) Wang

Global Equity Strategy: Short-Term Bullish Trends Clash With Longer-Term Resistance

For now we view the recent pullback as a countertrend move that helped correct the extended and overbought conditions we noted over the past two...

Vermilion Research

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