Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

Equity Bottom-Up

<ul>
<li>Equity ETF flows in China continued to lead Asia as the "National Team" in China supports market levels during the 3rd Plenum.</li>
<li>
<a href="https://www.smartkarma.com/entities/ck-infrastructure-holdings-l" target="_blank" data-smartkarma-citation="entities:163:1" rel="noopener">CK Infrastructure Holdings (1038 HK)</a> , <a href="https://www.smartkarma.com/entities/genscript-biotech-corp" target="_blank" data-smartkarma-citation="entities:21041:1" rel="noopener">Genscript Biotech (1548 HK)</a> and <a href="https://www.smartkarma.com/entities/boc-aviation" target="_blank" data-smartkarma-citation="entities:22689:1" rel="noopener">BOC Aviation (2588 HK)</a> saw positive news sentiment and share price movements for the week.</li>
<li>
<a href="https://www.smartkarma.com/entities/jiumaojiu-international-holdings-limited" target="_blank" data-smartkarma-citation="entities:28293:1" rel="noopener">Jiumaojiu (9922 HK)</a> , <a href="https://www.smartkarma.com/entities/aluminum-corporation-of-china-limited" target="_blank" data-smartkarma-citation="entities:6884:1" rel="noopener">Aluminum Corporation Of China (2600 HK)</a> and <a href="https://www.smartkarma.com/entities/china-hongqiao-group-ltd" target="_blank" data-smartkarma-citation="entities:1909:1" rel="noopener">China Hongqiao (1378 HK)</a> saw negative news sentiment and share price drops for the week.</li>
</ul>


Equity ETF flows in China continued to lead Asia as the "National Team" in China supports market levels during the 3rd Plenum.

CK Infrastructure Holdings (1038 HK) , Genscript Biotech (1548 HK) and BOC Aviation (2588 HK) saw positive news sentiment and share price movements for the week.

Jiumaojiu (9922 HK) , Aluminum Corporation Of China (2600 HK) and China Hongqiao (1378 HK) saw negative news sentiment and share price drops for the week.


The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (July 19)

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/legend-biotech-corp" target="_blank" data-smartkarma-citation="entities:28963:1" rel="noopener">Legend Biotech Corp (LEGN US)</a> shares increased 12% on Friday as a Street Insider report claimed it received takeover interest and hired Centerview Partners to help review the offer.</li>
<li>
<a href="https://www.smartkarma.com/entities/genscript-biotech-corp" target="_blank" data-smartkarma-citation="entities:21041:1" rel="noopener">Genscript Biotech (1548 HK)</a>, the largest shareholder, shares rose 25%. Genscript responsded that it is not aware of any reasons for these share price movements and any inside information.</li>
<li>The chances for an offer are low as the offeror would face several hurdles. Nevertheless, without an offer, the upcoming CARVYKTI commercial production in 2H24 will support the share price.   </li>
</ul>



Legend Biotech Corp (LEGN US) shares increased 12% on Friday as a Street Insider report claimed it received takeover interest and hired Centerview Partners to help review the offer.

Genscript Biotech (1548 HK), the largest shareholder, shares rose 25%. Genscript responsded that it is not aware of any reasons for these share price movements and any inside information.
The chances for an offer are low as the offeror would face several hurdles. Nevertheless, without an offer, the upcoming CARVYKTI commercial production in 2H24 will support the share price.   


Legend Biotech (LEGN US): Takeover Interest – Possible but Tough to Pull Off

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

<ul>
<li>Legend Biotech received takeover interest and hired Centerview Partners to review the offer. Due to the satisfactory clinical results/promising commercialization outlook of Carvykti, Legend Bio is an attractive M&amp;A candidate.</li>
<li>Peak sales of Carvykti could exceed US$5 billion. After Carvykti is approved by the FDA/EC for 2L treatment of MM, future valuation leap of legend Bio is becoming more certain.</li>
<li>Legend Bio is clearly undervalued. We think reasonable market value range for Legend Bio is about US$12.5 – 15 billion, which means there is decent upward potential for share price.</li>
</ul>


Legend Biotech received takeover interest and hired Centerview Partners to review the offer. Due to the satisfactory clinical results/promising commercialization outlook of Carvykti, Legend Bio is an attractive M&amp;A candidate.
Peak sales of Carvykti could exceed US$5 billion. After Carvykti is approved by the FDA/EC for 2L treatment of MM, future valuation leap of legend Bio is becoming more certain.
Legend Bio is clearly undervalued. We think reasonable market value range for Legend Bio is about US$12.5 – 15 billion, which means there is decent upward potential for share price.


Legend Biotech (LEGN US) - A Takeover Offer?

<ul>
<li>For all licensing cooperation with MNCs, we recommend that investors wait to see what MNCs' next move is before deciding whether the cooperation is really promising.</li>
<li>Topchoice showed good business growth in 24Q2. Our biggest concern for Topchoice is that the unit price per customer may further decrease in the future, thereby affecting revenue/profit growth.</li>
<li>Junshi’s sales growth picked up in 24Q1, but concerns on Junshi persist. We don't think Junshi is undervalued and its valuation should be lower than that of peers.</li>
</ul>


For all licensing cooperation with MNCs, we recommend that investors wait to see what MNCs' next move is before deciding whether the cooperation is really promising.
Topchoice showed good business growth in 24Q2. Our biggest concern for Topchoice is that the unit price per customer may further decrease in the future, thereby affecting revenue/profit growth.
Junshi’s sales growth picked up in 24Q1, but concerns on Junshi persist. We don't think Junshi is undervalued and its valuation should be lower than that of peers.


China Healthcare Weekly (July.7) - MNCs' Next Move In Licensing Deals, Topchoice, Junshi's Trouble

<ul>
<li>Takeda’s sales team is fully prepared for the launch of fruquintinib in EU. 2024 full-year overseas sales may once again beat the expectations. High growth is expected from 2024 to 2026.</li>
<li>Peak sales of fruquintinib + savolitinib + surufatinib that recorded in HUTCHMED’s revenue is expected to be over US$750 million.Without considering other revenue, market value would reach about US$4.5 billion.</li>
<li>HUTCHMED’s pipeline lacks blockbuster products and the indications are small. With the rise of PROTAC, small molecule drugs would face challenges, which would test the management's resilience in the future.</li>
</ul>


Takeda’s sales team is fully prepared for the launch of fruquintinib in EU. 2024 full-year overseas sales may once again beat the expectations. High growth is expected from 2024 to 2026.
Peak sales of fruquintinib + savolitinib + surufatinib that recorded in HUTCHMED’s revenue is expected to be over US$750 million.Without considering other revenue, market value would reach about US$4.5 billion.
HUTCHMED’s pipeline lacks blockbuster products and the indications are small. With the rise of PROTAC, small molecule drugs would face challenges, which would test the management's resilience in the future.


Hutchmed China Ltd (13.HK/​​HCM.US) - Time to Reassess Valuation Prospects Despite the Pain Points

China

Legend Biotech Corporation operates as a biopharmaceutical company. The Company engages in discovery and development of novel cell therapies for oncology and other indications. Legend Biotech serves customers in the State of New Jersey.

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Legend Biotech Corp (LEGN US)

The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (July 19)

Equity ETF flows in China benefited from National Team buying this week. CK Infrastructure, Genscript Bio and BOC Aviation saw positive news...

David Mudd

Legend Biotech (LEGN US): Takeover Interest – Possible but Tough to Pull Off

The chances for an offer are low as the offeror would face several hurdles. Nevertheless, the upcoming CARVYKTI commercial production in 2H24 will...

Arun George

Legend Biotech (LEGN US) - A Takeover Offer?

Legend Bio is an attractive M&A target with promising Carvykti outlook. Peak sales could reach over $5 billion. Legend Bio is currently...

Xinyao (Criss) Wang

China Healthcare Weekly (July.7) - MNCs' Next Move In Licensing Deals, Topchoice, Junshi's Trouble

Investors should wait to see MNCs' next move before deciding on licensing deals. Topchoice's growth is positive but unit price per customer may...

Xinyao (Criss) Wang

Hutchmed China Ltd (13.HK/HCM.US) - Time to Reassess Valuation Prospects Despite the Pain Points

HUTCHMED’s 2024 full-year sales may once again exceed expectations. It's time to recalculate the peak sales of pipeline and the Company’s outlook....

Xinyao (Criss) Wang

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (July 19)

Equity ETF flows in China benefited from National Team buying this week. CK Infrastructure, Genscript Bio and BOC Aviation saw positive news...

David Mudd

Legend Biotech (LEGN US): Takeover Interest – Possible but Tough to Pull Off

The chances for an offer are low as the offeror would face several hurdles. Nevertheless, the upcoming CARVYKTI commercial production in 2H24 will...

Arun George

Legend Biotech (LEGN US) - A Takeover Offer?

​Legend Bio is an attractive M&A target with promising Carvykti outlook. Peak sales could reach over $5 billion. Legend Bio is currently...

Xinyao (Criss) Wang

China Healthcare Weekly (July.7) - MNCs' Next Move In Licensing Deals, Topchoice, Junshi's Trouble

​Investors should wait to see MNCs' next move before deciding on licensing deals. Topchoice's growth is positive but unit price per customer may...

Xinyao (Criss) Wang

Hutchmed China Ltd (13.HK/​​HCM.US) - Time to Reassess Valuation Prospects Despite the Pain Points

HUTCHMED’s 2024 full-year sales may once again exceed expectations. It's time to recalculate the peak sales of pipeline and the Company’s outlook....

Xinyao (Criss) Wang

Legend Bio is an attractive M&A target with promising Carvykti outlook. Peak sales could reach over $5 billion. Legend Bio is currently...

Investors should wait to see MNCs' next move before deciding on licensing deals. Topchoice's growth is positive but unit price per customer may...

Hutchmed China Ltd (13.HK/HCM.US) - Time to Reassess Valuation Prospects Despite the Pain Points