HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

<ul>
<li>Valuation based on Cancellation Price hasn’t fully reflected the potential of Weijing Medical Robot business, nor does it reflect the future growth driven by import substitution due to centralized procurement.</li>
<li>The medical device sector is expected to have a strong trend of performance reversal/valuation repair. Kangji's fundamentals/prospects are moving in a positive direction. Reasonable valuation is HK$12-15 billion at least.</li>
<li>The current Cancellation Price of HK$9.25 is too low to normally reflect the Company's true fundamentals and prospects. Therefore, we're worried that there would be some investors opposing this privatization.</li>
</ul>


Valuation based on Cancellation Price hasn’t fully reflected the potential of Weijing Medical Robot business, nor does it reflect the future growth driven by import substitution due to centralized procurement.
The medical device sector is expected to have a strong trend of performance reversal/valuation repair. Kangji's fundamentals/prospects are moving in a positive direction. Reasonable valuation is HK$12-15 billion at least.
The current Cancellation Price of HK$9.25 is too low to normally reflect the Company's true fundamentals and prospects. Therefore, we're worried that there would be some investors opposing this privatization.


Kangji Medical (9997 HK) Privatization - The Cancellation Price Is Not Attractive

Global Healthcare Analyst

Tina Banerjee

Equity Capital Markets

Medcaptain Medical Technology / Equity Capital Markets

<ul>
<li>Medcaptain Medical launched Hongkong IPO to raise nearly HK$ 600M. They are a global medical device provider supplying life support products, minimally invasive intervention products, and in vitro diagnostics products.</li>
<li>Medcaptain intends to use the proceeds for research and development, expand production capacity, enhance their sales &amp; marketing capabilities, for strategic investments, upgrade IT infrastructure and for general corporate purpose.</li>
<li>The valuation that they are seeking, seems relatively steep, but fundamentally worth for long term investors. The company needs to scale up the operations further, but that will take time.</li>
</ul>


Medcaptain Medical launched Hongkong IPO to raise nearly HK$ 600M. They are a global medical device provider supplying life support products, minimally invasive intervention products, and in vitro diagnostics products.
Medcaptain intends to use the proceeds for research and development, expand production capacity, enhance their sales &amp; marketing capabilities, for strategic investments, upgrade IT infrastructure and for general corporate purpose.
The valuation that they are seeking, seems relatively steep, but fundamentally worth for long term investors. The company needs to scale up the operations further, but that will take time.


Medcaptain Medical IPO: Not Minimally Invasive For Investors For Now, But Can Be Life-Long Support

<ul>
<li>Medcaptain has built its business matrix through continuous M&amp;As. The merger strategy directly supports its expansion and market position improvement, but also posed a huge potential risk of goodwill impairment.</li>
<li>Medcaptain’s structure, where half of revenue is tied to a single business line, makes profits highly vulnerable to policy changes, price cuts, intensified competition, thereby exacerbating the fragility of profits.</li>
<li>Post-Money valuation of RMB8.245bn already includes M&amp;A premium and market sentiment factors, the IPO valuation may be in the range of RMB6-8bn, but it may face downward pressure after listing</li>
</ul>


Medcaptain has built its business matrix through continuous M&amp;As. The merger strategy directly supports its expansion and market position improvement, but also posed a huge potential risk of goodwill impairment.
Medcaptain’s structure, where half of revenue is tied to a single business line, makes profits highly vulnerable to policy changes, price cuts, intensified competition, thereby exacerbating the fragility of profits.
Post-Money valuation of RMB8.245bn already includes M&amp;A premium and market sentiment factors, the IPO valuation may be in the range of RMB6-8bn, but it may face downward pressure after listing


Pre-IPO Medcaptain Medical Technology (PHIP Updates) - Some Points Worth the Attention

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Index Rebalance

Sichuan Biokin Pharmaceutical / Index Rebalance

Sichuan Biokin Pharmaceutical (688506 CH)

<ul>
<li>As expected, the index committee has used a 6-month minimum listing history and that results in one change to the <a href="https://www.smartkarma.com/entities/sse-science-and-technology-innovation-board-50-index" target="_blank" data-smartkarma-citation="entities:29279:1" rel="noopener">SSE STAR50 (STAR50 INDEX)</a> in December.</li>
<li>
<a href="https://www.smartkarma.com/entities/sichuan-biokin-pharmaceutical-co-ltd" target="_blank" data-smartkarma-citation="entities:40027:1" rel="noopener">Sichuan Biokin Pharmaceutical (688506 CH)</a> will replace <a href="https://www.smartkarma.com/entities/ninebot-ltd" target="_blank" data-smartkarma-citation="entities:32180:1" rel="noopener">Ninebot (689009 CH)</a> in the index at the close on 8 December.</li>
<li>One way turnover is estimated at 2.18% and will result in a one-way trade of CNY 3,065m. <a href="https://www.smartkarma.com/entities/sichuan-biokin-pharmaceutical-co-ltd" target="_blank" data-smartkarma-citation="entities:40027:1" rel="noopener">Sichuan Biokin Pharmaceutical (688506 CH)</a> has moved up and there will be pre-positioning.</li>
</ul>


As expected, the index committee has used a 6-month minimum listing history and that results in one change to the SSE STAR50 (STAR50 INDEX) in December.

Sichuan Biokin Pharmaceutical (688506 CH) will replace Ninebot (689009 CH) in the index at the close on 8 December.
One way turnover is estimated at 2.18% and will result in a one-way trade of CNY 3,065m. Sichuan Biokin Pharmaceutical (688506 CH) has moved up and there will be pre-positioning.


STAR50 Index Rebalance: Big Impact Expected; Inclusion Up 40% in One Month

<ul>
<li>With the review period complete, we expect one change for the <a href="https://www.smartkarma.com/entities/sse-science-and-technology-innovation-board-50-index" target="_blank" data-smartkarma-citation="entities:29279:1" rel="noopener">STAR50 INDEX</a> in December if the index committee continues to use a 6-month minimum listing history.</li>
<li>With net inflows to mainland China ETFs over the last few months, passive trackers will need to trade between 9-25 days of ADV on the potential add and delete.</li>
<li>
<a href="https://www.smartkarma.com/entities/semiconductor-manufacturing-in" target="_blank" data-smartkarma-citation="entities:31062:1" rel="noopener">SMIC (688981 CH)</a> will be capped and there will be reverse funding flows on the index constituents. One-way turnover is estimated at 1.8% resulting in a one-way trade of CNY2,580m.</li>
</ul>


With the review period complete, we expect one change for the STAR50 INDEX in December if the index committee continues to use a 6-month minimum listing history.
With net inflows to mainland China ETFs over the last few months, passive trackers will need to trade between 9-25 days of ADV on the potential add and delete.

SMIC (688981 CH) will be capped and there will be reverse funding flows on the index constituents. One-way turnover is estimated at 1.8% resulting in a one-way trade of CNY2,580m.


STAR50 Index Rebalance Preview: Big Impact Expected on the Changes

China

Micro-Tech (Nanjing) Co., Ltd. manufactures and distributes medical equipment. The Company produces gastrointestinal equipment, biliary equipment, pulmonary equipment, and other related equipment. Micro-Tech (Nanjing) also operates import and export businesses.

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Micro-Tech Nanjing (688029 CH)

Kangji Medical (9997 HK) Privatization - The Cancellation Price Is Not Attractive

The Cancellation Price is too low to normally reflect Kangji's true fundamentals/outlook. The whole industry is moving in positive direction. We’re...

Xinyao (Criss) Wang

Medcaptain Medical IPO: Not Minimally Invasive For Investors For Now, But Can Be Life-Long Support

Medcaptain Medical launched Hongkong IPO to raise nearly HK$ 600M for R&D, production capacity, enhance sales & marketing capabilities, strategic...

Tina Banerjee

Pre-IPO Medcaptain Medical Technology (PHIP Updates) - Some Points Worth the Attention

Medcaptain has built its business matrix through continuous M&A, which pose potential risk of goodwill impairment. Weak profitability is an issue....

Xinyao (Criss) Wang

STAR50 Index Rebalance: Big Impact Expected; Inclusion Up 40% in One Month

There is 1 change for the index resulting in 1-way turnover of 2.18% and 1-way trade of CNY3.07bn. The add is up 40% over the last month and there...

Brian Freitas

STAR50 Index Rebalance Preview: Big Impact Expected on the Changes

There could be 1 index change in Dec. The ETF inflows over the last few months results in passives needing to trade 9-25x ADV on the add/delete....

Brian Freitas

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