HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

MicroPort NeuroScientific / Equity Bottom-Up

<ul>
<li>The spring coil centralized procurement of neuro-interventional consumables in 21 provinces led by Jilin is about to start. The result may be unexpected, which could cause uncertainty to NeuroTech's performance.</li>
<li>The promotion of import substitution in the field of neuro-intervention has not been as smooth as expected. If foreign brands win the bid, doctors would give priority to imported products.</li>
<li>Since NeuroTech is in leading position among domestic peers and has core R&amp;D capabilities in this industry, we think it still has investment value. The valuation is in comfortable range.</li>
</ul>


The spring coil centralized procurement of neuro-interventional consumables in 21 provinces led by Jilin is about to start. The result may be unexpected, which could cause uncertainty to NeuroTech's performance.
The promotion of import substitution in the field of neuro-intervention has not been as smooth as expected. If foreign brands win the bid, doctors would give priority to imported products.
Since NeuroTech is in leading position among domestic peers and has core R&amp;D capabilities in this industry, we think it still has investment value. The valuation is in comfortable range.


MicroPort NeuroTech (2172.HK) - The Potential Risks Behind the Positive Profit Alert

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

Brilliance China Automotive / Index Rebalance

<ul>
<li>We see 44 potential adds (including plenty of new listings) and 19 potential deletes (on market cap, liquidity and suspension) for the Hang Seng Composite Index in March.</li>
<li>We expect 37 stocks to be added to Southbound Stock Connect following the rebalance while 37 stocks could be deleted from the trading link and become Sell-only. </li>
<li>There are stocks that have a very high percentage of holdings via Stock Connect and there could be some unwinding prior to the stocks becoming Sell-only.</li>
</ul>


We see 44 potential adds (including plenty of new listings) and 19 potential deletes (on market cap, liquidity and suspension) for the Hang Seng Composite Index in March.
We expect 37 stocks to be added to Southbound Stock Connect following the rebalance while 37 stocks could be deleted from the trading link and become Sell-only. 
There are stocks that have a very high percentage of holdings via Stock Connect and there could be some unwinding prior to the stocks becoming Sell-only.


HSCI Index Rebalance Preview and Stock Connect: A Lot of Change

<ul>
<li>We see 3 potential adds for the HSCI in December. We also see 26 potential adds and 16 potential deletes for the index in March.</li>
<li>Following the March rebalance, we see 22 potential inclusions to Stock Connect while we expect 37 stocks to be removed from the link.</li>
<li>Some of the potential deletions/ Stock Connect drops have large Southbound holdings and some of these positions could be pared back over the next few months.</li>
</ul>


We see 3 potential adds for the HSCI in December. We also see 26 potential adds and 16 potential deletes for the index in March.
Following the March rebalance, we see 22 potential inclusions to Stock Connect while we expect 37 stocks to be removed from the link.
Some of the potential deletions/ Stock Connect drops have large Southbound holdings and some of these positions could be pared back over the next few months.


HSCI Index Rebalance and Stock Connect: Changes at the Margins

<ul>
<li>We saw some rebounds of <a href="https://www.smartkarma.com/entities/microport-scientific-corp" target="_blank" data-smartkarma-citation="entities:4487:1" rel="noopener">Microport Scientific (853 HK)</a>’s share price recently, which was mainly driven by the catalysts from the policy side. However, such rebounds would not last. </li>
<li>Microport’s development mode is unfavorable to investors. It’s not surprising for Microport to underperform or its valuation to be lower than expected. We recommend investors to focus more on Microport's subsidiaries.</li>
<li>The communication between Microport and investors has a problem, leading investors to think the management's no longer credible. How to repay the US$700 million convertible bond is also a problem.</li>
</ul>


We saw some rebounds of Microport Scientific (853 HK)’s share price recently, which was mainly driven by the catalysts from the policy side. However, such rebounds would not last. 
Microport’s development mode is unfavorable to investors. It’s not surprising for Microport to underperform or its valuation to be lower than expected. We recommend investors to focus more on Microport's subsidiaries.
The communication between Microport and investors has a problem, leading investors to think the management's no longer credible. How to repay the US$700 million convertible bond is also a problem.


Microport Scientific (853.HK) - Underperformance Would Be the Norm

<ul>
<li>Among domestic enterprises, <a href="https://www.smartkarma.com/entities/microport-neurotech-limited" target="_blank" data-smartkarma-citation="entities:35379:1" rel="noopener">MicroPort NeuroTech (2172 HK)</a>’s product richness takes the lead. With the support of <a href="https://www.smartkarma.com/entities/microport-scientific-corp" target="_blank" data-smartkarma-citation="entities:4487:1" rel="noopener">Microport Scientific (853 HK)</a>, the production quality system and capacity are relatively more guaranteed. </li>
<li>Fierce competition and centralized procurement are the major challenges, but the rich domestic distribution network and promising internationalization prospects would help NeuroTech find way out.</li>
<li>By reducing the size of the IPO to maintain a good share price, at the expense of stock liquidity, it doesn’t really solve the problem.There’s risk of overvaluation for NeuroTech.</li>
</ul>


Among domestic enterprises, MicroPort NeuroTech (2172 HK)’s product richness takes the lead. With the support of Microport Scientific (853 HK), the production quality system and capacity are relatively more guaranteed. 
Fierce competition and centralized procurement are the major challenges, but the rich domestic distribution network and promising internationalization prospects would help NeuroTech find way out.
By reducing the size of the IPO to maintain a good share price, at the expense of stock liquidity, it doesn’t really solve the problem.There’s risk of overvaluation for NeuroTech.


MicroPort NeuroTech (2172.HK) 22H1 - Advantages Deserve Recognition, but with Overvaluation Risk

China

MicroPort NeuroScientific is engaged in the research, development, and manufacturing of neuro-interventional medical devices. The company's products address three key areas of cerebrovascular disease: hemorrhagic stroke, cerebral atherosclerotic stenosis, and acute ischemic stroke. Key products include the NUMEN coil, Tubridge flow-diverting stent, and APOLLO intracranial stent. Headquartered in Shanghai, China, the company was founded in 2012.

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MicroPort NeuroScientific (2172 HK)

MicroPort NeuroTech (2172.HK) - The Potential Risks Behind the Positive Profit Alert

NeuroTech released 2022 positive profit alert. Although it has investment value,the centralized procurement led by Jilin may bring unexpected...

Xinyao (Criss) Wang

HSCI Index Rebalance Preview and Stock Connect: A Lot of Change

We forecast 44 adds/19 deletes for the HSCI in March leading to 37 adds/deletes for Southbound Stock Connect. There could be more Connect changes...

Brian Freitas

HSCI Index Rebalance and Stock Connect: Changes at the Margins

We see 3 inclusions for the index in Dec, and then 26 adds/16 deletions in March. Following the March rebal, we see 22 adds/37 deletions for Stock...

Brian Freitas

Microport Scientific (853.HK) - Underperformance Would Be the Norm

Microport’s development model is unfavorable to investors, leading to underperformance of share price. Investors may no longer trust the management...

Xinyao (Criss) Wang

MicroPort NeuroTech (2172.HK) 22H1 - Advantages Deserve Recognition, but with Overvaluation Risk

NeuroTech has advantages in product richness/quality system, but fierce competition/product homogenization, centralized procurement are major...

Xinyao (Criss) Wang

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