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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Index Rebalance

Haidilao International Holding / Index Rebalance

<p>The Hang Seng Indexes Company Limited (HSIL) announced the results of its review of the Hang Seng Family of Indexes post market close on 26 February. The constituent changes will be effective after the close of trading on 12 March.</p><p>For the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hong Kong Hang Seng Index (HSI INDEX)</a>, there are 3 inclusions - <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>, <a href="https://www.smartkarma.com/entities/longfor-properties" target="_blank" data-smartkarma-citation="entities:8149:1" rel="noopener">Longfor Properties (960 HK)</a> and <a href="https://www.smartkarma.com/entities/haidilao-international-holding-ltd" target="_blank" data-smartkarma-citation="entities:27044:1" rel="noopener">Haidilao (6862 HK)</a>. This takes the number of index constituents to 55 and sets the stage for a further increase in the number of stocks as a part of the market consultation, the conclusions of which are to be announced on 1 March.</p><p>One-way turnover is estimated at 2.65% and will result in a one-way trade of HK$6.08bn. The highest impact is on <a href="https://www.smartkarma.com/entities/longfor-properties" target="_blank" data-smartkarma-citation="entities:8149:1" rel="noopener">Longfor Properties (960 HK)</a> while the impact on <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/haidilao-international-holding-ltd" target="_blank" data-smartkarma-citation="entities:27044:1" rel="noopener">Haidilao (6862 HK)</a> is lower, though still substantial.</p><p>There are only 10 trading days to implementation of the changes, so the three stocks should move up on Monday and outperform their peers till implementation date.</p><p>Hang Seng Indexes is scheduled to announce the conclusions of the market consultation on Monday, 1 March and there will be a lot more changes to the index. These changes should commence at the June 2021 review and will most likely be implemented in 4 tranches, concluding at the March 2022 review.</p>

The Hang Seng Indexes Company Limited (HSIL) announced the results of its review of the Hang Seng Family of Indexes post market close on 26 February. The constituent changes will be effective after the close of trading on 12 March.For the Hong Kong Hang Seng Index (HSI INDEX), there are 3 inclusions - Alibaba Health Information Technology (241 HK), Longfor Properties (960 HK) and Haidilao (6862 HK). This takes the number of index constituents to 55 and sets the stage for a further increase in the number of stocks as a part of the market consultation, the conclusions of which are to be announced on 1 March.One-way turnover is estimated at 2.65% and will result in a one-way trade of HK$6.08bn. The highest impact is on Longfor Properties (960 HK) while the impact on Alibaba Health Information Technology (241 HK) and Haidilao (6862 HK) is lower, though still substantial.There are only 10 trading days to implementation of the changes, so the three stocks should move up on Monday and outperform their peers till implementation date.Hang Seng Indexes is scheduled to announce the conclusions of the market consultation on Monday, 1 March and there will be a lot more changes to the index. These changes should commence at the June 2021 review and will most likely be implemented in 4 tranches, concluding at the March 2022 review.

Hang Seng Index Rebalance: Three Adds; Market Consultation Conclusions on 1 March

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

Lepu Medical Technology A / Equity Bottom-Up

<p><a href="https://www.smartkarma.com/entities/lepu-medical-technology-a" target="_blank" data-smartkarma-citation="entities:16654:1" rel="noopener">Lepu Medical Technology A (300003 CH)</a> did not perform well in 2020/2H mainly due to the intensive procurement of high-value medical consumables (the coronary stents). The market was concerned about the Company's uncertainty in business and subsequent decline in performance, leading to the continuous decrease of its stock price. Over the past six months, the share price of Lepu fell from around RMB47/share in July last year to around RMB26/share. However, the stock price has rebounded recently, reaching as high as RMB34.68/share. So is Lepu still worth looking forward to in the long term?</p>

Lepu Medical Technology A (300003 CH) did not perform well in 2020/2H mainly due to the intensive procurement of high-value medical consumables (the coronary stents). The market was concerned about the Company's uncertainty in business and subsequent decline in performance, leading to the continuous decrease of its stock price. Over the past six months, the share price of Lepu fell from around RMB47/share in July last year to around RMB26/share. However, the stock price has rebounded recently, reaching as high as RMB34.68/share. So is Lepu still worth looking forward to in the long term?

Lepu Medical Technology A (300003 CH) - Does Not Have High Moat

Thematic (Sector/Industry)

<p><strong>1. Industry viewpoints:</strong></p><ul>
<li>An important document supporting the development of the traditional Chinese medicine industry has been released recently.</li>
<li>The market size of cardiac pacemakers in China is expected to reach RMB28 billion in the future.</li>
<li>China's health care products market is expected to maintain rapid growth in the future. </li>
</ul><p><strong>2. Company news:</strong></p><p style="text-align: start;">News about the progress of new drugs and strategic collaboration from <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>, <a href="https://www.smartkarma.com/entities/sihuan-pharmaceutical-hldgs" target="_blank" data-smartkarma-citation="entities:33:1" rel="noopener">Sihuan Pharmaceutical Hldgs (460 HK)</a> and <a href="https://www.smartkarma.com/entities/jiangsu-hengrui-medicine-co-ltd" target="_blank" data-smartkarma-citation="entities:14128:1" rel="noopener">Jiangsu Hengrui Medicine (600276 CH).</a></p><p><strong>3. Market review:</strong></p><p style="text-align: start;">Last week, stock price for healthcare sector in A share increased 6.31%, while CSI 300 increased 5.91% over the same period of time.</p><p><strong>4. Risk disclosure:</strong></p><p style="text-align: start;">Policy risk, R&amp;D risk, Company risk and COVID-19 risk.</p>

1. Industry viewpoints:
An important document supporting the development of the traditional Chinese medicine industry has been released recently.
The market size of cardiac pacemakers in China is expected to reach RMB28 billion in the future.
China's health care products market is expected to maintain rapid growth in the future. 
2. Company news:News about the progress of new drugs and strategic collaboration from Innovent Biologics Inc (1801 HK), Sihuan Pharmaceutical Hldgs (460 HK) and Jiangsu Hengrui Medicine (600276 CH).3. Market review:Last week, stock price for healthcare sector in A share increased 6.31%, while CSI 300 increased 5.91% over the same period of time.4. Risk disclosure:Policy risk, R&amp;D risk, Company risk and COVID-19 risk.

Chine Healthcare Weekly(Feb12)-TCM New Policy,Cardiac Pacemaker,Health Care Product,Innovent,Hengrui

Founder

Kemp Dolliver, CFA

Cherrystone Hill Research

Equity Capital Markets

Microport Cardioflow Medtech / Equity Capital Markets

<p>We think that the proposed valuation for MicroPort CardioFlow's HKEX listing is pricey based on our DCF analysis, but the business has very good momentum resulting from a favorable product cycle and adoption of a new procedure. We would take the deal.</p>

We think that the proposed valuation for MicroPort CardioFlow's HKEX listing is pricey based on our DCF analysis, but the business has very good momentum resulting from a favorable product cycle and adoption of a new procedure. We would take the deal.

MicroPort CardioFlow: What You Have to Assume

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.

<div><p><a href="https://www.smartkarma.com/entities/microport-cardioflow-medtech-corporation" target="_blank" data-smartkarma-citation="entities:31084:1" rel="noopener">MicroPort CardioFlow (1844972D HK)</a> is a leading transcatheter heart valve medical device company in China. It started as an incubation project within <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 controlling shareholder. At the proposed IPO price range of HK$11.10-12.20 per share, MicroPort will have a market cap of HK$26,264.5-28,867.2 ($3.4-3.7 billion). At the mid-point of the IPO price range, the total net proceeds are HK$2,247.5 million ($290 million). </p></div><div><p>Sixteen cornerstone investors will subscribe for $125 million of the offer shares (40.5% of the offer shares at the mid-point of the IPO price range). The five largest cornerstone investors are CPE Fund, Hillhouse Capital, Lake Bleu Capital, GIC and Taikang Life. </p></div><div><div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/microport-cardioflow-ipo-initiation-to-save-a-life" target="_blank" data-smartkarma-citation="insights:47200" rel="noopener">MicroPort CardioFlow IPO Initiation: To Save a Life</a>, we stated that with a large addressable market opportunity and VitaFlow’s potentially best-in-class clinical data, we believe that MicroPort is another attractive play on the China TAVR (transcatheter aortic heart valve replacement) market. Overall, we think that the IPO price range is reasonable.</p></div></div></div>

MicroPort CardioFlow (1844972D HK) is a leading transcatheter heart valve medical device company in China. It started as an incubation project within Microport Scientific (853 HK), the controlling shareholder. At the proposed IPO price range of HK$11.10-12.20 per share, MicroPort will have a market cap of HK$26,264.5-28,867.2 ($3.4-3.7 billion). At the mid-point of the IPO price range, the total net proceeds are HK$2,247.5 million ($290 million). Sixteen cornerstone investors will subscribe for $125 million of the offer shares (40.5% of the offer shares at the mid-point of the IPO price range). The five largest cornerstone investors are CPE Fund, Hillhouse Capital, Lake Bleu Capital, GIC and Taikang Life. In MicroPort CardioFlow IPO Initiation: To Save a Life, we stated that with a large addressable market opportunity and VitaFlow’s potentially best-in-class clinical data, we believe that MicroPort is another attractive play on the China TAVR (transcatheter aortic heart valve replacement) market. Overall, we think that the IPO price range is reasonable.

MicroPort CardioFlow IPO: Valuation Insights

China

Microport Scientific Corp. manufactures interventional and minimally invasive devices for keyhole surgery. The Company's products are used to treat vascular diseases and is developing devices to treat diabetes and orthopedic diseases.

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Microport Scientific (853 HK)

Hang Seng Index Rebalance: Three Adds; Market Consultation Conclusions on 1 March

There are 3 inclusions to the HSI - Ali Health, Longfor Prop and Haidilao. With 10 days to implementation, the stocks should outperform....

Brian Freitas

Lepu Medical Technology A (300003 CH) - Does Not Have High Moat

This article analyzed Lepu Medical's poor performance in the past six months, deep dive its development mode, financial position, and indicate...

Xinyao (Criss) Wang

Chine Healthcare Weekly(Feb12)-TCM New Policy,Cardiac Pacemaker,Health Care Product,Innovent,Hengrui

This article analyzed industry viewpoints include new policy about traditional Chinese medicine, cardiac pacemakers market, health care products...

Xinyao (Criss) Wang

MicroPort CardioFlow: What You Have to Assume

We think that the proposed valuation for MicroPort CardioFlow's HKEX listing is pricey, but the business has very good momentum. We would take the...

Kemp Dolliver, CFA

MicroPort CardioFlow IPO: Valuation Insights

MicroPort aims to raise total net proceeds of $290 million at the mid-point of the IPO price range of HK$11.10-12.20 per share. Overall, we think...

Arun George

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