HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Thematic (Sector/Industry)

<ul>
<li>Last week, the 14th Five-Year Plan for the medical device industry was released, which is actually China's first state-level industrial development plan for the medical device sector.</li>
<li>The NHSA and State Administration of TCM issued the new guidelines on medical insurance to support the development of TCM from top to bottom, and various measures are being implemented.</li>
<li>The recent rally in TCM sector may not the sustainable, and our view on this sector is conservative.</li>
</ul>


Last week, the 14th Five-Year Plan for the medical device industry was released, which is actually China's first state-level industrial development plan for the medical device sector.
The NHSA and State Administration of TCM issued the new guidelines on medical insurance to support the development of TCM from top to bottom, and various measures are being implemented.
The recent rally in TCM sector may not the sustainable, and our view on this sector is conservative.


China Healthcare Weekly (Dec.31)-1st State-Level Device Policy,TCM Guideline,TCM Rally Unsustainable

Equity Bottom-Up

Angelalign Technology  / Equity Bottom-Up

The IPO of <a href="https://www.smartkarma.com/entities/angelalign-technology-inc" target="_blank" data-smartkarma-citation="entities:31480:1" rel="noopener">Angelalign Technology (6699 HK)</a> was obviously very successful, with the share price hitting an all-time high of HK$490/share in June 2021. However, in the following months, Angelalign’s share price continued to fall and was closed at HK$318.8/share on Oct. 25, down about 35%. On the other hand, Angelalign released it 2021 interim report. The revenue in 2021/1H was RMB571 million, up 85.0% YoY, and the net profit was RMB95.7 million, up 55.8% YoY, indicating good growth momentum. This insight mainly analyzed some points about the business and the concerns that worth investors’ attention.

The IPO of Angelalign Technology (6699 HK) was obviously very successful, with the share price hitting an all-time high of HK$490/share in June 2021. However, in the following months, Angelalign’s share price continued to fall and was closed at HK$318.8/share on Oct. 25, down about 35%. On the other hand, Angelalign released it 2021 interim report. The revenue in 2021/1H was RMB571 million, up 85.0% YoY, and the net profit was RMB95.7 million, up 55.8% YoY, indicating good growth momentum. This insight mainly analyzed some points about the business and the concerns that worth investors’ attention.

Angelalign Technology (6699.HK) - Some Points Worth the Attention

Industry viewpoints:<ul>
<li>The recent centralized procurement on spring coil in Hebei province could be a warning to the relevant enterprises.</li>
<li>The NHSA pointed out that it will explore feasible ways to include dental items into the payment scope of commercial insurance.</li>
<li>We expect to see AI deeply integrated into the new drug development process and revolutionize the industry in the future.</li>
</ul>Company news:News about the updated progress on new drugs and cooperation agreement of <a href="https://www.smartkarma.com/entities/akeso-biopharma-inc" target="_blank" data-smartkarma-citation="entities:28830:1" rel="noopener">Akeso Biopharma Inc (9926 HK)</a>, <a href="https://www.smartkarma.com/entities/cspc-pharmaceutical-group-ltd" target="_blank" data-smartkarma-citation="entities:229:1" rel="noopener">CSPC Pharmaceutical Group (1093 HK)</a> and <a href="https://www.smartkarma.com/entities/everest-medicines-ltd" target="_blank" data-smartkarma-citation="entities:29224:1" rel="noopener">Everest Medicines (1952 HK)</a>. Market review:Last week, stock price for healthcare sector in A share increased 3.74%, while CSI 300 decreased 0.37% over the same period of time.Risk disclosure:Policy risk, R&amp;D risk, Company risk and COVID-19 risk.

Industry viewpoints:
The recent centralized procurement on spring coil in Hebei province could be a warning to the relevant enterprises.
The NHSA pointed out that it will explore feasible ways to include dental items into the payment scope of commercial insurance.
We expect to see AI deeply integrated into the new drug development process and revolutionize the industry in the future.
Company news:News about the updated progress on new drugs and cooperation agreement of Akeso Biopharma Inc (9926 HK), CSPC Pharmaceutical Group (1093 HK) and Everest Medicines (1952 HK). Market review:Last week, stock price for healthcare sector in A share increased 3.74%, while CSI 300 decreased 0.37% over the same period of time.Risk disclosure:Policy risk, R&amp;D risk, Company risk and COVID-19 risk.

China Healthcare Weekly (Sep.24) - VBP on Neuro-Intervention, Payment System Changes, AI in Drug R&D

<a href="https://www.smartkarma.com/entities/modern-dental-group-ltd" target="_blank" data-smartkarma-citation="entities:21020:1" rel="noopener">Modern Dental Group (3600 HK)</a> (MDG) has been quite popular since the beginning of this year, and its share price increased about 527.46% by the end of August 20, 2021, which was mainly driven by the positive financial performance. According to the Company’s announcements, based on the preliminary assessment for 2021/1H, MDG expects the net profit for 2021/1H to be within the range of HK$230 million to HK$245 million compared with a net loss for the six month period ended 30 June 2020 of approximately HK$140 million. The turnaround was mainly driven by the strong sales performance amid the solid recovery in the dental industry. The total revenue increased by approximately 61.7% to 66.1% (approximately HKD1,450 million to HKD1,490 million) compared with the six months ended 30 June 2020 (approximately HKD897 million). This insight mainly analyzed the business, thoughts on valuation and the outlook of MDG.

Modern Dental Group (3600 HK) (MDG) has been quite popular since the beginning of this year, and its share price increased about 527.46% by the end of August 20, 2021, which was mainly driven by the positive financial performance. According to the Company’s announcements, based on the preliminary assessment for 2021/1H, MDG expects the net profit for 2021/1H to be within the range of HK$230 million to HK$245 million compared with a net loss for the six month period ended 30 June 2020 of approximately HK$140 million. The turnaround was mainly driven by the strong sales performance amid the solid recovery in the dental industry. The total revenue increased by approximately 61.7% to 66.1% (approximately HKD1,450 million to HKD1,490 million) compared with the six months ended 30 June 2020 (approximately HKD897 million). This insight mainly analyzed the business, thoughts on valuation and the outlook of MDG.

Modern Dental Group (3600.HK) - Performance Turnaround with Promising Growth Potential

Equity Analyst, LightStream Research

Shifara Samsudeen, FCMA, CGMA

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Equity Capital Markets

Angelalign Technology  / Equity Capital Markets

<a href="https://www.smartkarma.com/entities/angelalign-technology-inc" target="_blank" data-smartkarma-citation="entities:31480:1" rel="noopener">Angelalign Technology (6699 HK)</a> , one of the leading clear alignment treatment solution providers in China has set the terms for its IPO. The company plans to issue approx. 16.8m shares (10% of the outstanding shares post-IPO) at an indicative price range of HK$147-173 per share. At the midpoint of the above price range of HK$160 per share, Angelalign will raise net proceeds of HK$2.5bn (US$324m) at a market capitalisation of HK$26.5bn and a post-money valuation of HK$22.9bn.<table class="table table-striped"><tbody>
<tr><td colspan="2" style="width: 225.0pt;">Angelalign Technology IPO Details</td></tr>
<tr>
<td style="width: 162.3pt;">No. of Shares Issued</td>
<td style="width: 62.7pt;">   16,829,600</td>
</tr>
<tr>
<td style="width: 162.3pt;">IPO Price per Share (HK$)</td>
<td style="width: 62.7pt;">147-173</td>
</tr>
<tr>
<td style="width: 162.3pt;">Offer as a % of Outstanding Shares</td>
<td style="width: 62.7pt;">10.2%</td>
</tr>
<tr>
<td style="width: 162.3pt;">Total Shares Outstanding (m)</td>
<td style="width: 62.7pt;">165.81</td>
</tr>
<tr>
<td style="width: 162.3pt;">Net Proceeds (HK$m)</td>
<td style="width: 62.7pt;">          2,513.0</td>
</tr>
<tr>
<td style="width: 162.3pt;">Market Capitalisation (HK$m)</td>
<td style="width: 62.7pt;">        26,529.1</td>
</tr>
<tr>
<td style="width: 162.3pt;">Enterprise Value (HK$m)</td>
<td style="width: 62.7pt;">        22,945.5</td>
</tr>
</tbody></table>Source: Company disclosures, LSR (net proceeds, market cap and EV are at the midpoint of the IPO price range)The company plans to use approx. 40% of the net proceeds from the IPO on funding the construction of new manufacturing facilities and R&amp;D center and plans to utilise another 18.3% of the net IPO proceeds on further strengthening its R&amp;D capabilities.

Angelalign Technology (6699 HK) , one of the leading clear alignment treatment solution providers in China has set the terms for its IPO. The company plans to issue approx. 16.8m shares (10% of the outstanding shares post-IPO) at an indicative price range of HK$147-173 per share. At the midpoint of the above price range of HK$160 per share, Angelalign will raise net proceeds of HK$2.5bn (US$324m) at a market capitalisation of HK$26.5bn and a post-money valuation of HK$22.9bn.
Angelalign Technology IPO Details

No. of Shares Issued
   16,829,600


IPO Price per Share (HK$)
147-173


Offer as a % of Outstanding Shares
10.2%


Total Shares Outstanding (m)
165.81


Net Proceeds (HK$m)
          2,513.0


Market Capitalisation (HK$m)
        26,529.1


Enterprise Value (HK$m)
        22,945.5

Source: Company disclosures, LSR (net proceeds, market cap and EV are at the midpoint of the IPO price range)The company plans to use approx. 40% of the net proceeds from the IPO on funding the construction of new manufacturing facilities and R&amp;D center and plans to utilise another 18.3% of the net IPO proceeds on further strengthening its R&amp;D capabilities.

Angelalign IPO Valuation: Limited Upside from the Top End

China

Modern Dental Group Ltd is a dental prosthetic device provider. The Company supplies fixed prosthetic devices, removable prosthetic devices, and others. Modern Dental serves customers worldwide.

Price Gauge
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Modern Dental Group (3600 HK)

China Healthcare Weekly (Dec.31)-1st State-Level Device Policy,TCM Guideline,TCM Rally Unsustainable

This insight analyzed the 14th Five-Year Plan for medical device industry, the new guideline on medical insurance to support TCM development, and...

Xinyao (Criss) Wang

Angelalign Technology (6699.HK) - Some Points Worth the Attention

This article analyzed Angelalign in terms of some points about business and concerns, such as fierce competition, product positioning,...

Xinyao (Criss) Wang

China Healthcare Weekly (Sep.24) - VBP on Neuro-Intervention, Payment System Changes, AI in Drug R&D

This article analyzed the centralized procurement on spring coil in Hebei province, commercial insurance coverage for dental items, AI in new drug...

Xinyao (Criss) Wang