Asia Pac ECM and Index Rebal, Shenton Research

Ke Yan, CFA, FRM

Asia Pac ECM and Index Rebal

Asia Pac IPO & Placement Research, China Biotech

DZT Research

DZT Research is an independent Asia Pacific equity specialist. Our quantitative research covers index rebalancing flows, alongside exchange data analytics accross Asia Pacific. On the equity capital markets side, we focus on Asia Pacific ECM, especially biotech and TMT. Our lead analyst is frequently cited by international media.

Quantitative Analysis

<ul>
<li>We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of July 21st.</li>
<li>The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.</li>
<li>We estimate the inflows to be USD 2.1billion and highlight flows for Tencent, Hsbc.</li>
</ul>


We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of July 21st.
The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.
We estimate the inflows to be USD 2.1billion and highlight flows for Tencent, Hsbc.


Hong Kong Connect Flows (Jul 21st): Tencent, HSBC

Global Healthcare Analyst

Tina Banerjee

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/sanbio-co-ltd" target="_blank" data-smartkarma-citation="entities:24540:1" rel="noopener">SanBio Co Ltd (4592 JP)</a> is expected to receive approval for its first regenerative cell medicine SB623 for treating chronic motor deficit from traumatic brain injury in Japan this year.</li>
<li>SB623, with current and future indication approvals, is targeting a large patient population of more than 50 million in major pharmaceutical markets globally. The indications have large unmet need.</li>
<li>SanBio has a pipeline of five other pre-clinical drug candidates, entailing visibility beyond SB623.</li>
</ul>



SanBio Co Ltd (4592 JP) is expected to receive approval for its first regenerative cell medicine SB623 for treating chronic motor deficit from traumatic brain injury in Japan this year.
SB623, with current and future indication approvals, is targeting a large patient population of more than 50 million in major pharmaceutical markets globally. The indications have large unmet need.
SanBio has a pipeline of five other pre-clinical drug candidates, entailing visibility beyond SB623.


SanBio (4592 JP): Marketing Approval of First Product Expected This Year in Japan

Equity Capital Markets

Zhaoke Ophthalmology / Equity Capital Markets

<p>Zhaoke Ophtalmic raised HKD 1,942 million (USD 250m) from its global offering and will list on the Hong Kong Stock Exchange on Thursday, April 28th.</p>
<p>In our previous note, we looked at the company's two products, namely CsA gel and ZKY001. We are of the view that CsA gel does provide advantage over Restasis, the top-selling eye gel for the DED, but the forecast of market growth is too aggressive for the DED market. For another core product ZKY001 which will be indicated for CED, while there is no data on the efficacy from Phase I clinical trial, we do note that the licensing parnter's product which uses the same technology but on a different indication did not meet the primary end point in Phase III clinical trial according to a recent announcement, which raises our concern on the potential of the product candidate. In addition, the company also had a long list of generic referencing top selling glaucoma drugs. The company has an OK management team but strong backing of institutional investors.  We think the company provides aggressive guidance that lacks evidence to support the forecast and valuation. We think the IPO valuation is rich at the high end and the cornerstone investors' commitment left a large portion of the deal to be sold on debut. </p>
<p>In this note, we look at the updates since our last note. We were bearish with the deal and would be taking profit if there's pop on debut.</p>
<div>
<div>
<h2>Our previous coverage on Zhaoke Ophthalmic</h2>
</div>
</div>
<div>
<ul style="list-style-type: disc;">
<li><a href="https://www.smartkarma.com/insights/zhaoke-ophthalmic-could-be-over-valued-for-pre-ipo-round" target="_blank" rel="noopener">Zhaoke Ophthalmic (兆科眼科): Could Be Over-Valued for Pre-IPO Round</a></li>
<li><a href="https://www.smartkarma.com/insights/zhaoke-ophthalmic-pre-ipo-thoughts-on-valuation" target="_blank" rel="noopener">Zhaoke Ophthalmic (兆科眼科) Pre-IPO: Thoughts on Valuation</a></li>
<li><a href="https://www.smartkarma.com/insights/zhaoke-ophthalmic-pre-ipo-beware-of-aggressive-guidance" target="_blank" rel="noopener">Zhaoke Ophthalmic (兆科眼科) Pre-IPO: Beware of Aggressive “Guidance”</a></li>
<li><a href="https://www.smartkarma.com/insights/zhaoke-ophthalmic-ipo-rationalize-the-valuation" target="_blank" rel="noopener">Zhaoke Ophthalmic (兆科眼科) IPO: Rationalize the Valuation</a></li>
</ul>
</div>

Zhaoke Ophtalmic raised HKD 1,942 million (USD 250m) from its global offering and will list on the Hong Kong Stock Exchange on Thursday, April 28th.
In our previous note, we looked at the company's two products, namely CsA gel and ZKY001. We are of the view that CsA gel does provide advantage over Restasis, the top-selling eye gel for the DED, but the forecast of market growth is too aggressive for the DED market. For another core product ZKY001 which will be indicated for CED, while there is no data on the efficacy from Phase I clinical trial, we do note that the licensing parnter's product which uses the same technology but on a different indication did not meet the primary end point in Phase III clinical trial according to a recent announcement, which raises our concern on the potential of the product candidate. In addition, the company also had a long list of generic referencing top selling glaucoma drugs. The company has an OK management team but strong backing of institutional investors.  We think the company provides aggressive guidance that lacks evidence to support the forecast and valuation. We think the IPO valuation is rich at the high end and the cornerstone investors' commitment left a large portion of the deal to be sold on debut. 
In this note, we look at the updates since our last note. We were bearish with the deal and would be taking profit if there's pop on debut.


Our previous coverage on Zhaoke Ophthalmic




Zhaoke Ophthalmic (兆科眼科): Could Be Over-Valued for Pre-IPO Round
Zhaoke Ophthalmic (兆科眼科) Pre-IPO: Thoughts on Valuation
Zhaoke Ophthalmic (兆科眼科) Pre-IPO: Beware of Aggressive “Guidance”
Zhaoke Ophthalmic (兆科眼科) IPO: Rationalize the Valuation



Zhaoke Ophthalmic (兆科眼科) IPO Trading: Strong Cornerstone Doesn't Save the Deal

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/zhaoke-ophthalmology-pharmaceutical" target="_blank" data-smartkarma-citation="entities:31495:1" rel="noopener">Zhaoke Ophthalmology Pharmaceutical (6622 HK)</a> is an ophthalmic pharma company that has an ophthalmic drug pipeline of 13 innovative drugs and 12 generic drugs. Zhaoke was founded by <a href="https://www.smartkarma.com/entities/lee-s-pharmaceutical-hldgs" target="_blank" data-smartkarma-citation="entities:14616:1" rel="noopener">Lee's Pharmaceutical (950 HK)</a> which is the largest shareholder. </p>
<p>Zhaoke has launched an HKEx IPO to raise net proceeds of HK$1,857.8 million ($239 million) at the mid-point of the IPO price range of HK$15.38-16.80 per share.</p>
</div><div><p>Eight cornerstone investors have agreed to invest about $55 million in the IPO (21.51% of the offer shares at the mid-point of the IPO price range). The cornerstone investors are CaaS Capital, GIC, Golden Valley, Jennison Associates, Mass Ave, Matthews Asia, OrbiMed Funds and VMS Investment.</p></div><div><div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/zhaoke-ophthalmology-ipo-initiation-the-eyes-have-it" target="_blank" data-smartkarma-citation="insights:50243" rel="noopener">Zhaoke Ophthalmology IPO Initiation: The Eyes Have It</a>, we stated that the prospects of Zhaoke’s drug assets are favourable. Overall, our valuation analysis suggests that the IPO price range is attractive. </p></div></div></div>


Zhaoke Ophthalmology Pharmaceutical (6622 HK) is an ophthalmic pharma company that has an ophthalmic drug pipeline of 13 innovative drugs and 12 generic drugs. Zhaoke was founded by Lee's Pharmaceutical (950 HK) which is the largest shareholder. 
Zhaoke has launched an HKEx IPO to raise net proceeds of HK$1,857.8 million ($239 million) at the mid-point of the IPO price range of HK$15.38-16.80 per share.
Eight cornerstone investors have agreed to invest about $55 million in the IPO (21.51% of the offer shares at the mid-point of the IPO price range). The cornerstone investors are CaaS Capital, GIC, Golden Valley, Jennison Associates, Mass Ave, Matthews Asia, OrbiMed Funds and VMS Investment.In Zhaoke Ophthalmology IPO Initiation: The Eyes Have It, we stated that the prospects of Zhaoke’s drug assets are favourable. Overall, our valuation analysis suggests that the IPO price range is attractive. 

Zhaoke Ophthalmology IPO: Valuation Insights

<p>Founded by Lee's Pharma, Zhaoke offers a comprehensive ophthalmic product pipeline. The company launched book building to raise up to USD 267m via a Hong Kong listing.</p><p>In our previous note, we looked at the company's two products, namely CsA gel and ZKY001. We are of the view that CsA gel does provide advantage over Restasis, the top selling eye gel for the DED, but the forecast of market growth is too aggressive for the DED market. For another core product ZKY001, while there is no data on the efficacy from Phase I clinical trial, we do note that the licensing parnter's product which uses the same technology but on a different indication, did not meet the primary end point in Phase III clinical trial according to a recent announcement, which raises our concern on the potential of the product candidate. In addition, the company also had a long list of generic referencing top selling glaucoma drugs. The company has an OK management team but strong backing of institutional investors.  </p><p>We think the valuation is rich at the high end and the cornerstone investors' commitment left a large portion of the deal to be sold on debut. We also note that the market sentiment is not very positive on the ophthalmic deals.</p><div><div><h2>Our previous coverage on Zhaoke Ophthalmic</h2></div></div><div><ul style="list-style-type: disc;">
<li><a href="https://www.smartkarma.com/insights/zhaoke-ophthalmic-could-be-over-valued-for-pre-ipo-round" target="_blank" rel="noopener">Zhaoke Ophthalmic (兆科眼科): Could Be Over-Valued for Pre-IPO Round</a></li>
<li><a href="https://www.smartkarma.com/insights/zhaoke-ophthalmic-pre-ipo-thoughts-on-valuation" target="_blank" rel="noopener">Zhaoke Ophthalmic (兆科眼科) Pre-IPO: Thoughts on Valuation</a></li>
<li><a href="https://www.smartkarma.com/insights/zhaoke-ophthalmic-pre-ipo-beware-of-aggressive-guidance" target="_blank" rel="noopener">Zhaoke Ophthalmic (兆科眼科) Pre-IPO: Beware of Aggressive “Guidance”</a></li>
</ul></div>

Founded by Lee's Pharma, Zhaoke offers a comprehensive ophthalmic product pipeline. The company launched book building to raise up to USD 267m via a Hong Kong listing.In our previous note, we looked at the company's two products, namely CsA gel and ZKY001. We are of the view that CsA gel does provide advantage over Restasis, the top selling eye gel for the DED, but the forecast of market growth is too aggressive for the DED market. For another core product ZKY001, while there is no data on the efficacy from Phase I clinical trial, we do note that the licensing parnter's product which uses the same technology but on a different indication, did not meet the primary end point in Phase III clinical trial according to a recent announcement, which raises our concern on the potential of the product candidate. In addition, the company also had a long list of generic referencing top selling glaucoma drugs. The company has an OK management team but strong backing of institutional investors.  We think the valuation is rich at the high end and the cornerstone investors' commitment left a large portion of the deal to be sold on debut. We also note that the market sentiment is not very positive on the ophthalmic deals.Our previous coverage on Zhaoke Ophthalmic
Zhaoke Ophthalmic (兆科眼科): Could Be Over-Valued for Pre-IPO Round
Zhaoke Ophthalmic (兆科眼科) Pre-IPO: Thoughts on Valuation
Zhaoke Ophthalmic (兆科眼科) Pre-IPO: Beware of Aggressive “Guidance”


Zhaoke Ophthalmic (兆科眼科) IPO: Rationalize the Valuation

China

Ocumension is a China-based ophthalmic pharmaceutical platform company focused on discovering, developing, and commercializing first- or best-in-class ophthalmic therapies. Its product portfolio addresses various eye diseases, including uveitis, dry eye, glaucoma, and macular degeneration. The company was founded in 2017 and is headquartered in Suzhou, China.

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Ocumension (1477 HK)

Hong Kong Connect Flows (Jul 21st): Tencent, HSBC

We analyzed southbound Hong Kong connect flows in the past week and highlight flows for Tencent Holdings Limited and, HSBC.

Ke Yan, CFA, FRM

SanBio (4592 JP): Marketing Approval of First Product Expected This Year in Japan

With promising clinical trial data and priority review status, SanBio’s lead drug candidate SB623 is expected to be approved in Japan this year....

Tina Banerjee

Zhaoke Ophthalmic (兆科眼科) IPO Trading: Strong Cornerstone Doesn't Save the Deal

We re-iterate our differentiated bearish view with the deal. The deal received lukewarm interests from retail and institutional investors. We would...

Ke Yan, CFA, FRM

Zhaoke Ophthalmology IPO: Valuation Insights

Zhaoke has launched an HKEx IPO to raise net proceeds of $239m at the mid-point of the IPO price range of HK$15.38-16.80 per share. Overall, we...

Arun George

Zhaoke Ophthalmic (兆科眼科) IPO: Rationalize the Valuation

We think the valuation is rich at the high end and the cornerstone investors' commitment left a large portion of the deal to be sold on debut.

Ke Yan, CFA, FRM

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