HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

Shandong Weigao Group Medical Polymer Co / Equity Bottom-Up

<ul>
<li>Due to centralized procurement and anti-corruption campaign in 23H2, negative YoY revenue growth in 2023 seems to be inevitable. We are not optimistic about Weigao's performance turnaround in 2024.</li>
<li>After new policy strictly prohibiting borrowing to purchase medical equipment in public hospitals was released, the investment logic of medical device sector changes, which would negatively affect Weigao’s outlook.</li>
<li>Weigao feels like “living off its past gains”.Current valuation is reasonable not undervalued. There’s no need to rush to long this stock when downward trend in share price hasn’t reversed.</li>
</ul>


Due to centralized procurement and anti-corruption campaign in 23H2, negative YoY revenue growth in 2023 seems to be inevitable. We are not optimistic about Weigao's performance turnaround in 2024.
After new policy strictly prohibiting borrowing to purchase medical equipment in public hospitals was released, the investment logic of medical device sector changes, which would negatively affect Weigao’s outlook.
Weigao feels like “living off its past gains”.Current valuation is reasonable not undervalued. There’s no need to rush to long this stock when downward trend in share price hasn’t reversed.


Shandong Weigao Group Medical Polymer Co (1066.HK) - 2023 Full-Year Results Could Be Ugly

Zhejiang Orient Gene Biotech C / Equity Bottom-Up

<ul>
<li>The national centralized procurement of high-value medical consumables for intraocular lens (IOL) and medical consumables related to sports medicine released results, with lower than expected price reductions. </li>
<li>Despite anti-corruption campaign, the business/profit model validation process of Chinese Biotech has not slowed down. There’s a chance to see Chinese Biotech turn losses into profits in 2024-2025.</li>
<li>Zhejiang Orient Gene Biotech (688298 CH) once brought considerable returns to investors, but now the beautiful story is over.After deletion from CSI Medical Service Index, share price could remain weak.</li>
</ul>


The national centralized procurement of high-value medical consumables for intraocular lens (IOL) and medical consumables related to sports medicine released results, with lower than expected price reductions. 
Despite anti-corruption campaign, the business/profit model validation process of Chinese Biotech has not slowed down. There’s a chance to see Chinese Biotech turn losses into profits in 2024-2025.
Zhejiang Orient Gene Biotech (688298 CH) once brought considerable returns to investors, but now the beautiful story is over.After deletion from CSI Medical Service Index, share price could remain weak.


China Healthcare Weekly (Dec.1) - Medical Device VBP, Biotech to Breakeven Soon, Orient Gene Biotech

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

<ul>
<li>As expected, the index committee has used a 6-month minimum listing history and that results in two changes 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 September.</li>
<li>
<a href="https://www.smartkarma.com/entities/piotech-inc" target="_blank" data-smartkarma-citation="entities:36698:1" rel="noopener">Piotech (688072 CH)</a> and <a href="https://www.smartkarma.com/entities/hwatsing-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:36700:1" rel="noopener">Hwatsing Technology (688120 CH)</a> will replace <a href="https://www.smartkarma.com/entities/suzhou-nanomicro-technology-co" target="_blank" data-smartkarma-citation="entities:33272:1" rel="noopener">Suzhou Nanomicro Technology (688690 CH)</a> and <a href="https://www.smartkarma.com/entities/zhuhai-cosmx-battery-co-ltd" target="_blank" data-smartkarma-citation="entities:34667:1" rel="noopener">Zhuhai CosMX Battery (688772 CH)</a> in the index.</li>
<li>One-Way turnover is estimated at 2.83% and will result in a one-way trade of CNY 3,562m. There does not appear to be a lot of pre-positioning on the stocks.</li>
</ul>


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

Piotech (688072 CH) and Hwatsing Technology (688120 CH) will replace Suzhou Nanomicro Technology (688690 CH) and Zhuhai CosMX Battery (688772 CH) in the index.
One-Way turnover is estimated at 2.83% and will result in a one-way trade of CNY 3,562m. There does not appear to be a lot of pre-positioning on the stocks.


STAR50 Index Rebalance: Two Changes; Pre-Positioning Appears Light

<ul>
<li>The review period for the September rebalance ends today. The changes could be announced on 25 August with the implementation taking place after the close on 8 September.</li>
<li>The upcoming launch of the STAR100 Index could result in the index committee continuing to use a 6-month minimum listing history resulting in two changes to the index.</li>
<li>One way turnover is estimated at 2.3% resulting in a one-way trade of CNY 2,658m. The impact on the deletions will be much larger than that on the inclusions.</li>
</ul>


The review period for the September rebalance ends today. The changes could be announced on 25 August with the implementation taking place after the close on 8 September.
The upcoming launch of the STAR100 Index could result in the index committee continuing to use a 6-month minimum listing history resulting in two changes to the index.
One way turnover is estimated at 2.3% resulting in a one-way trade of CNY 2,658m. The impact on the deletions will be much larger than that on the inclusions.


STAR50 Index Rebalance Preview: Potential Changes Playing Catchup

<ul>
<li>The review period for the September rebalance ends 31 July. We expect the changes to be announced 25 August with the implementation taking place after the close on 8 September.</li>
<li>We expect the index committee to continue using a 6-month minimum listing history resulting in two changes to the index.</li>
<li>One way turnover is estimated at 3.45% resulting in a one-way trade of CNY 3,675m. The impact on the deletions will be larger than that on the inclusions.</li>
</ul>


The review period for the September rebalance ends 31 July. We expect the changes to be announced 25 August with the implementation taking place after the close on 8 September.
We expect the index committee to continue using a 6-month minimum listing history resulting in two changes to the index.
One way turnover is estimated at 3.45% resulting in a one-way trade of CNY 3,675m. The impact on the deletions will be larger than that on the inclusions.


STAR50 Index Rebalance Preview: One High Probability Change; One 'It Depends'

China

Shandong Weigao Orthopaedic Device Company Limited produces and sells medical devices. The Company manufactures and sells orthopedic implants and other products. Shandong Weigao Orthopaedic Device markets its products throughout China.

Shandong Weigao Orthopaedic De (688161 CH)

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Shandong Weigao Orthopaedic De (688161 CH)

Shandong Weigao Group Medical Polymer Co (1066.HK) - 2023 Full-Year Results Could Be Ugly

Due to VBP and anti-corruption campaign in 23H2, Weigao's 2023 results could be disappointing. Whether the performance will recover in 2024 is...

Xinyao (Criss) Wang

China Healthcare Weekly (Dec.1) - Medical Device VBP, Biotech to Breakeven Soon, Orient Gene Biotech

VBP result for intraocular lens/sports medicine consumables is better than expected.There’s a chance to see Chinese Biotech turn loss into profits...

Xinyao (Criss) Wang

STAR50 Index Rebalance: Two Changes; Pre-Positioning Appears Light

There are 2 changes for the STAR50 in Sep. The adds/dels were expected and there has been big outperformance over the last few weeks. But,...

Brian Freitas

STAR50 Index Rebalance Preview: Potential Changes Playing Catchup

Changes will be announced after market close today. The potential adds have outperformed the potential deletes by over 10% since the end of the...

Brian Freitas

STAR50 Index Rebalance Preview: One High Probability Change; One 'It Depends'

There could be 2 changes in September if a 6 month minimum listing history is used. Piotech was added to the CSI500 in June and there are multiple...

Brian Freitas

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