HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

<ul>
<li>After excluding gains on the disposal of United Family Healthcare, profitability of main business was disappointing.The revenue decline confirms that Fosun Pharma is facing pressure. Short-term performance hasn’t truly improved.</li>
<li>Fosun Pharma will continue to sell unprofitable assets to alleviate debt pressure and optimize business structure, which will be the short-term main theme. Fosun Pharma is still in adjustment period</li>
<li>Whether high profit growth can be sustainable in long term is uncertain, which depends on if Henlius is able to achieve high growth to offset the negative impact of VBP.</li>
</ul>


After excluding gains on the disposal of United Family Healthcare, profitability of main business was disappointing.The revenue decline confirms that Fosun Pharma is facing pressure. Short-term performance hasn’t truly improved.
Fosun Pharma will continue to sell unprofitable assets to alleviate debt pressure and optimize business structure, which will be the short-term main theme. Fosun Pharma is still in adjustment period
Whether high profit growth can be sustainable in long term is uncertain, which depends on if Henlius is able to achieve high growth to offset the negative impact of VBP.


Shanghai Fosun Pharmaceutical (2196.HK/600196.CH) 25H1 - The Performance Has Not Truly Improved

Global Healthcare Analyst

Tina Banerjee

<ul>
<li>
<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> 1H25 revenue dropped 18.5% YoY as finished drugs witnessed decrease on VBP and NRDL inclusion. Bulk products and license fees compensated to an extent.</li>
<li>More license and collaboration in relation to the development, manufacturing and commercialization of certain products of the company awaited in 2H25 and augurs well in terms of future revenue visibility.</li>
<li>CSPC Pharmaceutical aims to expand into the high-end market to achieve competitive differentiation and thereby command higher prices.</li>
</ul>



CSPC Pharmaceutical Group (1093 HK) 1H25 revenue dropped 18.5% YoY as finished drugs witnessed decrease on VBP and NRDL inclusion. Bulk products and license fees compensated to an extent.
More license and collaboration in relation to the development, manufacturing and commercialization of certain products of the company awaited in 2H25 and augurs well in terms of future revenue visibility.
CSPC Pharmaceutical aims to expand into the high-end market to achieve competitive differentiation and thereby command higher prices.


CSPC Pharma (1093 HK): Finished Drugs Drag 1H25; 2H25 Expected To End with More Licensing Deals

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 analyse the changes of A-H premium on 157 stocks over the last week. The average A-H premium was 58.0% as of Aug 22nd.</li>
<li>The average A-H premium changed by 3.6ppt week-on-week, led by consumer staples, real estate, materials.</li>
<li>We highlight weekly changes in A-H premium for Air China, Cosco Shipping Development, Ganfeng Lithium, Fuyao Glass.</li>
</ul>


We analyse the changes of A-H premium on 157 stocks over the last week. The average A-H premium was 58.0% as of Aug 22nd.
The average A-H premium changed by 3.6ppt week-on-week, led by consumer staples, real estate, materials.
We highlight weekly changes in A-H premium for Air China, Cosco Shipping Development, Ganfeng Lithium, Fuyao Glass.


A-H Premium Weekly (Aug 22nd): Air China, Cosco Shipping Development, Ganfeng Lithium, Fuyao Glass

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>There is 1 add and 21 deletions for the Hang Seng Biotech Index (HSHKBIO Index) at the September rebalance.</li>
<li>Estimated one-way turnover at the rebalance is 11.25% resulting in a round-trip trade of HK$1.77bn (US$226m).</li>
<li>The deletes have underperformed the HSHKBIO Index since the start of the year with the gap opening up over the last two months following the announcement of the methodology change.</li>
</ul>


There is 1 add and 21 deletions for the Hang Seng Biotech Index (HSHKBIO Index) at the September rebalance.
Estimated one-way turnover at the rebalance is 11.25% resulting in a round-trip trade of HK$1.77bn (US$226m).
The deletes have underperformed the HSHKBIO Index since the start of the year with the gap opening up over the last two months following the announcement of the methodology change.


Hang Seng Biotech Index Rebalance: 1 Add & 21 Deletes as Methodology Changes

Jiangsu Hengrui Pharmaceuticals / Equity Bottom-Up

Jiangsu Hengrui Pharmaceuticals (1276 HK)

<ul>
<li>In 1H25, Jiangsu Hengrui reported 16% YoY increase in revenue to RMB 15.8B primarily attributable to the growth of innovative drugs sales along with increase in licensing revenue.</li>
<li>R&amp;D expenses surged 6% to RMB 3.2B due to ongoing clinical trials. Net profit increased 30% YoY to RMB 4.5B resulting in net margin expanding 310bps to 28.3% in 1H25.</li>
<li>In 1H25, the company obtained marketing approvals for six Class 1 innovative drugs, including trastuzumab rezetecan injection (as second line of treatment for NSCLC with HER2 mutations).</li>
</ul>


In 1H25, Jiangsu Hengrui reported 16% YoY increase in revenue to RMB 15.8B primarily attributable to the growth of innovative drugs sales along with increase in licensing revenue.
R&amp;D expenses surged 6% to RMB 3.2B due to ongoing clinical trials. Net profit increased 30% YoY to RMB 4.5B resulting in net margin expanding 310bps to 28.3% in 1H25.
In 1H25, the company obtained marketing approvals for six Class 1 innovative drugs, including trastuzumab rezetecan injection (as second line of treatment for NSCLC with HER2 mutations).


Jiangsu Hengrui (1276 HK): Robust 1H25; Innovative Drugs Key; Out-Licensing Affirm Pipeline Strength

China

Shanghai Fosun Pharmaceutical (Group) Co., Ltd. is a pharmaceutical company. Through its subsidiaries, the Company manufactures genetic medicines, Chinese traditional medicines, diagnostic products, and medical instruments, provides technology, marketing, and advertising services, as well as invests in import and export trading.

Shanghai Fosun Pharmaceutical (Group) (600196 CH)

Price Gauge
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Shanghai Fosun Pharmaceutical (Group) (600196 CH)

Shanghai Fosun Pharmaceutical (2196.HK/600196.CH) 25H1 - The Performance Has Not Truly Improved

The revenue decline confirms that Fosun Pharma is facing pressure and has to continue to sell unprofitable assets to alleviate debt pressure....

Xinyao (Criss) Wang

CSPC Pharma (1093 HK): Finished Drugs Drag 1H25; 2H25 Expected To End with More Licensing Deals

CSPC Pharma's 1H25 revenue dropped 18.5% YoY, on lower finished drug sales. However, future revenue visibility looks promising with upcoming...

Tina Banerjee

A-H Premium Weekly (Aug 22nd): Air China, Cosco Shipping Development, Ganfeng Lithium, Fuyao Glass

We analyzed A-H premium changes in the past week and highlight A-H premium changes for Air China, Cosco Shipping Development, Ganfeng Lithium,...

Ke Yan, CFA, FRM

Hang Seng Biotech Index Rebalance: 1 Add & 21 Deletes as Methodology Changes

There is 1 add and 21 deletes for the HSHKBIO in Sep. Couple of surprises. Estimated one-way turnover at the rebalance is 11.25% resulting in a...

Brian Freitas

Jiangsu Hengrui (1276 HK): Robust 1H25; Innovative Drugs Key; Out-Licensing Affirm Pipeline Strength

Jiangsu Hengrui sees16% revenue growth in 1H25. Innovative drug sales were up 15% YoY and contributed 48% of revenue. Aided by 43% jump in...

Tina Banerjee

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Shanghai Fosun Pharmaceutical (2196.HK/600196.CH) 25H1 - The Performance Has Not Truly Improved

The revenue decline confirms that Fosun Pharma is facing pressure and has to continue to sell unprofitable assets to alleviate debt pressure....

Xinyao (Criss) Wang

CSPC Pharma (1093 HK): Finished Drugs Drag 1H25; 2H25 Expected To End with More Licensing Deals

​CSPC Pharma's 1H25 revenue dropped 18.5% YoY, on lower finished drug sales. However, future revenue visibility looks promising with upcoming...

Tina Banerjee

A-H Premium Weekly (Aug 22nd): Air China, Cosco Shipping Development, Ganfeng Lithium, Fuyao Glass

We analyzed A-H premium changes in the past week and highlight A-H premium changes for Air China, Cosco Shipping Development, Ganfeng Lithium,...

Ke Yan, CFA, FRM

Hang Seng Biotech Index Rebalance: 1 Add & 21 Deletes as Methodology Changes

There is 1 add and 21 deletes for the HSHKBIO in Sep. Couple of surprises. Estimated one-way turnover at the rebalance is 11.25% resulting in a...

Brian Freitas

Jiangsu Hengrui (1276 HK): Robust 1H25; Innovative Drugs Key; Out-Licensing Affirm Pipeline Strength

​Jiangsu Hengrui sees16% revenue growth in 1H25. Innovative drug sales were up 15% YoY and contributed 48% of revenue. Aided by 43% jump in...

Tina Banerjee

CSPC Pharma's 1H25 revenue dropped 18.5% YoY, on lower finished drug sales. However, future revenue visibility looks promising with upcoming...

Jiangsu Hengrui sees16% revenue growth in 1H25. Innovative drug sales were up 15% YoY and contributed 48% of revenue. Aided by 43% jump in...