HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

Shanghai Henlius Biotech  / Equity Bottom-Up

<ul>
<li>There have been quite a few M&amp;As in the field of TCM, with a clear trend of SOEs taking over TCM enterprises due to strategically significant and advantageous integration.</li>
<li>Whether a drug can be approved does not depend on whether it has entered Phase II/III trials. The areas with clearly unmet medical needs often indicate good investment opportunities.</li>
<li>The privatization of Henlius failed. Lin Lijun's dissenting vote was based on a deliberate decision. We are optimistic about the outlook of Henlius due to its strong fundamentals and internationalization. </li>
</ul>


There have been quite a few M&amp;As in the field of TCM, with a clear trend of SOEs taking over TCM enterprises due to strategically significant and advantageous integration.
Whether a drug can be approved does not depend on whether it has entered Phase II/III trials. The areas with clearly unmet medical needs often indicate good investment opportunities.
The privatization of Henlius failed. Lin Lijun's dissenting vote was based on a deliberate decision. We are optimistic about the outlook of Henlius due to its strong fundamentals and internationalization. 


China Healthcare Weekly (Jan.26) - Key Takeaways from the Failure of Henlius Privatization, TCM M&As

<ul>
<li>Lin Lijun voted against the privatization, which is in line with our analysis.Lin and some other long-term investors expressed their "dissatisfaction" by opposing the privatization due to disappointing Cancellation Price.</li>
<li>Due to deal break, Henlius’ share price could be under pressure in short term.Investors may need to wait until the implementation of biosimilar VBP in 2025 to see situation clearly.</li>
<li>Despite biosimilar VBP, we remain optimistic about the outlook of Henlius, because its future development positioning will not be limited to just biosimilars, but will focus on internationalization.</li>
</ul>


Lin Lijun voted against the privatization, which is in line with our analysis.Lin and some other long-term investors expressed their "dissatisfaction" by opposing the privatization due to disappointing Cancellation Price.
Due to deal break, Henlius’ share price could be under pressure in short term.Investors may need to wait until the implementation of biosimilar VBP in 2025 to see situation clearly.
Despite biosimilar VBP, we remain optimistic about the outlook of Henlius, because its future development positioning will not be limited to just biosimilars, but will focus on internationalization.


Shanghai Henlius Biotech (2696 HK) - About the Deal Break and the Valuation Outlook

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>The question was asked in <a href="https://skr.ma/2qNon" target="_blank" rel="noopener">Henlius (2696 HK): So, When Was The Last Time A PE/VC Outfit Blocked A Deal?</a> Well, now we have one as LVC inexplicably <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2025/0122/2025012200662.pdf" target="_blank" rel="noopener">blocked</a>.</li>
<li>It didn’t appear to make economic rationale for LVC to crash the party - knowing they would do so, and not bother to reduce their position accordingly.</li>
<li>In tandem with the <a href="https://www.smartkarma.com/entities/china-traditional-chinese-medicine" target="_blank" data-smartkarma-citation="entities:351:1" rel="noopener">TCM (570 HK)</a> debacle, it sets another bad precedent for future/existing Hong Kong  events. Expect spreads for HK arbs to widen. And Henlius to crater.</li>
</ul>


The question was asked in Henlius (2696 HK): So, When Was The Last Time A PE/VC Outfit Blocked A Deal? Well, now we have one as LVC inexplicably blocked.
It didn’t appear to make economic rationale for LVC to crash the party - knowing they would do so, and not bother to reduce their position accordingly.
In tandem with the TCM (570 HK) debacle, it sets another bad precedent for future/existing Hong Kong  events. Expect spreads for HK arbs to widen. And Henlius to crater.


Henlius (2696)'s Fail Sets (Another) Bad Precedent

<ul>
<li>Fosun hopes to privatize Henlius at a low price. As usual, it does not consider the interests of long-term investors, who may express their "dissatisfaction" by opposing the privatization.</li>
<li>Lin Lijun clearly has bargaining chips. He may ask Fosun to provide a clear plan for future relisting/asset restructuring, and how the Share Alternative will be linked to this plan.</li>
<li>There is a possibility this privatization may fail. Such possibility is not low, because investors will only support the privatization if they can be sure that their interests are protected.</li>
</ul>


Fosun hopes to privatize Henlius at a low price. As usual, it does not consider the interests of long-term investors, who may express their "dissatisfaction" by opposing the privatization.
Lin Lijun clearly has bargaining chips. He may ask Fosun to provide a clear plan for future relisting/asset restructuring, and how the Share Alternative will be linked to this plan.
There is a possibility this privatization may fail. Such possibility is not low, because investors will only support the privatization if they can be sure that their interests are protected.


Shanghai Henlius Biotech (2696 HK)- These Are the Reasons Why LVC May Vote Against the Privatization

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.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/shanghai-henlius-biotech-inc" target="_blank" data-smartkarma-citation="entities:27888:1" rel="noopener">Shanghai Henlius Biotech (2696 HK)</a> shareholders have voted against <a href="https://www.smartkarma.com/entities/shanghai-fosun-pharmaceutical-group" target="_blank" data-smartkarma-citation="entities:8045:1" rel="noopener">Shanghai Fosun Pharmaceutical (Group) (2196 HK)</a>’s HK$24.60 offer. The minority participation rate was high, and the NO vote comfortably cleared the threshold.</li>
<li>The <a href="https://www.smartkarma.com/entities/china-traditional-chinese-medicine" target="_blank" data-smartkarma-citation="entities:351:1" rel="noopener">China Traditional Chinese Medicine (570 HK)</a> and Henlius deal breaks have rewritten the HKEx merger arb rulebook. The Henlius deal break offers several lessons.</li>
<li>The 27.5% share price decline since 9 January points to a well-flagged deal break. Nevertheless, precedent deal-breaks suggest that the shares remain vulnerable and could touch HK$15.  </li>
</ul>



Shanghai Henlius Biotech (2696 HK) shareholders have voted against Shanghai Fosun Pharmaceutical (Group) (2196 HK)’s HK$24.60 offer. The minority participation rate was high, and the NO vote comfortably cleared the threshold.
The China Traditional Chinese Medicine (570 HK) and Henlius deal breaks have rewritten the HKEx merger arb rulebook. The Henlius deal break offers several lessons.
The 27.5% share price decline since 9 January points to a well-flagged deal break. Nevertheless, precedent deal-breaks suggest that the shares remain vulnerable and could touch HK$15.  


Henlius (2696 HK): Deal Break as HKEx Merger Arb Rulebooks Are Rewritten

China

Shanghai Henlius Biotech, Inc develops and produces drugs. The Company develops and produces monoclonal antibody biosimilar drugs, bio betters, novel monoclonal antibodys, and other drugs. Shanghai Henlius Biotech throughout China.

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Shanghai Henlius Biotech (2696 HK)

China Healthcare Weekly (Jan.26) - Key Takeaways from the Failure of Henlius Privatization, TCM M&As

Lin Lijun's dissenting vote was a deliberate decision.Despite failed privatization, we're optimistic on Henlius.SOEs are strategically taking over...

Xinyao (Criss) Wang