Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>After 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> fiasco back in October, Hong Kong M&amp;As have received some welcome Xmas cheer of late.</li>
<li>Small-Cap <a href="https://www.smartkarma.com/entities/cm-hi-tech-cleanroom-limited" target="_blank" data-smartkarma-citation="entities:44057:1" rel="noopener">CM Hi-Tech  (2115 HK)</a> secured reg approvals in record time. Then <a href="https://www.smartkarma.com/entities/cpmc-holdings-ltd" target="_blank" data-smartkarma-citation="entities:10427:1" rel="noopener">CPMC (906 HK)</a>'s pre-cons were satisfied on 13th December. Now <a href="https://www.smartkarma.com/entities/shanghai-henlius-biotech-inc" target="_blank" data-smartkarma-citation="entities:27888:1" rel="noopener">Shanghai Henlius (2696 HK)</a>'s pre-cons are also fulfilled. </li>
<li>Henlius' spread narrowed after securing NDRC approval on the 22nd Nov; and again after fulfilling pre-cons this week. A 3.1% gross spread is okay. This is done. Get involved.</li>
</ul>


After the China Traditional Chinese Medicine (570 HK) fiasco back in October, Hong Kong M&amp;As have received some welcome Xmas cheer of late.
Small-Cap CM Hi-Tech  (2115 HK) secured reg approvals in record time. Then CPMC (906 HK)'s pre-cons were satisfied on 13th December. Now Shanghai Henlius (2696 HK)'s pre-cons are also fulfilled. 
Henlius' spread narrowed after securing NDRC approval on the 22nd Nov; and again after fulfilling pre-cons this week. A 3.1% gross spread is okay. This is done. Get involved.


Henlius (2696 HK): This Should Trade Tighter. Get Involved

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>Due to several factors, the gross spread of <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 for <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> has widened to 21.5%.</li>
<li>The wide gross spread reflects the China TCM deal break hangover, slow progress in satisfying the precondition, Fosun Pharma’s potential funding challenges, and the shareholder vote. </li>
<li>NDRC approval should calm nerves about precondition satisfaction. Even with lingering deal-break concerns, a 21.5% gross spread is excessive.</li>
</ul>


Due to several factors, the gross spread of Shanghai Fosun Pharmaceutical (Group) (2196 HK)’s HK$24.60 offer for Shanghai Henlius Biotech (2696 HK) has widened to 21.5%.
The wide gross spread reflects the China TCM deal break hangover, slow progress in satisfying the precondition, Fosun Pharma’s potential funding challenges, and the shareholder vote. 
NDRC approval should calm nerves about precondition satisfaction. Even with lingering deal-break concerns, a 21.5% gross spread is excessive.


Henlius (2696 HK): NDRC Approval Should Calm Nerves

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

Hangzhou Kangji Medical Instrument Co., Ltd. / Equity Bottom-Up

Hangzhou Kangji Medical Instrument Co., Ltd.

<ul>
<li>Valuation based on Cancellation Price hasn’t fully reflected the potential of Weijing Medical Robot business, nor does it reflect the future growth driven by import substitution due to centralized procurement.</li>
<li>The medical device sector is expected to have a strong trend of performance reversal/valuation repair. Kangji's fundamentals/prospects are moving in a positive direction. Reasonable valuation is HK$12-15 billion at least.</li>
<li>The current Cancellation Price of HK$9.25 is too low to normally reflect the Company's true fundamentals and prospects. Therefore, we're worried that there would be some investors opposing this privatization.</li>
</ul>


Valuation based on Cancellation Price hasn’t fully reflected the potential of Weijing Medical Robot business, nor does it reflect the future growth driven by import substitution due to centralized procurement.
The medical device sector is expected to have a strong trend of performance reversal/valuation repair. Kangji's fundamentals/prospects are moving in a positive direction. Reasonable valuation is HK$12-15 billion at least.
The current Cancellation Price of HK$9.25 is too low to normally reflect the Company's true fundamentals and prospects. Therefore, we're worried that there would be some investors opposing this privatization.


Kangji Medical (9997 HK) Privatization - The Cancellation Price Is Not Attractive

Hangzhou Kangji Medical Instrument Co., Ltd. / Event-Driven

<ul>
<li>On the 12th August, <a href="https://www.smartkarma.com/entities/hangzhou-kangji-medical-instrument-co-ltd" target="_blank" data-smartkarma-citation="entities:28938:1" rel="noopener">Kangji Medical (9997 HK)</a> announced an Offer, by way of a Scheme, from a consortium led by TPG and Qatar Investment Authority, together with the founders.</li>
<li>The 9.9% premium to last close was less than ideal. A change of control premium (30%+) is arguably more commonplace in Asia-Pac. However, the Offer Price is a four-year high.</li>
<li>I had a number of questions concerning the transaction, and managed to secure a one-on-one with the FA to the Offeror earlier today. </li>
</ul>


On the 12th August, Kangji Medical (9997 HK) announced an Offer, by way of a Scheme, from a consortium led by TPG and Qatar Investment Authority, together with the founders.
The 9.9% premium to last close was less than ideal. A change of control premium (30%+) is arguably more commonplace in Asia-Pac. However, the Offer Price is a four-year high.
I had a number of questions concerning the transaction, and managed to secure a one-on-one with the FA to the Offeror earlier today. 


Kangji Medical (9997 HK): Q&A With The FA

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>
<a href="https://www.smartkarma.com/entities/3sbio-inc" target="_blank" data-smartkarma-citation="entities:459:1" rel="noopener">3SBio Inc (1530 HK)</a>'s stock price has soared over the last couple of months, and the higher market cap should result in global index inclusion in August.</li>
<li>
<a href="https://www.smartkarma.com/entities/3sbio-inc" target="_blank" data-smartkarma-citation="entities:459:1" rel="noopener">3SBio Inc (1530 HK)</a> has gone from middle/bottom of the pack to best performer among its peer group over the last two months.</li>
<li>There will be a lot of positioning in the stock, but we see a similar trend across stocks in the industry.</li>
</ul>



3SBio Inc (1530 HK)'s stock price has soared over the last couple of months, and the higher market cap should result in global index inclusion in August.

3SBio Inc (1530 HK) has gone from middle/bottom of the pack to best performer among its peer group over the last two months.
There will be a lot of positioning in the stock, but we see a similar trend across stocks in the industry.


3SBio (1530 HK): Global Index Inclusion as Stock Soars

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)

Henlius (2696 HK): This Should Trade Tighter. Get Involved

A 3.1% gross spread with expected payment around mid-Feb is okay. I'd pay up to HK$24.10/share for a 15% annualised spread. This is done. Get...

David Blennerhassett

Henlius (2696 HK): NDRC Approval Should Calm Nerves

Fosun Pharma has satisfied the precondition related to its Henlius’ HK$24.60 offer. The composite document will be despatched by 23 January. Key...

Arun George

Kangji Medical (9997 HK) Privatization - The Cancellation Price Is Not Attractive

The Cancellation Price is too low to normally reflect Kangji's true fundamentals/outlook. The whole industry is moving in positive direction. We’re...

Xinyao (Criss) Wang

Kangji Medical (9997 HK): Q&A With The FA

I expect this Offer to up. Assuming late Jan completion, I'd pay up to ~HK$8.67/share for a 15% annualised return. Currently trading at HK$8.59...

David Blennerhassett

3SBio (1530 HK): Global Index Inclusion as Stock Soars

3SBio could be added to a global index in August. There is large positioning in the stock, but industry momentum could lead to further upside in...

Brian Freitas

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