HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

Shenzhen Mindray Bio-Medical Electronics / Equity Bottom-Up

<ul>
<li>Mindray's 23H1 results were in line with expectations. The high growth in Q2 has given us more confidence in the “complementarity of performance” between different business lines of the company.</li>
<li>Mindray is right to acquire DiaSys,but Mindray should disclose the impact of M&amp;A on financial statements.When investors understand how to "quantify" M&amp;As, positive news would be reflected in stock price.</li>
<li>The anti-corruption campaign and foreign capital outflows have weighed on Mindray’s share prices. Based on our analysis, the decline offers a good buying opportunity and share price will rebound afterwards.</li>
</ul>


Mindray's 23H1 results were in line with expectations. The high growth in Q2 has given us more confidence in the “complementarity of performance” between different business lines of the company.
Mindray is right to acquire DiaSys,but Mindray should disclose the impact of M&amp;A on financial statements.When investors understand how to "quantify" M&amp;As, positive news would be reflected in stock price.
The anti-corruption campaign and foreign capital outflows have weighed on Mindray’s share prices. Based on our analysis, the decline offers a good buying opportunity and share price will rebound afterwards.


Shenzhen Mindray Bio-Medical Electronics (300760.CH) - Some Points Worth the Attention

<ul>
<li>Mindray withstood the negative impact of pandemic/lockdown and continued to achieve solid growth in 2022H1 amid China's “new infrastructure”  projects and the recovery of overseas demand for routine medical care.</li>
<li>The essence of falling shares is the process of optimistic high growth expectations returning to rationality,which takes time until the cyclical shocks brought by the receding of pandemic are digested.</li>
<li>Mindray’s biggest alpha could be the change brought about by M&amp;A. From the perspective of strategic development, the next jump in valuation is likely to depend on subsequent M&amp;A performance.</li>
</ul>


Mindray withstood the negative impact of pandemic/lockdown and continued to achieve solid growth in 2022H1 amid China's “new infrastructure”  projects and the recovery of overseas demand for routine medical care.
The essence of falling shares is the process of optimistic high growth expectations returning to rationality,which takes time until the cyclical shocks brought by the receding of pandemic are digested.
Mindray’s biggest alpha could be the change brought about by M&amp;A. From the perspective of strategic development, the next jump in valuation is likely to depend on subsequent M&amp;A performance.


Shenzhen Mindray Bio-Medical Electronics (300760.CH) 2022H1 - Waiting for the Next Jump in Valuation

Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

Cross Asset Strategy

<ul>
<li>Industrials and Consumer Staples Remain Top Overweights, Though Sentiment Fragile for Both.</li>
<li>Energy sector shows signs of a turnaround from long-term decline, whilst Financials remain unloved by China investors.</li>
<li>Real Estate allocations have hit record lows, with average holdings at just 2.93%, while Consumer Discretionary sector approaches all-time highs.</li>
</ul>


Industrials and Consumer Staples Remain Top Overweights, Though Sentiment Fragile for Both.
Energy sector shows signs of a turnaround from long-term decline, whilst Financials remain unloved by China investors.
Real Estate allocations have hit record lows, with average holdings at just 2.93%, while Consumer Discretionary sector approaches all-time highs.


Thematic (Sector/Industry)

<ul>
<li>From peak allocations of over 8% at the height of the COVID-19 pandemic, China &amp; HK Health Care allocations have fallen back in to their long-term range</li>
<li>Greater China managers have actively rebalanced portfolios away from China &amp; HK Health Care over the last 6-months, with Taiwan Tech the key beneficiary</li>
<li>Venus MedTech and Jiangsu Hengrui Medicine led the exodus, but it wasn't completely one-sided, with Mindray Bio-Medical Electronics and Aier Eye Hospital Group capturing new investment from Greater China managers.</li>
</ul>


From peak allocations of over 8% at the height of the COVID-19 pandemic, China &amp; HK Health Care allocations have fallen back in to their long-term range
Greater China managers have actively rebalanced portfolios away from China &amp; HK Health Care over the last 6-months, with Taiwan Tech the key beneficiary
Venus MedTech and Jiangsu Hengrui Medicine led the exodus, but it wasn't completely one-sided, with Mindray Bio-Medical Electronics and Aier Eye Hospital Group capturing new investment from Greater China managers.


Greater China Funds: China Health Care Reversal

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

Event-Driven

Shinva Medical Instrument A / Event-Driven

<ul>
<li>The review period ended on 30 April, there are just over 2 weeks to announcement of the changes, and implementation will be done at the close on 14 June.</li>
<li>We forecast 5 potential changes for the index in June where there could be buying of 1.6-2.6x ADV on the adds and selling of 0.7-2.6x ADV on the deletes.</li>
<li>At the December 2023 rebalance, the adds outperformed the deletes in the weeks prior to announcement of the changes and then spiked post-announcement. Repeat this time?</li>
</ul>


The review period ended on 30 April, there are just over 2 weeks to announcement of the changes, and implementation will be done at the close on 14 June.
We forecast 5 potential changes for the index in June where there could be buying of 1.6-2.6x ADV on the adds and selling of 0.7-2.6x ADV on the deletes.
At the December 2023 rebalance, the adds outperformed the deletes in the weeks prior to announcement of the changes and then spiked post-announcement. Repeat this time?


CSI Medical Service Index Rebalance Preview: Repeat of the December Rebal Could See Big Gains

China

Shenzhen Mindray Bio-Medical Electronics Co., Ltd. manufactures and distributes medical equipment. The Company produces life information supporting, in vitro diagnostic, and medical imaging equipment equipment. Shenzhen Mindray Bio-Medical Electronics also produces supporting reagents.

Shenzhen Mindray Bio-Medical Electronics (300760 CH)

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Shenzhen Mindray Bio-Medical Electronics (300760 CH)