HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Thematic (Sector/Industry)

<ul>
<li>China's relaxation of COVID-19 control measures is much faster than expected. Due to rising infection rate and mortality rate, China would bear some pressure in the short term. </li>
<li>We analyzed the direct impacts due to COVID policy shift and related investment opportunities. The hardest time of three-year COVID-19 has passed.The playbook of the pandemic is about to end.</li>
<li>With the new leadership taking office, China will be more committed to economic growth after the Two Sessions. Starting from 2023H2, China could formulate independent financial/monetary policies. China will change. </li>
</ul>


China's relaxation of COVID-19 control measures is much faster than expected. Due to rising infection rate and mortality rate, China would bear some pressure in the short term. 
We analyzed the direct impacts due to COVID policy shift and related investment opportunities. The hardest time of three-year COVID-19 has passed.The playbook of the pandemic is about to end.
With the new leadership taking office, China will be more committed to economic growth after the Two Sessions. Starting from 2023H2, China could formulate independent financial/monetary policies. China will change. 


China Makes U-Turn on COVID Policy - Here Are the Direct Impacts and Investment Opportunities

Equity Bottom-Up

Sichuan Kelun Pharmaceutical / Equity Bottom-Up

<ul>
<li>Due to huge negative policy impact, the prospects of Kelun’s traditional businesses would be lackluster. However, the deal with MSD has completely changed Kelun's investment logic. </li>
<li>For the two ADC drugs in the deal, there is a great chance for SKB264 to be eventually druggable. Kelun’s ADC technology is also keeping up with the times. </li>
<li>We deep dive the valuation of Kelun. The market's perception of Kelun is still at the level of traditional businesses. The potential of its ADC pipeline hasn’t been priced in.</li>
</ul>


Due to huge negative policy impact, the prospects of Kelun’s traditional businesses would be lackluster. However, the deal with MSD has completely changed Kelun's investment logic. 
For the two ADC drugs in the deal, there is a great chance for SKB264 to be eventually druggable. Kelun’s ADC technology is also keeping up with the times. 
We deep dive the valuation of Kelun. The market's perception of Kelun is still at the level of traditional businesses. The potential of its ADC pipeline hasn’t been priced in.


Sichuan Kelun Pharmaceutical (002422.CH) - The Deal with Merck Brightens the Outlook; A Dark Horse?

Hutchison China MediTech Ltd / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/hutchison-china-meditech-ltd-7c2c4b58-ca71-4ac4-befb-345e8d0f10ca" target="_blank" data-smartkarma-citation="entities:27342:1" rel="noopener">Hutchison China MediTech Ltd (HCM US)</a> (Hutchmed) didn’t perform well. Its cash holdings could last about two and a half years considering the cash burn rate.</li>
<li>Hutchmed’s three major commercialized products would all face different challenges. Feedbacks from FDA/MAA cast a shadow on the Company's internationalization prospects. </li>
<li>According to the current speed of pharmaceutical innovation, Hutchmed’s R&amp;D efficiency/productivity is not satisfactory. The current pipeline does not have core competitiveness. Bearish on outlook.</li>
</ul>



Hutchison China MediTech Ltd (HCM US) (Hutchmed) didn’t perform well. Its cash holdings could last about two and a half years considering the cash burn rate.
Hutchmed’s three major commercialized products would all face different challenges. Feedbacks from FDA/MAA cast a shadow on the Company's internationalization prospects. 
According to the current speed of pharmaceutical innovation, Hutchmed’s R&amp;D efficiency/productivity is not satisfactory. The current pipeline does not have core competitiveness. Bearish on outlook.


Hutchison China MediTech (HCM.US/13.HK) - The Pain Points Become More Pronounced

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<ul>
<li>We are starting to see early signs of a potential bottom on MSCI EM (EEM-US).</li>
<li>Specifically, the EEM-US has reversed topside its 6-month downtrend. If MSCI EM has indeed bottomed, we want to be buying the leaders; that is where this report comes in.</li>
<li>Specific themes include attractive opportunities in India and Thailand, and also many in Taiwan and South Korea. Attractive Sectors include Energy, Financials, Materials, and Industrials.</li>
</ul>


We are starting to see early signs of a potential bottom on MSCI EM (EEM-US).
Specifically, the EEM-US has reversed topside its 6-month downtrend. If MSCI EM has indeed bottomed, we want to be buying the leaders; that is where this report comes in.
Specific themes include attractive opportunities in India and Thailand, and also many in Taiwan and South Korea. Attractive Sectors include Energy, Financials, Materials, and Industrials.


Finding Leadership Within Emerging Markets

<ul>
<li>This is now the third Int'l Compass/third week in a row where we are discussing an increasing number of country indexes experiencing bullish 3.5-9-month downtrend reversals.</li>
<li>Importantly, all of the previously mentioned indexes are holding above their breakout levels (i.e., there has yet to be any failed breakouts).</li>
<li>Now, the U.S. dollar (DXY) is starting to show early signs of topping. We continue to believe that global equities are going through a bottoming process.</li>
</ul>


This is now the third Int'l Compass/third week in a row where we are discussing an increasing number of country indexes experiencing bullish 3.5-9-month downtrend reversals.
Importantly, all of the previously mentioned indexes are holding above their breakout levels (i.e., there has yet to be any failed breakouts).
Now, the U.S. dollar (DXY) is starting to show early signs of topping. We continue to believe that global equities are going through a bottoming process.


U.S. Dollar Topping?; Bullish Reversals Continue; Ideas in Growth/Cyclicals, Financials

China

Sichuan Kelun Pharmaceutical Co., Ltd. manufactures pharmaceutical products. The Company's products include large infusion products, tablets, capsules, antibiotic injection, lyophilized powder for injection, and traditional Chinese medicine.

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Sichuan Kelun Pharmaceutical (002422 CH)

China Makes U-Turn on COVID Policy - Here Are the Direct Impacts and Investment Opportunities

China's U-turn on COVID policy will lead to rising infection/mortality rate.We analyzed the direct impact/investment opportunity. Under new...

Xinyao (Criss) Wang