HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

Sihuan Pharmaceutical Hldgs / Equity Bottom-Up

<ul>
<li>Investors always have expectations for Chinese CXOs, believing that BIOSECURE Act will not pass and Chinese CXOs will bottom out. We can understand this, but we have to be rational.</li>
<li>Selling the operations that have been negatively affected is a reasonable choice, which helps stabilize WuXi’s business/market expectations. But this does not necessarily mean the geopolitical conflict will end here.</li>
<li>Without persuasive long-term logic, share price of Sihuan would still underperform. Despite strong performance of Chinese stocks, we advise investors to do short-term trading on <a href="https://www.smartkarma.com/entities/sihuan-pharmaceutical-hldgs" target="_blank" data-smartkarma-citation="entities:33:1" rel="noopener">Sihuan Pharmaceutical Hldgs (460 HK)</a>.</li>
</ul>


Investors always have expectations for Chinese CXOs, believing that BIOSECURE Act will not pass and Chinese CXOs will bottom out. We can understand this, but we have to be rational.
Selling the operations that have been negatively affected is a reasonable choice, which helps stabilize WuXi’s business/market expectations. But this does not necessarily mean the geopolitical conflict will end here.
Without persuasive long-term logic, share price of Sihuan would still underperform. Despite strong performance of Chinese stocks, we advise investors to do short-term trading on Sihuan Pharmaceutical Hldgs (460 HK).


China Healthcare Weekly (Oct.6) - WuXi to Sell Assets, Be Rational on China CXO, Sihuan Underperform

Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

Budweiser Brewing  APAC  / Equity Bottom-Up

<ul>
<li>Hong Kong market still trades at a substantial discount to Analyst year end price targets.</li>
<li>Budweiser APAC is dependent on China's consumer to lift sales while Anta Sports is targeting increased sales from the upcoming Paris Olympics.</li>
<li>Sunny Optical is seeing substantial growth from it EV segment and Haitian continues to grow its international sales.  Shineway RX is a rare value play in the pharmaceutical sector.</li>
</ul>


Hong Kong market still trades at a substantial discount to Analyst year end price targets.
Budweiser APAC is dependent on China's consumer to lift sales while Anta Sports is targeting increased sales from the upcoming Paris Olympics.
Sunny Optical is seeing substantial growth from it EV segment and Haitian continues to grow its international sales.  Shineway RX is a rare value play in the pharmaceutical sector.


BUY/SELL/HOLD: Hong Kong Stocks Update (July 15)

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.

Event-Driven

China Traditional Chinese Medicine / Event-Driven

<ul>
<li>On 21 February, <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> announced a privatisation offer from the Sinopharm-led consortium at HK$4.60 per share, a 47.4% premium to the undisturbed price.</li>
<li>The wide gross spread (7.0%) reflects risks around the re-rating of peers, the slow pace of satisfying the pre-condition, the completion timetable and Ping An’s blocking stake. </li>
<li>The key risk is the deal close timing due to the slow pace of regulatory approvals, which increases the chance that the vote will held after the August interim.   </li>
</ul>


On 21 February, China Traditional Chinese Medicine (570 HK) announced a privatisation offer from the Sinopharm-led consortium at HK$4.60 per share, a 47.4% premium to the undisturbed price.
The wide gross spread (7.0%) reflects risks around the re-rating of peers, the slow pace of satisfying the pre-condition, the completion timetable and Ping An’s blocking stake. 
The key risk is the deal close timing due to the slow pace of regulatory approvals, which increases the chance that the vote will held after the August interim.   


China Traditional Chinese Medicine (570 HK): Evaluating Deal-Break Risks

<ul>
<li>
<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> announced a privatisation offer from the Sinopharm-led consortium at HK$4.60 per share, a 47.4% premium to the undisturbed price.</li>
<li>The pre-condition relates to various Chinese regulatory approvals. As SOE entities own the offeror, regulatory approvals will be a formality. The offer price is final. </li>
<li>
<a href="https://www.smartkarma.com/entities/ping-an-insurance-grp-co-of-china-ltd" target="_blank" data-smartkarma-citation="entities:12880:1" rel="noopener">Ping An Insurance (H) (2318 HK)</a>, which holds a blocking stake, will be supportive. The offer is fair when the previously (higher) rumoured offers are adjusted for the market downturn. </li>
</ul>



China Traditional Chinese Medicine (570 HK) announced a privatisation offer from the Sinopharm-led consortium at HK$4.60 per share, a 47.4% premium to the undisturbed price.
The pre-condition relates to various Chinese regulatory approvals. As SOE entities own the offeror, regulatory approvals will be a formality. The offer price is final. 

Ping An Insurance (H) (2318 HK), which holds a blocking stake, will be supportive. The offer is fair when the previously (higher) rumoured offers are adjusted for the market downturn. 


China Traditional Chinese Medicine (570 HK): Sinopharm-Led Pre-Conditional Offer at HK$4.60

<ul>
<li>Bloomberg reports that Sinopharm is reviving its interest in privatising <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>/CTCM. Sinopharm has contacted banks about financing and is considering partnering with other investors.</li>
<li>Sinopharm’s best bet is to partner with <a href="https://www.smartkarma.com/entities/ping-an-insurance-group-co-of-c2975d60-47cd-4246-a7a6-25297586242b" target="_blank" data-smartkarma-citation="entities:24682:1" rel="noopener">Ping An Insurance Group of (601318 CH)</a> and privatise through a scheme. In this scenario, no disinterested shareholder would hold a blocking stake.</li>
<li>Due to Sinopharm's previous privatisation attempts, shareholders will be wary of the latest rumour. Nevertheless, the valuation is undemanding compared to peer multiples.</li>
</ul>


Bloomberg reports that Sinopharm is reviving its interest in privatising China Traditional Chinese Medicine (570 HK)/CTCM. Sinopharm has contacted banks about financing and is considering partnering with other investors.
Sinopharm’s best bet is to partner with Ping An Insurance Group of (601318 CH) and privatise through a scheme. In this scenario, no disinterested shareholder would hold a blocking stake.
Due to Sinopharm's previous privatisation attempts, shareholders will be wary of the latest rumour. Nevertheless, the valuation is undemanding compared to peer multiples.


China Traditional Chinese Med (570 HK): Third Time's the Charm as Sinopharm Revives Its Interest?

China

Sihuan Pharmaceutical Holdings Group Ltd. researches and develops cardiocerebral vascular drugs in China. The Company drugs address needs in the areas of anti-infective, metabolism, cardiovascular system, oncology and nervous system.

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Sihuan Pharmaceutical Hldgs (460 HK)

China Healthcare Weekly (Oct.6) - WuXi to Sell Assets, Be Rational on China CXO, Sihuan Underperform

Investors need to be rational on China CXO.Selling US/EU operations stabilizes WuXi's business, but geopolitical risk may persist. Sihuan's share...

Xinyao (Criss) Wang

BUY/SELL/HOLD: Hong Kong Stocks Update (July 15)

Hong Kong markets continue to trade at a 25% discount to analysts year end targets. Bud APAC, Anta Sports, Sunny Optical and Shineway RX are...

David Mudd

China Traditional Chinese Medicine (570 HK): Evaluating Deal-Break Risks

The wide gross spread (7.0%) reflects risks around the re-rating of peers, the slow pace of satisfying the pre-condition, the completion timetable...

Arun George

China Traditional Chinese Medicine (570 HK): Sinopharm-Led Pre-Conditional Offer at HK$4.60

The offer is attractive to historical trading ranges and peer multiples. Ping An, which holds a blocking stake, will be supportive. This looks like...

Arun George

China Traditional Chinese Med (570 HK): Third Time's the Charm as Sinopharm Revives Its Interest?

Due to Sinopharm's previous privatisation attempts, shareholders will be wary of the latest rumour. Nevertheless, the valuation is undemanding...

Arun George

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52-week Range

Market Cap (USDm)

P/E

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China Healthcare Weekly (Oct.6) - WuXi to Sell Assets, Be Rational on China CXO, Sihuan Underperform

​Investors need to be rational on China CXO.Selling US/EU operations stabilizes WuXi's business, but geopolitical risk may persist. Sihuan's share...

Xinyao (Criss) Wang

BUY/SELL/HOLD: Hong Kong Stocks Update (July 15)

Hong Kong markets continue to trade at a 25% discount to analysts year end targets. Bud APAC, Anta Sports, Sunny Optical and Shineway RX are...

David Mudd

China Traditional Chinese Medicine (570 HK): Evaluating Deal-Break Risks

The wide gross spread (7.0%) reflects risks around the re-rating of peers, the slow pace of satisfying the pre-condition, the completion timetable...

Arun George

China Traditional Chinese Medicine (570 HK): Sinopharm-Led Pre-Conditional Offer at HK$4.60

The offer is attractive to historical trading ranges and peer multiples. Ping An, which holds a blocking stake, will be supportive. This looks like...

Arun George

China Traditional Chinese Med (570 HK): Third Time's the Charm as Sinopharm Revives Its Interest?

Due to Sinopharm's previous privatisation attempts, shareholders will be wary of the latest rumour. Nevertheless, the valuation is undemanding...

Arun George

Investors need to be rational on China CXO.Selling US/EU operations stabilizes WuXi's business, but geopolitical risk may persist. Sihuan's share...