HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

<ul>
<li>Sihuan is pursuing strategic adjustments actively, aiming to further improve the overall operating efficiency and financial performance of the Company. We summarized some business updates. </li>
<li>Based on our analysis, Sihuan's business transformation to innovative drugs and medical aesthetics may not end up well, despite that they are “a good story” for the time being.</li>
<li>Without persuasive long-term logic, share price of Sihuan could underperform. Therefore, considering the characteristics of Sihuan, we advise investors to do short-term trading – buy low and sell high.</li>
</ul>


Sihuan is pursuing strategic adjustments actively, aiming to further improve the overall operating efficiency and financial performance of the Company. We summarized some business updates. 
Based on our analysis, Sihuan's business transformation to innovative drugs and medical aesthetics may not end up well, despite that they are “a good story” for the time being.
Without persuasive long-term logic, share price of Sihuan could underperform. Therefore, considering the characteristics of Sihuan, we advise investors to do short-term trading – buy low and sell high.


Sihuan Pharmaceutical (460.HK) - About the Recent Business Adjustments and the Outlook

Bloomage Biotechnology  Lt / Equity Bottom-Up

<ul>
<li>Many interpretations of Bloomage are just looking at the surface of the Company. It is actually a biotechnology and biomaterial company, with business layout covering the whole industrial chain.</li>
<li>The biggest advantage is the innovation of raw materials.Based on synthetic biology, Bloomage is more comfortable in the richness of raw materials (hyaluronic acid/collagen etc.) and flexibility of product matrix expansion.</li>
<li>The synergy/complementarity of multiple businesses improve the resilience to market/policy changes. If investors cannot have a deep understanding of Bloomage's positioning/real strategic intentions, they won't seize the alpha in the future.</li>
</ul>


Many interpretations of Bloomage are just looking at the surface of the Company. It is actually a biotechnology and biomaterial company, with business layout covering the whole industrial chain.
The biggest advantage is the innovation of raw materials.Based on synthetic biology, Bloomage is more comfortable in the richness of raw materials (hyaluronic acid/collagen etc.) and flexibility of product matrix expansion.
The synergy/complementarity of multiple businesses improve the resilience to market/policy changes. If investors cannot have a deep understanding of Bloomage's positioning/real strategic intentions, they won't seize the alpha in the future.


Bloomage Biotechnology (688363.CH) - Positioning and Strategic Layout Imply Strong Upside Potential

<ul>
<li>The disposal of generic drug segment would bring one-time cash flow. Together with the cash on hand, <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> is undervalued based on its current market value. </li>
<li>In the context of its innovative drug segment facing long-term losses, and the decreasing profit margins of medical beauty segment due to increasing competition, Sihuan’s prospects are no brighter.</li>
<li>Due to the concerns on outlook and its development mode, Sihuan’s upside potential could be lower than expected, and the share price could fluctuate largely. </li>
</ul>


The disposal of generic drug segment would bring one-time cash flow. Together with the cash on hand, Sihuan Pharmaceutical Hldgs (460 HK) is undervalued based on its current market value. 
In the context of its innovative drug segment facing long-term losses, and the decreasing profit margins of medical beauty segment due to increasing competition, Sihuan’s prospects are no brighter.
Due to the concerns on outlook and its development mode, Sihuan’s upside potential could be lower than expected, and the share price could fluctuate largely. 


Sihuan Pharmaceutical (460.HK) - The Potential Disposal of Generic Drug Business and the Outlook

Imeik Technology Development C / Equity Bottom-Up

Imeik Technology Development C (300896 CH)

<ul>
<li>Imeik keeps its outstanding financial performance in 2021/2022Q1. On the surface, it looks prosperous, but its development strategy, product layout and resilience in front of risks would bring many uncertainties.</li>
<li>Considering the pandemic/lockdown and a slowing economy in China, the revenue growth in 2022 could fall to about 50%, then to about 40% and 30% in 2023 and 2024 respectively.</li>
<li>Imeik’s valuation is “unreasonably high”, which is expected to be lower than Bloomage in the future. Anything that deviates from fundamentals would inevitably return to the origin. </li>
</ul>


Imeik keeps its outstanding financial performance in 2021/2022Q1. On the surface, it looks prosperous, but its development strategy, product layout and resilience in front of risks would bring many uncertainties.
Considering the pandemic/lockdown and a slowing economy in China, the revenue growth in 2022 could fall to about 50%, then to about 40% and 30% in 2023 and 2024 respectively.
Imeik’s valuation is “unreasonably high”, which is expected to be lower than Bloomage in the future. Anything that deviates from fundamentals would inevitably return to the origin. 


Imeik Technology Development (300896.CH) - Superficial Prosperity Hardly Masks Underlying Risks

Shanghai Haohai Biological Tec / Equity Bottom-Up

Shanghai Haohai Biological Tec (688366 CH)

<ul>
<li>Haohai's development is fuelled by a series of acquisitions, which help Haohai establish the existing diversified businesses, but we haven’t seen any growth point with high certainty.</li>
<li>Compared with Bloomage and Imeik, Haohai has no competitive advantage in the field of medical aesthetics. It’s also difficult for Haohai to make a substantial breakthrough without obvious product advantages.</li>
<li>Although Haohai’s PE/TTM is significantly lower than its peers, due to centralized procurement, Haohai’s valuation could be further lower. Considering the risks, we choose to stay cautious on Haohai.</li>
</ul>


Haohai's development is fuelled by a series of acquisitions, which help Haohai establish the existing diversified businesses, but we haven’t seen any growth point with high certainty.
Compared with Bloomage and Imeik, Haohai has no competitive advantage in the field of medical aesthetics. It’s also difficult for Haohai to make a substantial breakthrough without obvious product advantages.
Although Haohai’s PE/TTM is significantly lower than its peers, due to centralized procurement, Haohai’s valuation could be further lower. Considering the risks, we choose to stay cautious on Haohai.


Shanghai Haohai Biological Technology (688366CH)- Diversified Business Layout Doesn't Secure Outlook

China

Sihuan Pharmaceutical is a pharmaceutical and medical aesthetic company engaged in the research, development, manufacturing, and sale of products. It offers drugs across therapeutic areas such as oncology, metabolism, diabetes, and cardiovascular diseases, alongside medical aesthetic solutions. The company was founded in 2001 and is headquartered in Wan Chai, Hong Kong.

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Sihuan Pharmaceutical (460 HK)