Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Quantitative Analysis

<ul>
<li>We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of October 28th.</li>
<li>The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.</li>
<li>We highlight inflows into Tencent Holding, Meituan, Wuxi Biologics, Kuaishou.</li>
</ul>


We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of October 28th.
The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.
We highlight inflows into Tencent Holding, Meituan, Wuxi Biologics, Kuaishou.


Hong Kong Connect Flows (Oct 28th): Tencent, Meituan, Wuxi Biologics, Kuaishou

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

Sino Biopharmaceutical / Equity Bottom-Up

<ul>
<li>Due to VBP/NRDL negotiation, 2022 is the low point of Hengrui's performance.The question is to what extent would Hengrui recover?Its development model isn’t an advantage since the game rule changes. </li>
<li>Unlike Hengrui, Sino Biopharm hasn’t given up on generics business,which becomes a " performance buffer". Its BD capability/vision is commendable, which would help the company find the next "golden egg".</li>
<li>The stock price trend of the two companies could diverge. Sino Biopharm is more likely to outperform Hengrui in the medium to long term. Long Sino Biopharm, and short Hengrui.</li>
</ul>


Due to VBP/NRDL negotiation, 2022 is the low point of Hengrui's performance.The question is to what extent would Hengrui recover?Its development model isn’t an advantage since the game rule changes. 
Unlike Hengrui, Sino Biopharm hasn’t given up on generics business,which becomes a " performance buffer". Its BD capability/vision is commendable, which would help the company find the next "golden egg".
The stock price trend of the two companies could diverge. Sino Biopharm is more likely to outperform Hengrui in the medium to long term. Long Sino Biopharm, and short Hengrui.


China Healthcare - A Pair Trade: Long Sino Biopharm (1177.HK), Short Hengrui Medicine (600276.CH)

<ul>
<li>
<a href="https://www.smartkarma.com/entities/wuxi-apptec" target="_blank" data-smartkarma-citation="entities:23679:1" rel="noopener">Wuxi Biologics (2269 HK)</a> has been removed from the "Unverified List", but the crisis is not over. CXO's valuation center could gradually volatile to the downside,during which there would be temporary rebounds.</li>
<li>Biotechnology of US and China has entered a higher level of game. As domestic CXO is deeply embedded in global supply chain, we won't take any chances on WuXi Biologics.</li>
<li>We may face a long high-interest-rate environment after the Fed hikes,but the booming of US pharmaceutical IPOs is the underlying logic of CXO. We provided suggestions on CXO trading strategy.</li>
</ul>



Wuxi Biologics (2269 HK) has been removed from the "Unverified List", but the crisis is not over. CXO's valuation center could gradually volatile to the downside,during which there would be temporary rebounds.
Biotechnology of US and China has entered a higher level of game. As domestic CXO is deeply embedded in global supply chain, we won't take any chances on WuXi Biologics.
We may face a long high-interest-rate environment after the Fed hikes,but the booming of US pharmaceutical IPOs is the underlying logic of CXO. We provided suggestions on CXO trading strategy.


Wuxi Biologics (2269.HK) - Removed from UVL, but the Crisis Is Not Over

Thematic (Sector/Industry)

<ul>
<li>The plunge in medical beauty sector last week was due to the industry-wide overhaul and investigation resulting from the increase in business bribery/tax evasion/medical malpractice/customer complaints.</li>
<li>We found an interesting phenomenon – Investors dare not buy biotech, opting instead for Traditional Chinese Medicine (TCM) companies, scientific research service companies and medical service companies.</li>
<li>If investors still want to trade CXO, here are two suggestions.</li>
</ul>


The plunge in medical beauty sector last week was due to the industry-wide overhaul and investigation resulting from the increase in business bribery/tax evasion/medical malpractice/customer complaints.
We found an interesting phenomenon – Investors dare not buy biotech, opting instead for Traditional Chinese Medicine (TCM) companies, scientific research service companies and medical service companies.
If investors still want to trade CXO, here are two suggestions.


China Healthcare Weekly (Sep.25) - CXO Trading Strategy, Plunge in Medical Beauty, Belief in Biotech

Simcere Pharmaceutical Group / Equity Bottom-Up

<ul>
<li>Simcere’s profit was mainly driven by the income of non-recurring items (investment business). Due to unfriendly external environment, investors are recommended to be prepared for further decline in net profit. </li>
<li>The overall quality of Simcere’s pipeline is not high, which would be difficult to bring decent revenue in the next few years. Simcere’s transformation is not as smooth as expected.</li>
<li>In fact, over the years, Simcere's strongest capability lies in the sales rather than R&amp;D. Since the game rule changes, we are bearish on Simcere.</li>
</ul>


Simcere’s profit was mainly driven by the income of non-recurring items (investment business). Due to unfriendly external environment, investors are recommended to be prepared for further decline in net profit. 
The overall quality of Simcere’s pipeline is not high, which would be difficult to bring decent revenue in the next few years. Simcere’s transformation is not as smooth as expected.
In fact, over the years, Simcere's strongest capability lies in the sales rather than R&amp;D. Since the game rule changes, we are bearish on Simcere.


Simcere Pharmaceutical Group (2096.HK) 22H1 - Gloomy Outlook and Risks in Profits

Hong Kong

Sino Biopharmaceutical Limited, through its subsidiaries, researches, develops, produces, and sells biopharmaceutical products for the medical treatment of ophthalmia, as well as modernized Chinese medicine and chemical medicine for the treatment of hepatitis.

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Sino Biopharmaceutical (1177 HK)

Hong Kong Connect Flows (Oct 28th): Tencent, Meituan, Wuxi Biologics, Kuaishou

We analyzed southbound Hong Kong connect flows in the past week and highlight flows for Tencent, Meituan, Wuxi Biologics, Kuaishou.

Ke Yan, CFA, FRM

China Healthcare - A Pair Trade: Long Sino Biopharm (1177.HK), Short Hengrui Medicine (600276.CH)

Old-fashioned big pharma is a safe place to put assets.Stock price of Sino Biopharm/Hengrui could diverge in the future due to different strategy...

Xinyao (Criss) Wang

Wuxi Biologics (2269.HK) - Removed from UVL, but the Crisis Is Not Over

Removal from UVL won’t bring fundamental change.The logic of CXO(low labor cost+booming US pharmaceutical IPO) is untenable.We provide trading...

Xinyao (Criss) Wang

China Healthcare Weekly (Sep.25) - CXO Trading Strategy, Plunge in Medical Beauty, Belief in Biotech

If investor still want to trade CXO,here are two suggestions; The plunge in medical beauty sector last week was due to industry-wide...

Xinyao (Criss) Wang

Simcere Pharmaceutical Group (2096.HK) 22H1 - Gloomy Outlook and Risks in Profits

Simcere’s profit was driven by investment business, which will further decline due to unfriendly macro. The pipeline quality is not high, leading...

Xinyao (Criss) Wang

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