Healthcare Equity Analyst - Emerging & Dev Markets, daaimon

Avien Pillay

Healthcare Equity Analyst - Emerging & Dev Markets

daaimon

daaimon is an independent research company focusing on healthcare and consumer sectors across developed and emerging markets. We produce insightful research which challenges conventional thinking. In particular, we look for new ideas by testing consensus forecasts and markets expectations.

Equity Bottom-Up

Sinopharm Group Co Ltd H / Equity Bottom-Up

<ul>
<li>We expected growth to improve, however, on the contrary growth has slowed, and there seem to be limited short to medium term positive catalysts.</li>
<li>Pricing pressure is still a problem, and competition is intense especially in the fragmented medical device market.</li>
<li>Given the relatively low growth outlook, and the fact that Sinopharm is largely a distribution model, we see limited opportunity for the company to re-rate from the current level.</li>
</ul>


We expected growth to improve, however, on the contrary growth has slowed, and there seem to be limited short to medium term positive catalysts.
Pricing pressure is still a problem, and competition is intense especially in the fragmented medical device market.
Given the relatively low growth outlook, and the fact that Sinopharm is largely a distribution model, we see limited opportunity for the company to re-rate from the current level.


Sinopharm Group (1099 HK) – Downgrade to a Sell

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

<ul>
<li>Due to disappointing performance in 24Q1-Q3, both revenue and net profit attributable to the parent company in 2024 could face negative growth, but 2025 is expected to have positive growth.</li>
<li>As pharmaceutical distribution business can just maintain stable but medical device distribution business and retail pharmacies cannot contribute high growth, the overall performance of Sinopharm has lost growth momentum.</li>
<li>Due to longer payment cycles from hospitals and its business characteristics, Sinopharm is facing significant demands for working capital. Insufficient cash flow makes it difficult to increase the dividend rate.  </li>
</ul>


Due to disappointing performance in 24Q1-Q3, both revenue and net profit attributable to the parent company in 2024 could face negative growth, but 2025 is expected to have positive growth.
As pharmaceutical distribution business can just maintain stable but medical device distribution business and retail pharmacies cannot contribute high growth, the overall performance of Sinopharm has lost growth momentum.
Due to longer payment cycles from hospitals and its business characteristics, Sinopharm is facing significant demands for working capital. Insufficient cash flow makes it difficult to increase the dividend rate.  


Sinopharm Group Co Ltd (1099.HK) - Performance May Continue to Miss Expectations

<ul>
<li>Sinopharm will benefit from the strong expected growth in China’s healthcare spend.</li>
<li>There is scope to increase its distribution which will continue to shield the company from short-term volatility.</li>
<li>Pricing pressure in drug prices creates opportunity to optimise range and improve profitability.</li>
</ul>


Sinopharm will benefit from the strong expected growth in China’s healthcare spend.
There is scope to increase its distribution which will continue to shield the company from short-term volatility.
Pricing pressure in drug prices creates opportunity to optimise range and improve profitability.


Sinopharm (1099 HK) - A Compelling Investment Case

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

Index Rebalance

<ul>
<li>There are currently 76 index constituents and we can (maybe? finally! hopefully 🤞) get to 80 members in March before commencing the next leg up to 100 index constituents.</li>
<li>We list 10 potential inclusions to the index in March. Adding all 10 stocks will lead to over 6% one-way turnover, so there will be fewer inclusions.</li>
<li>All stocks will have over 1 day of ADV to buy from passive trackers. Some stocks have short interest of over 7% of float.</li>
</ul>


There are currently 76 index constituents and we can (maybe? finally! hopefully 🤞) get to 80 members in March before commencing the next leg up to 100 index constituents.
We list 10 potential inclusions to the index in March. Adding all 10 stocks will lead to over 6% one-way turnover, so there will be fewer inclusions.
All stocks will have over 1 day of ADV to buy from passive trackers. Some stocks have short interest of over 7% of float.


HSI Index Rebalance Preview: Better Late Than Never?

Contemporary Amperex Technology (CATL) / Index Rebalance

<ul>
<li>Post market close on Friday, Hang Seng Indexes will announce the changes for the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hang Seng Index (HSI INDEX)</a> that will be implemented at the close on 5 December.</li>
<li>We highlight 6 stocks that have a higher probability of being added to the index. With the index committee entitled to a lot of discretion, there will be differences.</li>
<li>
<a href="https://www.smartkarma.com/entities/contemporary-amperex-technology-catl-co-limited" target="_blank" data-smartkarma-citation="entities:45179:1" rel="noopener">CATL (3750 HK)</a> will have a 6-month trading history by implementation of the index changes and is a high probability inclusion to the index. But cornerstone lock-up ends tomorrow.</li>
</ul>


Post market close on Friday, Hang Seng Indexes will announce the changes for the Hang Seng Index (HSI INDEX) that will be implemented at the close on 5 December.
We highlight 6 stocks that have a higher probability of being added to the index. With the index committee entitled to a lot of discretion, there will be differences.

CATL (3750 HK) will have a 6-month trading history by implementation of the index changes and is a high probability inclusion to the index. But cornerstone lock-up ends tomorrow.


Hang Seng Index (HSI) Rebalance Preview: Inclusion Candidates for Dec25

China

Sinopharm Group Co Ltd is a pharmacy distribution company. The Company also owns several pharmacy enterprise groups in different industries such as logistics, retail stores, pharmaceutical manufacturing, and chemical testing.

Price Gauge
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Sinopharm Group Co Ltd H (1099 HK)

Sinopharm Group (1099 HK) – Downgrade to a Sell

Despite expectations for improvement, growth has slowed with limited positive catalysts in the near term. Pricing pressure, competition in the...

daaimon

Sinopharm Group Co Ltd (1099.HK) - Performance May Continue to Miss Expectations

Sinopharm's disappointing results in 2024Q1-Q3 may see negative growth for the whole year, but 2025 is expected to rebound. Pain points lies in...

Xinyao (Criss) Wang

Sinopharm (1099 HK) - A Compelling Investment Case

Sinopharm is well positioned to benefit from China’s expected strong growth in healthcare spend. The investment case is further strengthened by a...

daaimon

HSI Index Rebalance Preview: Better Late Than Never?

Adding 4 stocks gets us to 80 members - a target that was to be reached by mid-2022. We list 10 potential adds where passive trackers will need to...

Brian Freitas

Hang Seng Index (HSI) Rebalance Preview: Inclusion Candidates for Dec25

We highlight 6 potential adds to the HSI in Dec. CATL is a high prob add and has a lock-up expiry tomorrow. Estimated turnover is 1.9% and trade is...

Brian Freitas

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Sinopharm Group (1099 HK) – Downgrade to a Sell

​Despite expectations for improvement, growth has slowed with limited positive catalysts in the near term. Pricing pressure, competition in the...

daaimon

Sinopharm Group Co Ltd (1099.HK) - Performance May Continue to Miss Expectations

​Sinopharm's disappointing results in 2024Q1-Q3 may see negative growth for the whole year, but 2025 is expected to rebound. Pain points lies in...

Xinyao (Criss) Wang

Sinopharm (1099 HK) - A Compelling Investment Case

Sinopharm is well positioned to benefit from China’s expected strong growth in healthcare spend. The investment case is further strengthened by a...

daaimon

HSI Index Rebalance Preview: Better Late Than Never?

Adding 4 stocks gets us to 80 members - a target that was to be reached by mid-2022. We list 10 potential adds where passive trackers will need to...

Brian Freitas

Hang Seng Index (HSI) Rebalance Preview: Inclusion Candidates for Dec25

We highlight 6 potential adds to the HSI in Dec. CATL is a high prob add and has a lock-up expiry tomorrow. Estimated turnover is 1.9% and trade is...

Brian Freitas

Despite expectations for improvement, growth has slowed with limited positive catalysts in the near term. Pricing pressure, competition in the...

Sinopharm's disappointing results in 2024Q1-Q3 may see negative growth for the whole year, but 2025 is expected to rebound. Pain points lies in...