HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

Sonoscape Medical Corp / Equity Bottom-Up

<ul>
<li>Sonoscape’s 2022/23Q1 results were outstanding, but the performance growth slowed down significantly in 22Q4. We think this was just a temporary headwind.</li>
<li>Revenue of ultrasound could keep 10-15% YoY growth in the future, while the revenue growth of hard endoscopes and soft endoscopes could reach 50-100% YoY and 40-50% YoY respectively.</li>
<li>We updated our forecast based on 2022/23Q1 results. We think Sonoscape’s revenue in 2023 could be about RMB2.2 billion. Net profit margin could reach above 22% in 2023.</li>
</ul>


Sonoscape’s 2022/23Q1 results were outstanding, but the performance growth slowed down significantly in 22Q4. We think this was just a temporary headwind.
Revenue of ultrasound could keep 10-15% YoY growth in the future, while the revenue growth of hard endoscopes and soft endoscopes could reach 50-100% YoY and 40-50% YoY respectively.
We updated our forecast based on 2022/23Q1 results. We think Sonoscape’s revenue in 2023 could be about RMB2.2 billion. Net profit margin could reach above 22% in 2023.


2023 High Conviction Update: Sonoscape (300633.CH)-Profitability Will Improve as Scale Effect Emerge

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>With 1 trading day left in the review period, we forecast 10 changes for the <a href="https://www.smartkarma.com/entities/chinext-price-index" target="_blank" data-smartkarma-citation="entities:25483:1" rel="noopener">Chinext Price Index (SZ399006 INDEX)</a> and 5 changes for the ChiNext 50 Index in June.</li>
<li>Passive trackers are estimated to trade around +/-0.5 days ADV on most of the potential adds/deletes, though there are some deletes that will have over 1 day ADV to sell.</li>
<li>The potential inclusion to one or both indices have outperformed the potential deletes by a huge margin in the last month. We'd be inclined to trim positions.</li>
</ul>


With 1 trading day left in the review period, we forecast 10 changes for the Chinext Price Index (SZ399006 INDEX) and 5 changes for the ChiNext 50 Index in June.
Passive trackers are estimated to trade around +/-0.5 days ADV on most of the potential adds/deletes, though there are some deletes that will have over 1 day ADV to sell.
The potential inclusion to one or both indices have outperformed the potential deletes by a huge margin in the last month. We'd be inclined to trim positions.


ChiNext/​​ChiNext50 Index Rebalance Preview: Outperformance Maintained

<ul>
<li>Three quarters of the way through the review period, we forecast 10 changes for the <a href="https://www.smartkarma.com/entities/chinext-price-index" target="_blank" data-smartkarma-citation="entities:25483:1" rel="noopener">Chinext Price Index (SZ399006 INDEX)</a> and 5 changes for the ChiNext 50 Index in June.</li>
<li>Passive trackers will need to buy +/-0.5 days of ADV for most inclusions and exclusions from the indices. On average, the impact on the potential deletions is higher.</li>
<li>The potential adds have outperformed the potential deletes over the last six months, and there has been a sharp widening of the gap over the last few weeks.</li>
</ul>


Three quarters of the way through the review period, we forecast 10 changes for the Chinext Price Index (SZ399006 INDEX) and 5 changes for the ChiNext 50 Index in June.
Passive trackers will need to buy +/-0.5 days of ADV for most inclusions and exclusions from the indices. On average, the impact on the potential deletions is higher.
The potential adds have outperformed the potential deletes over the last six months, and there has been a sharp widening of the gap over the last few weeks.


ChiNext/​ChiNext50 Index Rebalance Preview: Overlapping Stocks & Recent Outperformance

Thematic (Sector/Industry)

<ul>
<li>China’s GDP growth target of 5% for 2023 is a "deliberate decision".Chinese authorities may have seen potential downside risks of economy and hope to restore the credibility of growth target.</li>
<li>If investors fantasize about low interest rates would continue in the future, they could be disappointed. This means that investors' strategies and mentality may need to be changed in time.</li>
<li>For China healthcare, the expansion of high-quality medical resources in grassroots markets would be a big opportunity, involving reform of State-owned Enterprise-run hospitals and increasing market penetration of medical device/TCM. </li>
</ul>


China’s GDP growth target of 5% for 2023 is a "deliberate decision".Chinese authorities may have seen potential downside risks of economy and hope to restore the credibility of growth target.
If investors fantasize about low interest rates would continue in the future, they could be disappointed. This means that investors' strategies and mentality may need to be changed in time.
For China healthcare, the expansion of high-quality medical resources in grassroots markets would be a big opportunity, involving reform of State-owned Enterprise-run hospitals and increasing market penetration of medical device/TCM. 


China's 2023 Government Work Report in 14th NPC - The Highlights and the Outlook

<ul>
<li>We are optimistic about Sonoscape's 2022 annual results, which was an important turning year. Due to policy catalyst/China reopening, Sonoscape would maintain high growth in 2023, with relatively high certainty.</li>
<li>Sonoscape has established a high moat in the field of soft endoscopes. Even if new manufacturers enter this market, they are hard to affect the market pattern in short term.</li>
<li>Although the current valuation is not cheap, based on our forecast of its business lines, there's still growth space in valuation. Under positive momentum, this stock can be traded repeatedly.</li>
</ul>


We are optimistic about Sonoscape's 2022 annual results, which was an important turning year. Due to policy catalyst/China reopening, Sonoscape would maintain high growth in 2023, with relatively high certainty.
Sonoscape has established a high moat in the field of soft endoscopes. Even if new manufacturers enter this market, they are hard to affect the market pattern in short term.
Although the current valuation is not cheap, based on our forecast of its business lines, there's still growth space in valuation. Under positive momentum, this stock can be traded repeatedly.


2023 High Conviction Update: Sonoscape Medical (300633.CH) - High Growth Is Expected to Continue

China

Sonoscape Medical Corp. manufactures medical equipment. The Company develops, produces, and sells ultrasound diagnostic systems, transducers, and other medical equipment products. Sonoscape Medical serves customers worldwide.

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Sonoscape Medical Corp (300633 CH)

2023 High Conviction Update: Sonoscape (300633.CH)-Profitability Will Improve as Scale Effect Emerge

Sonoscape would keep high growth. The Company has entered a stage where scale effect has emerged, leading to better profit performance in the...

Xinyao (Criss) Wang

ChiNext/ChiNext50 Index Rebalance Preview: Outperformance Maintained

We forecast 10 changes for the Chinext and 5 for the Chinext50. Impact is not large but these are liquid stocks that are moving. The potential adds...

Brian Freitas

ChiNext/ChiNext50 Index Rebalance Preview: Overlapping Stocks & Recent Outperformance

We forecast 10 changes to the ChiNext & 5 changes to the ChiNext50 in June. There are a few overlapping stocks & the potential adds have...

Brian Freitas

China's 2023 Government Work Report in 14th NPC - The Highlights and the Outlook

We analyzed our interpretation on China's 2023 Government Work Report in 14th NPC, including GDP growth, CPI, fiscal/monetary policy, valuation...

Xinyao (Criss) Wang

2023 High Conviction Update: Sonoscape Medical (300633.CH) - High Growth Is Expected to Continue

We're optimistic about Sonoscape's 2022 results.High growth continues in 2023.Based on our forecast, there's still growth space in valuation.Under...

Xinyao (Criss) Wang

Price Gauge

52-week Range

Market Cap (USDm)

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2023 High Conviction Update: Sonoscape (300633.CH)-Profitability Will Improve as Scale Effect Emerge

Sonoscape would keep high growth. The Company has entered a stage where scale effect has emerged, leading to better profit performance in the...

Xinyao (Criss) Wang

ChiNext/​​ChiNext50 Index Rebalance Preview: Outperformance Maintained

We forecast 10 changes for the Chinext and 5 for the Chinext50. Impact is not large but these are liquid stocks that are moving. The potential adds...

Brian Freitas

ChiNext/​ChiNext50 Index Rebalance Preview: Overlapping Stocks & Recent Outperformance

We forecast 10 changes to the ChiNext & 5 changes to the ChiNext50 in June. There are a few overlapping stocks & the potential adds have...

Brian Freitas

China's 2023 Government Work Report in 14th NPC - The Highlights and the Outlook

We analyzed our interpretation on China's 2023 Government Work Report in 14th NPC, including GDP growth, CPI, fiscal/monetary policy, valuation...

Xinyao (Criss) Wang

2023 High Conviction Update: Sonoscape Medical (300633.CH) - High Growth Is Expected to Continue

We're optimistic about Sonoscape's 2022 results.High growth continues in 2023.Based on our forecast, there's still growth space in valuation.Under...

Xinyao (Criss) Wang

ChiNext/ChiNext50 Index Rebalance Preview: Outperformance Maintained

ChiNext/ChiNext50 Index Rebalance Preview: Overlapping Stocks & Recent Outperformance