HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

<ul>
<li>CanSino’s performance declined in 22H1 due to decreased demand of COVID-19 vaccine. Since we have analyzed our concerns on performance in prior insight, there should be psychological expectations for the decline.</li>
<li>The COVID-19 vaccine business brings CanSino rich cash flow and helps it establish commercial team. Together with MCV2/MCV4/mRNA/PCV13i, it's too early to be completely bearish on CanSino.</li>
<li>The market has exaggerated the impact of performance decline of COVID-19 vaccine on CanSino. Although 2022 is a difficult year, it is a good time to bottom fish this stock.</li>
</ul>


CanSino’s performance declined in 22H1 due to decreased demand of COVID-19 vaccine. Since we have analyzed our concerns on performance in prior insight, there should be psychological expectations for the decline.
The COVID-19 vaccine business brings CanSino rich cash flow and helps it establish commercial team. Together with MCV2/MCV4/mRNA/PCV13i, it's too early to be completely bearish on CanSino.
The market has exaggerated the impact of performance decline of COVID-19 vaccine on CanSino. Although 2022 is a difficult year, it is a good time to bottom fish this stock.


CanSino Biologics (6185.HK/688185.CH) 2022H1 - It's Too Early to Be Completely Bearish on CanSino

<ul>
<li>We update our forecast on CanSino’s performance in 2022, which could be much lower than that in 2021 due to the concerns on commercialization outlook of COVID-19 vaccine and MCV2/MCV4.</li>
<li>However, due to strong R&amp;D and technology platforms, the value of CanSino's pipeline is higher and its products could become the ceiling of pricing power for other homogeneous competing products.</li>
<li>We still think CanSino has investment value in long term despite the headwinds in short term.The market value by May 6 of HK$18.1 billion (PE/TTM at 7.22) is also attractive.</li>
</ul>


We update our forecast on CanSino’s performance in 2022, which could be much lower than that in 2021 due to the concerns on commercialization outlook of COVID-19 vaccine and MCV2/MCV4.
However, due to strong R&amp;D and technology platforms, the value of CanSino's pipeline is higher and its products could become the ceiling of pricing power for other homogeneous competing products.
We still think CanSino has investment value in long term despite the headwinds in short term.The market value by May 6 of HK$18.1 billion (PE/TTM at 7.22) is also attractive.


CanSino Biologics (688185.CH/6185.HK) -Difficulties in 2022 Cannot Mask Long-Term Investment Value

Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

Thematic (Sector/Industry)

<ul>
<li>Allocations in Biotechnology stocks have taken a severe drop among active China A-Share investors.  </li>
<li>From a high of 4% in July of 2020, average fund weights have fallen to just 1.14% and average underweights have plunged towards their lowest level on record.</li>
<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 led the declines, as sentiment towards the China A-Share Biotechnology sector looks fragile.</li>
</ul>


Allocations in Biotechnology stocks have taken a severe drop among active China A-Share investors.  
From a high of 4% in July of 2020, average fund weights have fallen to just 1.14% and average underweights have plunged towards their lowest level on record.

Wuxi Biologics (2269 HK) has led the declines, as sentiment towards the China A-Share Biotechnology sector looks fragile.


Chongqing Zhifei Biological Products / Equity Bottom-Up

<ul>
<li>Under the current policy in China, any minor changes to vaccine doses require a series of clinical data support and registration changes. So, WHO’s recommendation won’t affect Zhifei’s short-term performance.</li>
<li>The increasing domestic competing HPV vaccines in the future would be a big threat to Zhifei’s agency business. Its self-developed products may not be strong enough to compensate. </li>
<li>The performance in 2022 is expected to be solid before real challenge comes in 2024. The valuation logic and outlook won’t be brighten unless there’s new breakthrough in agency business.</li>
</ul>


Under the current policy in China, any minor changes to vaccine doses require a series of clinical data support and registration changes. So, WHO’s recommendation won’t affect Zhifei’s short-term performance.
The increasing domestic competing HPV vaccines in the future would be a big threat to Zhifei’s agency business. Its self-developed products may not be strong enough to compensate. 
The performance in 2022 is expected to be solid before real challenge comes in 2024. The valuation logic and outlook won’t be brighten unless there’s new breakthrough in agency business.


Chongqing Zhifei Biological Products (300122.CH) - WHO's One-Dose HPV Vaccine Regimen & The Outlook

<ul>
<li>The main performance contributor in 2021 was CanSino’s COVID-19 vaccine.However, the high vaccination rates, new alternatives (e.g. oral COVID-19 pills) and concerns on capacity make the future sales highly uncertain.</li>
<li>The commercialization performance of MCV2 and MCV4 would largely determine when CanSino could truly shift to relying on conventional vaccine business rather than COVID-19 vaccine to contribute performance.</li>
<li>Objectively speaking, CanSino’s pipeline, R&amp;D capability and technology platforms do have advantages and investment value.</li>
</ul>


The main performance contributor in 2021 was CanSino’s COVID-19 vaccine.However, the high vaccination rates, new alternatives (e.g. oral COVID-19 pills) and concerns on capacity make the future sales highly uncertain.
The commercialization performance of MCV2 and MCV4 would largely determine when CanSino could truly shift to relying on conventional vaccine business rather than COVID-19 vaccine to contribute performance.
Objectively speaking, CanSino’s pipeline, R&amp;D capability and technology platforms do have advantages and investment value.


CanSino Biologics (6185.HK/688185.CH) - Still Have Investment Value

China

Walvax Biotechnology Company Limited develops, manufactures and sells bio-pharmaceutical vaccination products.  The Company's products include haemophilus influenzae type b conjugate vaccine and meningococcal group A,C bivalent polysaccharide conjugate vaccine.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Walvax Biotechnology Co A (300142 CH)

CanSino Biologics (6185.HK/688185.CH) 2022H1 - It's Too Early to Be Completely Bearish on CanSino

The market has exaggerated the impact of performance decline of COVID-19 vaccine on CanSino. Although 2022 is a difficult year, considering MCV2...

Xinyao (Criss) Wang

CanSino Biologics (688185.CH/6185.HK) -Difficulties in 2022 Cannot Mask Long-Term Investment Value

2022 will be difficult for CanSino. We lowered performance forecast.But due to strong R&D and technology platforms, the value of CanSino's pipeline...

Xinyao (Criss) Wang

China A-Shares: Biotechnology Exit

Allocations in Biotechnology stocks have taken a severe drop among active China A-Share investors. From a high of 4% in July of 2020, average fund...

Steven Holden

Chongqing Zhifei Biological Products (300122.CH) - WHO's One-Dose HPV Vaccine Regimen & The Outlook

WHO’s recommendation on HPV vaccines is not the biggest risk of Zhifei and won't affect short-term performance, but the valuation logic...

Xinyao (Criss) Wang

CanSino Biologics (6185.HK/688185.CH) - Still Have Investment Value

We analyzed our concerns on the uncertain outlook of COVID-19 vaccine and MCV2/MCV4 commercialization performance.But CanSino still has investment...

Xinyao (Criss) Wang

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)