Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>The data in this insight is collated from the "shareholding disclosure" link on the HKEx website.</li>
<li>Often there is a corresponding HKEx announcement on the increase - or decrease - in the shareholding by directors. Or pledging. However, such disclosures are by no means an absolute.</li>
<li>The key stocks mentioned in this regular insight are <a href="https://www.smartkarma.com/entities/wuxi-apptec-co-ltd-bf4a1265-beef-48b6-b82d-29308426030f" target="_blank" data-smartkarma-citation="entities:27795:1" rel="noopener">WuXi AppTec (2359 HK)</a>, <a href="https://www.smartkarma.com/entities/peking-university-resources" target="_blank" data-smartkarma-citation="entities:6379:1" rel="noopener">Peking University Resources (618 HK)</a>, and <a href="https://www.smartkarma.com/entities/friendtimes-inc" target="_blank" data-smartkarma-citation="entities:28309:1" rel="noopener">FriendTimes Inc (6820 HK)</a>.</li>
</ul>


The data in this insight is collated from the "shareholding disclosure" link on the HKEx website.
Often there is a corresponding HKEx announcement on the increase - or decrease - in the shareholding by directors. Or pledging. However, such disclosures are by no means an absolute.
The key stocks mentioned in this regular insight are WuXi AppTec (2359 HK), Peking University Resources (618 HK), and FriendTimes Inc (6820 HK).


Hong Kong CEO & Director Dealings (6 Sept): WuXi AppTec, Peking University, FriendTimes

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

<ul>
<li>The market’s reaction to WuXi AppTec's 23H1 report was positive due to some improvements in performance, but we don’t think WuXi AppTec has reversed its predicament completely if look closely.</li>
<li>We deep dive the challenges/risks in macro environment faced by US/Europe. The orders WuXi AppTec received from MNCs can’t guarantee future growth momentum if the US cannot achieve "soft landing".</li>
<li>We advise investors not to be blinded by the high growth of CXO in the past since the prosperity of CXO industry may face continuous downward pressure in the future.</li>
</ul>


The market’s reaction to WuXi AppTec's 23H1 report was positive due to some improvements in performance, but we don’t think WuXi AppTec has reversed its predicament completely if look closely.
We deep dive the challenges/risks in macro environment faced by US/Europe. The orders WuXi AppTec received from MNCs can’t guarantee future growth momentum if the US cannot achieve "soft landing".
We advise investors not to be blinded by the high growth of CXO in the past since the prosperity of CXO industry may face continuous downward pressure in the future.


WuXi AppTec (2359.HK/603259.CH) 23H1 - Is It Time to Start Being Optimistic?

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

<ul><li>WuXi AppTec reported 1H23 revenue of RMB18,871mn, up 6.3% YoY, and attributable recurring net income of RMB4,761mn, up 23.7% YoY, with attributable adjusted non-IFRS net income of RMB5,095mn, up 18.5% YoY.</li><li>1H23 revenue / adjusted Non-IFRS net income accounted for 45-52% of both our full-year estimates and consensus estimates, which also fell in its average historical range.</li><li>Non-IFRS gross profit margin (GPM) improved by 3.4ppt to 41.6% while non-IFRS net profit margin increased by 2.8ppt to 27.0% in 1H23, driven by favourable currency exchange rates and continuously improved operating efficiency. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

WuXi AppTec reported 1H23 revenue of RMB18,871mn, up 6.3% YoY, and attributable recurring net income of RMB4,761mn, up 23.7% YoY, with attributable adjusted non-IFRS net income of RMB5,095mn, up 18.5% YoY.1H23 revenue / adjusted Non-IFRS net income accounted for 45-52% of both our full-year estimates and consensus estimates, which also fell in its average historical range.Non-IFRS gross profit margin (GPM) improved by 3.4ppt to 41.6% while non-IFRS net profit margin increased by 2.8ppt to 27.0% in 1H23, driven by favourable currency exchange rates and continuously improved operating efficiency. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

WuXi AppTec (603259 CH) – Impressive Margin Improvement in 1H23

<ul>
<li>It seems that Mr Market was not satisfactory with WuXi AppTec’s 2022H1 performance. If excluding COVID-19 projects (which are regarded as a one-time increment), the performance growth was not high.</li>
<li>Considering that the CXO preliminary bid winning has declined largely in the US, domestic CXO would not begin to gradually reflect the slowdown of newly added orders until Q4.</li>
<li>We are concerned about WuXi AppTec's performance in 2023. As an old generation CXO, it's hard to achieve V-shaped rebound. So, 2022 is a good time to offload the Company.</li>
</ul>


It seems that Mr Market was not satisfactory with WuXi AppTec’s 2022H1 performance. If excluding COVID-19 projects (which are regarded as a one-time increment), the performance growth was not high.
Considering that the CXO preliminary bid winning has declined largely in the US, domestic CXO would not begin to gradually reflect the slowdown of newly added orders until Q4.
We are concerned about WuXi AppTec's performance in 2023. As an old generation CXO, it's hard to achieve V-shaped rebound. So, 2022 is a good time to offload the Company.


WuXi AppTec (603259.CH/2359.HK) 2022H1 - The Concerns Behind and the Outlook

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

Cross Asset Strategy

<ul>
<li>Industrials and Consumer Staples Remain Top Overweights, Though Sentiment Fragile for Both.</li>
<li>Energy sector shows signs of a turnaround from long-term decline, whilst Financials remain unloved by China investors.</li>
<li>Real Estate allocations have hit record lows, with average holdings at just 2.93%, while Consumer Discretionary sector approaches all-time highs.</li>
</ul>


Industrials and Consumer Staples Remain Top Overweights, Though Sentiment Fragile for Both.
Energy sector shows signs of a turnaround from long-term decline, whilst Financials remain unloved by China investors.
Real Estate allocations have hit record lows, with average holdings at just 2.93%, while Consumer Discretionary sector approaches all-time highs.


China

WuXi AppTec Co., Ltd. manufactures medical products. The Company produces biological agents, antibodies, biological diagnostic reagents, and other products. WuXi AppTec also provides biological analysis, technical study, and other services.

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WuXi AppTec (2359 HK)

Hong Kong CEO & Director Dealings (6 Sept): WuXi AppTec, Peking University, FriendTimes

The data in this insight is collated from the "shareholding disclosure" link on the HKEx website. These insights also flag those companies where...

David Blennerhassett