HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

<ul>
<li>Li Ge has begun increasing his holdings, but we’re not sure whether this move is really confident about the prospects of WuXi Bio, or another buy low sell high/capital operation.</li>
<li>The actual situation of WuXi Bio is not necessarily optimistic. Due to geopolitical risks, WuXi Bio has to start striving for more domestic orders. However, price reduction seems inevitable.</li>
<li>Although WuXi Bio released optimistic expectations for 2024 project number/outlook, there may be another announcement of lower-than-expected performance in the future,which would be a devastating blow to investors’ confidence/management's credibility.</li>
</ul>


Li Ge has begun increasing his holdings, but we’re not sure whether this move is really confident about the prospects of WuXi Bio, or another buy low sell high/capital operation.
The actual situation of WuXi Bio is not necessarily optimistic. Due to geopolitical risks, WuXi Bio has to start striving for more domestic orders. However, price reduction seems inevitable.
Although WuXi Bio released optimistic expectations for 2024 project number/outlook, there may be another announcement of lower-than-expected performance in the future,which would be a devastating blow to investors’ confidence/management's credibility.


Wuxi Biologics (2269.HK) - The Latest Updates Related to 2024 Performance Worth the Attention

<ul>
<li>WuXi Bio’s profit was disappointing.The 41 new orders added last December were small orders, which cannot contribute decent revenue/profits.The goal of gross margin to reach 45% by 2026 seems challenging.</li>
<li>The management has become more cautious in its guidance for 2024. 2024H1’s performance could be disappointing. The key is to see whether the performance in 2024 full-year would meet expectations.</li>
<li>Due to BIOSECURE Act, foreign CXOs are planning to seize WuXi Bio’s market share. We are not sure whether Europe (the US’s ally), will follow suit and enact similar legislation.</li>
</ul>


WuXi Bio’s profit was disappointing.The 41 new orders added last December were small orders, which cannot contribute decent revenue/profits.The goal of gross margin to reach 45% by 2026 seems challenging.
The management has become more cautious in its guidance for 2024. 2024H1’s performance could be disappointing. The key is to see whether the performance in 2024 full-year would meet expectations.
Due to BIOSECURE Act, foreign CXOs are planning to seize WuXi Bio’s market share. We are not sure whether Europe (the US’s ally), will follow suit and enact similar legislation.


Wuxi Biologics (2269.HK) - The Crisis Is Not Over

<ul>
<li>WuXi Bio’s optimism about new orders failed to generated expected surge in its stock price. Many investors raised great doubts about the credibility and professionalism in communication of WuXi Bio.</li>
<li>It’s easy/cost-effective for WuXi Bio to “adjust” order number. However, it’s more difficult to inflate revenue/cash flow. We have to wait for future financial results to know the real situation.</li>
<li>XBI is essentially “a bond”.Recent surge of XBI is driven by the expectations of Fed's rate cut + US soft landing, rather than virtual improvement of external environment.Much remains unclear.  </li>
</ul>


WuXi Bio’s optimism about new orders failed to generated expected surge in its stock price. Many investors raised great doubts about the credibility and professionalism in communication of WuXi Bio.
It’s easy/cost-effective for WuXi Bio to “adjust” order number. However, it’s more difficult to inflate revenue/cash flow. We have to wait for future financial results to know the real situation.
XBI is essentially “a bond”.Recent surge of XBI is driven by the expectations of Fed's rate cut + US soft landing, rather than virtual improvement of external environment.Much remains unclear.  


Wuxi Biologics (2269.HK) - Dramatic Changes in Management Forecasts Fail to Bring Back Confidence

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

Event-Driven

<ul>
<li>With a few weeks to go in the review period, <a href="https://www.smartkarma.com/entities/cgn-power-co-ltd-h" target="_blank" data-smartkarma-citation="entities:58:1" rel="noopener">CGN Power (1816 HK)</a> and <a href="https://www.smartkarma.com/entities/yankuang-energy-group" target="_blank" data-smartkarma-citation="entities:384:1" rel="noopener">Yankuang Energy Group (1171 HK)</a> could be added to the ETF in March.</li>
<li>
<a href="https://www.smartkarma.com/entities/china-resources-beer-holdings" target="_blank" data-smartkarma-citation="entities:399:1" rel="noopener">China Resources Beer Holdings (291 HK)</a> and <a href="https://www.smartkarma.com/entities/wuxi-apptec" target="_blank" data-smartkarma-citation="entities:23679:1" rel="noopener">Wuxi Biologics (2269 HK)</a> are potential deletions while there is another stock close to deletion zone.</li>
<li>There are a lot of shorts on <a href="https://www.smartkarma.com/entities/yankuang-energy-group" target="_blank" data-smartkarma-citation="entities:384:1" rel="noopener">Yankuang Energy</a> in terms of days of ADV and as a percentage of float while short interest on the other stocks is lower.</li>
</ul>


With a few weeks to go in the review period, CGN Power (1816 HK) and Yankuang Energy Group (1171 HK) could be added to the ETF in March.

China Resources Beer Holdings (291 HK) and Wuxi Biologics (2269 HK) are potential deletions while there is another stock close to deletion zone.
There are a lot of shorts on Yankuang Energy in terms of days of ADV and as a percentage of float while short interest on the other stocks is lower.


FXI Rebalance Preview: Two Potential Changes in March

<ul>
<li>According to WuXi Bio’s management, the Company’s growth in 23H1 would be challenging. That is to say, investors don’t need to expect too much from the semi-annual report.</li>
<li>Based on "hedge logic" of CXO, AD drugs cannot bring about the prosperity of entire CXO industry as COVID-19 vaccines/drugs did.But WuXi Bio would be beneficiary if receiving large orders.</li>
<li>We are not sure where the bottom of share price is, because shareholders could continue to reduce their holdings and CXO’s valuation has not reached the inflection point.</li>
</ul>


According to WuXi Bio’s management, the Company’s growth in 23H1 would be challenging. That is to say, investors don’t need to expect too much from the semi-annual report.
Based on "hedge logic" of CXO, AD drugs cannot bring about the prosperity of entire CXO industry as COVID-19 vaccines/drugs did.But WuXi Bio would be beneficiary if receiving large orders.
We are not sure where the bottom of share price is, because shareholders could continue to reduce their holdings and CXO’s valuation has not reached the inflection point.


Wuxi Biologics (2269.HK) - Some New Business Updates and the Outlook

China

WuXi Biologics (Cayman) Inc. is a leading open-access R&D capability and technology platform company serving the pharmaceutical, biotechnology, and medical device industries, with operations in China, U.S., and Iceland.  We provide a broad and integrated portfolio of laboratory and manufacturing services throughout the drug and medical device R&D process.  Our services are designed to help our global partners in shortening the cycle and lowering the cost of drug and medical device R&D through cost-effective and efficient solutions. 

Wuxi Biologics (2269 HK)