HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

<ul>
<li>WuXi XDC remains our top pick in China healthcare. We're optimistic about its share price performance. Cansino is stronger than imagined, and we recommend investors to be patient with it.</li>
<li>The future competitive landscape of GLP-1s would present very different situation from traditional drugs. Innovent’s Mazdutide could be a "dark horse" if the head-to-head trial against Semaglutide is successful.</li>
<li>For GLP-1s, it will be difficult to shake the first-mover position of the first two giants (Semaglutide and Tirzepatide) unless latecomers are able to show higher marginal benefits.</li>
</ul>


WuXi XDC remains our top pick in China healthcare. We're optimistic about its share price performance. Cansino is stronger than imagined, and we recommend investors to be patient with it.
The future competitive landscape of GLP-1s would present very different situation from traditional drugs. Innovent’s Mazdutide could be a "dark horse" if the head-to-head trial against Semaglutide is successful.
For GLP-1s, it will be difficult to shake the first-mover position of the first two giants (Semaglutide and Tirzepatide) unless latecomers are able to show higher marginal benefits.


China Healthcare Weekly (Jan.5) - WuXi XDC, GLP-1s New Game Rule, Innovent, Cansino, A-Share Outlook

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>
<a href="https://www.smartkarma.com/entities/posco-dx-co-ltd" target="_blank" data-smartkarma-citation="entities:5198:1" rel="noopener">Posco DX (022100 KS)</a> continues to drop following its section transfer from the KOSDAQ market to the KOSPI market. Short interest in the stock nearly halved in December.</li>
<li>There were big net inflows to China ETFs with creations in <a href="https://www.smartkarma.com/entities/shanghai-shenzhen-csi-300-inde" target="_blank" data-smartkarma-citation="entities:22906:1" rel="noopener">CSI 300 Index</a> ETFs and redemptions in ETFs tracking the CSI 500 Index and CSI 1000 Index.</li>
<li>Creations continued in the <a href="https://www.smartkarma.com/entities/ishares-msci-emerging-markets-223f5da3-7054-4e4f-bc55-b7f0852c2581" target="_blank" data-smartkarma-citation="entities:31998:1" rel="noopener">iShares Emerging Markets ex China (EMXC US)</a> ETF with units outstanding reaching a new high.</li>
</ul>



Posco DX (022100 KS) continues to drop following its section transfer from the KOSDAQ market to the KOSPI market. Short interest in the stock nearly halved in December.
There were big net inflows to China ETFs with creations in CSI 300 Index ETFs and redemptions in ETFs tracking the CSI 500 Index and CSI 1000 Index.
Creations continued in the iShares Emerging Markets ex China (EMXC US) ETF with units outstanding reaching a new high.


Index Rebalance & ETF Flow Recap: HSCEI, HSCI, KRX New Deal, NIFTY50, NEXT50, CNXBANK

<ul>
<li>We see 30 potential adds (including plenty of new listings) and 28 potential deletes (on market cap and liquidity) for the Hang Seng Composite Index in March.</li>
<li>We expect 26 stocks to be added to Southbound Stock Connect following the rebalance while 25 stocks could be deleted from the trading link and become Sell-only.</li>
<li>There are stocks that have a very high percentage of holdings via Stock Connect and there could be some unwinding prior to the stocks becoming Sell-only.</li>
</ul>


We see 30 potential adds (including plenty of new listings) and 28 potential deletes (on market cap and liquidity) for the Hang Seng Composite Index in March.
We expect 26 stocks to be added to Southbound Stock Connect following the rebalance while 25 stocks could be deleted from the trading link and become Sell-only.
There are stocks that have a very high percentage of holdings via Stock Connect and there could be some unwinding prior to the stocks becoming Sell-only.


HSCI Index Rebalance Preview and Stock Connect: Potential Changes in March

Gracell Biotechnologies Inc / Equity Bottom-Up

<ul>
<li>Ministry of Finance and National Health Commission issued new policy strictly prohibiting public hospitals from borrowing to purchase medical equipment, which will change the investment logic of medical device sector.</li>
<li>“PD-1+ADC” is expected to replace “PD-1+chemotherapy” as the first-line standard therapy. This will be a huge market. So, good story of ADC CDMO (such as WuXi XDC) would continue.</li>
<li>The inspiration that AstraZeneca's acquisition of Gracell brings to investors is IPO isn’t the only way for exit.Being acquired is also good, which will become more important in the future.</li>
</ul>


Ministry of Finance and National Health Commission issued new policy strictly prohibiting public hospitals from borrowing to purchase medical equipment, which will change the investment logic of medical device sector.
“PD-1+ADC” is expected to replace “PD-1+chemotherapy” as the first-line standard therapy. This will be a huge market. So, good story of ADC CDMO (such as WuXi XDC) would continue.
The inspiration that AstraZeneca's acquisition of Gracell brings to investors is IPO isn’t the only way for exit.Being acquired is also good, which will become more important in the future.


China Healthcare Weekly (Dec.31)-New Medical Device Policy, AstraZeneca to Acquire Gracell, PD-1+ADC

Equity Capital Markets

<ul>
<li>WuXi XDC's shares surged since IPO. Obviously, ADC industry is in a "honeymoon period". The market is optimistic about ADC due to high certainty and growth visibility in short term.</li>
<li>Pharmaceutical companies believe this platform would produce blockbuster products continuously. However, if there’s any “persuasive event” to change optimistic expectations on ADC, it's time for investors to reconsider WuXi XDC.</li>
<li>“Positive sentiment + non-falsifiable short-term logic” would indeed push WuXi XDC's shares to a new high. As long as sales of major ADCs are in line with expectations, party continues.</li>
</ul>


WuXi XDC's shares surged since IPO. Obviously, ADC industry is in a "honeymoon period". The market is optimistic about ADC due to high certainty and growth visibility in short term.
Pharmaceutical companies believe this platform would produce blockbuster products continuously. However, if there’s any “persuasive event” to change optimistic expectations on ADC, it's time for investors to reconsider WuXi XDC.
“Positive sentiment + non-falsifiable short-term logic” would indeed push WuXi XDC's shares to a new high. As long as sales of major ADCs are in line with expectations, party continues.


WuXi XDC (2268.HK) - How Long Will the Rally Last?

China

WuXi XDC is a leading global Contract Research, Development, and Manufacturing Organization (CRDMO) specializing in antibody-drug conjugates (ADCs) and other bioconjugates. The company offers integrated, end-to-end services for the discovery, process development, and GMP manufacturing of bioconjugates, monoclonal antibody intermediates, and payload-linkers. WuXi XDC was founded in 2013 and is headquartered in Wuxi, China.

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WuXi XDC (2268 HK)

Index Rebalance & ETF Flow Recap: HSCEI, HSCI, KRX New Deal, NIFTY50, NEXT50, CNXBANK

This recap highlights Insights covering Asian index rebalances (announcements/ forecasts/ IPO Fast Entry/ M&A driven changes). We also highlight...

Brian Freitas

HSCI Index Rebalance Preview and Stock Connect: Potential Changes in March

There could be nearly 58 adds/deletes for the HSCI in September. That will trigger changes to the Southbound Stock Connect list and increase flows...

Brian Freitas

China Healthcare Weekly (Dec.31)-New Medical Device Policy, AstraZeneca to Acquire Gracell, PD-1+ADC

As new policy prohibits public hospitals from borrowing to purchase medical device, investment logic changes. AZ-Gracell deal has epoch-making...

Xinyao (Criss) Wang

WuXi XDC (2268.HK) - How Long Will the Rally Last?

Last Friday, WuXi XDC's share price hit new high, and that is just the beginning. AbbVie pays US$10B to acquire ImmunoGen indicates that ADC...

Xinyao (Criss) Wang

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

China Healthcare Weekly (Jan.5) - WuXi XDC, GLP-1s New Game Rule, Innovent, Cansino, A-Share Outlook

WuXi XDC remains our top pick.We're optimistic about its share price.Game rule of GLP-1 will be different from traditional drugs.Investors should...

Xinyao (Criss) Wang

Index Rebalance & ETF Flow Recap: HSCEI, HSCI, KRX New Deal, NIFTY50, NEXT50, CNXBANK

This recap highlights Insights covering Asian index rebalances (announcements/ forecasts/ IPO Fast Entry/ M&A driven changes). We also highlight...

Brian Freitas

HSCI Index Rebalance Preview and Stock Connect: Potential Changes in March

There could be nearly 58 adds/deletes for the HSCI in September. That will trigger changes to the Southbound Stock Connect list and increase flows...

Brian Freitas

China Healthcare Weekly (Dec.31)-New Medical Device Policy, AstraZeneca to Acquire Gracell, PD-1+ADC

As new policy prohibits public hospitals from borrowing to purchase medical device, investment logic changes. AZ-Gracell deal has epoch-making...

Xinyao (Criss) Wang

WuXi XDC (2268.HK) - How Long Will the Rally Last?

Last Friday, WuXi XDC's share price hit new high, and that is just the beginning. AbbVie pays US$10B to acquire ImmunoGen indicates that ADC...

Xinyao (Criss) Wang