HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Event-Driven

Yichang HEC Changjiang Pharma / Event-Driven

<ul>
<li>Sunshine Lake Pharma plans to privatize HEC CJ Pharma in the form of merger by absorption with conditions. After privatization, CJ Pharma will be delisted from the Stock Exchange.</li>
<li>Sunshine Lake Pharma's pipeline has been “disconnected” from the level of domestic biotech in recent years, and is completely lagging behind the average speed of innovative drug development in China.</li>
<li>Due to “outdated” pipeline and lack of prospects, even if CJ Pharma is merged into Sunshine Lake Pharma, valuation performance of the new entity would be disappointing in the future.</li>
</ul>


Sunshine Lake Pharma plans to privatize HEC CJ Pharma in the form of merger by absorption with conditions. After privatization, CJ Pharma will be delisted from the Stock Exchange.
Sunshine Lake Pharma's pipeline has been “disconnected” from the level of domestic biotech in recent years, and is completely lagging behind the average speed of innovative drug development in China.
Due to “outdated” pipeline and lack of prospects, even if CJ Pharma is merged into Sunshine Lake Pharma, valuation performance of the new entity would be disappointing in the future.


HEC CJ Pharma (1558.HK)'s Merger Deal with Sunshine Lake Pharma - Almost No Investment Value

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/yichang-hec-changjiang-pharmaceutical" target="_blank" data-smartkarma-citation="entities:21040:1" rel="noopener">Yichang HEC Changjiang Pharma (1558 HK)</a>'s pre-conditional privatisation from Sunshine Lake Pharma comprises scrip (0.263614 new offeror H Share per HEC CJ Pharma share) and cash (special dividend of HK$1.5).</li>
<li>The pre-condition is regulatory approvals from NDRC, MOFCOM, and SAFE. The key condition is approval by at least 75% of independent H Shareholders (&lt;10% of all independent H Shareholders rejection). </li>
<li>There is valuation uncertainty as the offeror is unlisted, and its valuation hinges on pipeline products. Nevertheless, with no shareholder close to a blocking stake, the deal should get up.   </li>
</ul>



Yichang HEC Changjiang Pharma (1558 HK)'s pre-conditional privatisation from Sunshine Lake Pharma comprises scrip (0.263614 new offeror H Share per HEC CJ Pharma share) and cash (special dividend of HK$1.5).
The pre-condition is regulatory approvals from NDRC, MOFCOM, and SAFE. The key condition is approval by at least 75% of independent H Shareholders (&lt;10% of all independent H Shareholders rejection). 
There is valuation uncertainty as the offeror is unlisted, and its valuation hinges on pipeline products. Nevertheless, with no shareholder close to a blocking stake, the deal should get up.   


HEC CJ Pharma (1558 HK): Pre-Conditional Share Exchange Offer from Largest Shareholder

Global Healthcare Analyst

Tina Banerjee

Equity Bottom-Up

Yichang HEC Changjiang Pharma / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/yichang-hec-changjiang-pharmaceutical" target="_blank" data-smartkarma-citation="entities:21040:1" rel="noopener">Yichang HEC Changjiang Pharma (1558 HK)</a> is set to benefit from the recent upsurge in respiratory illness in China. The company commands ~90% share of anti-flu drug market in China.</li>
<li>In 1H23, HEC Pharma’s revenue jumped 148% YoY to RMB3.2B, mainly due to spiking flu cases in China. A strong flu season in 4Q23, should boost H2 performance.</li>
<li>Despite a 43% rally in HEC Pharma share price over the last six months, the shares are trading at forward P/E of just 4.8x.</li>
</ul>



Yichang HEC Changjiang Pharma (1558 HK) is set to benefit from the recent upsurge in respiratory illness in China. The company commands ~90% share of anti-flu drug market in China.
In 1H23, HEC Pharma’s revenue jumped 148% YoY to RMB3.2B, mainly due to spiking flu cases in China. A strong flu season in 4Q23, should boost H2 performance.
Despite a 43% rally in HEC Pharma share price over the last six months, the shares are trading at forward P/E of just 4.8x.


HEC Pharma (1558 HK): Strong Performance to Continue as Flu Activity Is On Rise In China

<ul>
<li>
<a href="https://www.smartkarma.com/entities/yichang-hec-changjiang-pharmaceutical" target="_blank" data-smartkarma-citation="entities:21040:1" rel="noopener">Yichang HEC Changjiang Pharma (1558 HK)</a> reported a whopping 148% YoY growth in revenue to RMB3,209M in 1H23. Net profit rebounded to RMB3,209M from a loss of RMB33M in 1H22.</li>
<li>In H1 2023, revenue from Kewei, approved for first-line treatment of influenza, jumped 186% YoY to RMB2,881M, representing ~90% of total revenue, mainly due to spiking flu cases in China.</li>
<li>Recently, the company obtained approval for premixed Protamine human insulin injection and submitted marketing application for its self-developed product, Yiqibuvir for the treatment of chronic Hepatitis C in China.</li>
</ul>



Yichang HEC Changjiang Pharma (1558 HK) reported a whopping 148% YoY growth in revenue to RMB3,209M in 1H23. Net profit rebounded to RMB3,209M from a loss of RMB33M in 1H22.
In H1 2023, revenue from Kewei, approved for first-line treatment of influenza, jumped 186% YoY to RMB2,881M, representing ~90% of total revenue, mainly due to spiking flu cases in China.
Recently, the company obtained approval for premixed Protamine human insulin injection and submitted marketing application for its self-developed product, Yiqibuvir for the treatment of chronic Hepatitis C in China.


HEC Pharma (1558 HK): Robust 1H23 Performance on Flu Outbreak in China

Greatview Aseptic Packaging / Event-Driven

<ul>
<li>We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.</li>
<li>Highest spreads: <a href="https://www.smartkarma.com/entities/yichang-hec-changjiang-pharmaceutical" target="_blank" data-smartkarma-citation="entities:21040:1" rel="noopener">Yichang HEC Changjiang Pharma (1558 HK)</a>, <a href="https://www.smartkarma.com/entities/alps-logistics-co-ltd" target="_blank" data-smartkarma-citation="entities:3935:1" rel="noopener">Alps Logistics (9055 JP)</a>, <a href="https://www.smartkarma.com/entities/hollysys-automation-technologies" target="_blank" data-smartkarma-citation="entities:26078:1" rel="noopener">Hollysys Automation Technologies (HOLI US)</a>, <a href="https://www.smartkarma.com/entities/ansarada-group-ltd" target="_blank" data-smartkarma-citation="entities:30718:1" rel="noopener">Ansarada Group Ltd (AND AU)</a>, <a href="https://www.smartkarma.com/entities/southern-cross-media-group-ltd" target="_blank" data-smartkarma-citation="entities:10374:1" rel="noopener">Southern Cross Media (SXL AU)</a>. </li>
<li>Lowest spreads: <a href="https://www.smartkarma.com/entities/chilled-frozen-logistics-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:40987:1" rel="noopener">Chilled &amp; Frozen Logistics Holdings (9099 JP)</a>, <a href="https://www.smartkarma.com/entities/mma-offshore-ltd" target="_blank" data-smartkarma-citation="entities:594:1" rel="noopener">Mma Offshore (MRM AU)</a>, <a href="https://www.smartkarma.com/entities/great-eastern-holdings-ltd" target="_blank" data-smartkarma-citation="entities:13993:1" rel="noopener">Great Eastern Holdings (GE SP)</a>, <a href="https://www.smartkarma.com/entities/pact-group-holdings-ltd" target="_blank" data-smartkarma-citation="entities:692:1" rel="noopener">Pact Group Holdings (PGH AU)</a>, <a href="https://www.smartkarma.com/entities/alumina-ltd" target="_blank" data-smartkarma-citation="entities:939:1" rel="noopener">Alumina Ltd (AWC AU)</a>. </li>
</ul>


We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads: Yichang HEC Changjiang Pharma (1558 HK), Alps Logistics (9055 JP), Hollysys Automation Technologies (HOLI US), Ansarada Group Ltd (AND AU), Southern Cross Media (SXL AU). 
Lowest spreads: Chilled &amp; Frozen Logistics Holdings (9099 JP), Mma Offshore (MRM AU), Great Eastern Holdings (GE SP), Pact Group Holdings (PGH AU), Alumina Ltd (AWC AU). 


Merger Arb Mondays (13 May) - GA Pack, HEC Pharma, L'Occitane, Alps Logistics, Great Eastern

Hong Kong

YiChang HEC ChangJiang Pharmaceutical Co Ltd develops a variety of drugs.  The Company develops and sells drugs for anti-virus, metabolic diseases, cardiovascular, and more.

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Yichang HEC Changjiang Pharma (1558 HK)

HEC CJ Pharma (1558.HK)'s Merger Deal with Sunshine Lake Pharma - Almost No Investment Value

Sunshine Lake Pharma plans to privatize and merge with CJ Pharma.However, with an outdated pipeline, the new entity's valuation performance will...

Xinyao (Criss) Wang

HEC Pharma (1558 HK): Strong Performance to Continue as Flu Activity Is On Rise In China

HEC Pharma should benefit from the upsurge in respiratory illness in China. With a forward P/E of 4.8x and 14% YoY EPS growth expectation for 2024,...

Tina Banerjee

HEC Pharma (1558 HK): Robust 1H23 Performance on Flu Outbreak in China

HEC Pharma reports impressive revenue growth of 148% YoY in 1H23, driven by strong sales of Kewei for influenza treatment. The company obtained...

Tina Banerjee

Merger Arb Mondays (13 May) - GA Pack, HEC Pharma, L'Occitane, Alps Logistics, Great Eastern

This week, the highest gross spreads are HEC Pharma (58.1%), Alps Logistics (14.3%), Hollysys (12.9%), Ansarada (8.7%), Southern Cross (8.7%), QV...

Arun George

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HEC CJ Pharma (1558.HK)'s Merger Deal with Sunshine Lake Pharma - Almost No Investment Value

​Sunshine Lake Pharma plans to privatize and merge with CJ Pharma.However, with an outdated pipeline, the new entity's valuation performance will...

Xinyao (Criss) Wang

HEC CJ Pharma (1558 HK): Pre-Conditional Share Exchange Offer from Largest Shareholder

There is scrip valuation uncertainty as the offeror is unlisted, and its valuation hinges on pipeline products. Nevertheless, the deal should get...

Arun George

HEC Pharma (1558 HK): Strong Performance to Continue as Flu Activity Is On Rise In China

HEC Pharma should benefit from the upsurge in respiratory illness in China. With a forward P/E of 4.8x and 14% YoY EPS growth expectation for 2024,...

Tina Banerjee

HEC Pharma (1558 HK): Robust 1H23 Performance on Flu Outbreak in China

HEC Pharma reports impressive revenue growth of 148% YoY in 1H23, driven by strong sales of Kewei for influenza treatment. The company obtained...

Tina Banerjee

Merger Arb Mondays (13 May) - GA Pack, HEC Pharma, L'Occitane, Alps Logistics, Great Eastern

This week, the highest gross spreads are HEC Pharma (58.1%), Alps Logistics (14.3%), Hollysys (12.9%), Ansarada (8.7%), Southern Cross (8.7%), QV...

Arun George

Sunshine Lake Pharma plans to privatize and merge with CJ Pharma.However, with an outdated pipeline, the new entity's valuation performance will...