HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

<ul>
<li>Many people have begun to pay attention to whether there would be a second wave of COVID-19 in China. We think it is necessary to share our views.</li>
<li>The overvaluation or undervaluation of China’s core assets cannot be explained solely by classic valuation models such as PE/PB/DCF, but rather by considering the deep meaning represented by the companies.</li>
<li>Lifetech’s future growth space depend more on the performance of pacemakers and IBS, but they are facing different challenges. Therefore, we recommend short-term trade rather than long term hold.</li>
</ul>


Many people have begun to pay attention to whether there would be a second wave of COVID-19 in China. We think it is necessary to share our views.
The overvaluation or undervaluation of China’s core assets cannot be explained solely by classic valuation models such as PE/PB/DCF, but rather by considering the deep meaning represented by the companies.
Lifetech’s future growth space depend more on the performance of pacemakers and IBS, but they are facing different challenges. Therefore, we recommend short-term trade rather than long term hold.


China Healthcare Weekly (May.5)- 2nd Wave of COVID, Valuation Logic of China's Core Assets, Lifetech

Shanghai Pharmaceuticals / Equity Bottom-Up

<ul>
<li>The majority revenue of Shanghai Pharmaceuticals comes from pharmaceutical distribution business, but the pharmaceutical manufacturing business has much higher gross margin,which drives up the overall profit margin of the Company.</li>
<li>Due to VBP, profit margin is under pressure. Weak demand for COVID-19 vaccines, decreasing long-term profitability and concerns on synergistic effect of cooperation with Yunnan Baiyao cast doubt on outlook.</li>
<li>Compared with peers, the valuation of Shanghai Pharmaceuticals doesn’t show decent upside potential. High valuation expectations cannot be supported due to industry trend. Its share prices could underperform.</li>
</ul>


The majority revenue of Shanghai Pharmaceuticals comes from pharmaceutical distribution business, but the pharmaceutical manufacturing business has much higher gross margin,which drives up the overall profit margin of the Company.
Due to VBP, profit margin is under pressure. Weak demand for COVID-19 vaccines, decreasing long-term profitability and concerns on synergistic effect of cooperation with Yunnan Baiyao cast doubt on outlook.
Compared with peers, the valuation of Shanghai Pharmaceuticals doesn’t show decent upside potential. High valuation expectations cannot be supported due to industry trend. Its share prices could underperform.


Shanghai Pharmaceuticals (2607.HK)- Low Profitability Is Big Problem; Share Price Would Underperform

Beijing Tong Ren Tang Chinese Medicine / Equity Bottom-Up

Beijing Tong Ren Tang Chinese Medicine (3613 HK)

<ul>
<li>Tong Ren Tang Chinese Medicine’s performance declined in 22H1 due to the pandemic, which led to the short supply of the core products and a serious setback of production/operation.</li>
<li>The recovery of the Company’s performance in 2022H2 depends not only on the alleviation of the pandemic, but also on the sustainability of the demand for non-rigid medical products.</li>
<li>In the long run, whether the overseas sales except those in Hong Kong and the Mainland can have breakthrough is the main supporting logic for raising the valuation.</li>
</ul>


Tong Ren Tang Chinese Medicine’s performance declined in 22H1 due to the pandemic, which led to the short supply of the core products and a serious setback of production/operation.
The recovery of the Company’s performance in 2022H2 depends not only on the alleviation of the pandemic, but also on the sustainability of the demand for non-rigid medical products.
In the long run, whether the overseas sales except those in Hong Kong and the Mainland can have breakthrough is the main supporting logic for raising the valuation.


Beijing Tong Ren Tang Chinese Medicine (3613.HK) 22H1 - Performance Recovery in 22H2 Is Uncertain

Beijing Tongrentang Co A / Equity Bottom-Up

<ul>
<li>2018 was a watershed for Tongrentang. After the incident of using expired honey was exposed and the corruption scandal afterwards, Tongrentang's performance declined significantly and didn’t recover until 2021.</li>
<li>Angong Niuhuang Pill is the major performance driver and also Tongrentang’s core product. Due to the economic downturn, the price increase of Angong Niuhuang Pills could lead to inventory overstocking.</li>
<li>The high growth in 2021 may not be sustained. We lowered our forecast for 2022. Without core competitiveness and high moat, we are conservative about Tongrentang’s long-term outlook.</li>
</ul>


2018 was a watershed for Tongrentang. After the incident of using expired honey was exposed and the corruption scandal afterwards, Tongrentang's performance declined significantly and didn’t recover until 2021.
Angong Niuhuang Pill is the major performance driver and also Tongrentang’s core product. Due to the economic downturn, the price increase of Angong Niuhuang Pills could lead to inventory overstocking.
The high growth in 2021 may not be sustained. We lowered our forecast for 2022. Without core competitiveness and high moat, we are conservative about Tongrentang’s long-term outlook.


Beijing Tongrentang (600085.CH)- Neither Brand Nor Angong Niuhuang Pills Can Secure Future Prospects

Equity Capital Markets

Weimeizi (Guangdong) / Equity Capital Markets

<ul>
<li>WEIMEIZI develops the oral care market by means of large promotion and marketing so as to attract consumers, which helps Saky become one of the top brands in China.</li>
<li>However, with the layout of other long-lasting reputable brands and the entry of new brands, how to maintain the market share in fierce competition has become an important issue.</li>
<li>WEIMEIZI’s leading market position is not solid, unless it could create differentiated products and keep up with industry trends closely. </li>
</ul>


WEIMEIZI develops the oral care market by means of large promotion and marketing so as to attract consumers, which helps Saky become one of the top brands in China.
However, with the layout of other long-lasting reputable brands and the entry of new brands, how to maintain the market share in fierce competition has become an important issue.
WEIMEIZI’s leading market position is not solid, unless it could create differentiated products and keep up with industry trends closely. 


Pre-IPO Weimeizi (Guangdong) - The Market Position Is Not Solid

China

Yunnan Baiyao Group Co., Ltd. manufactures and markets traditional Chinese medicines.  The Company also operates in pharmaceutical wholesale and retail trading, empty capsules manufacturing, and hotel operation.

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

Yunnan Baiyao Group Co., (000538 CH)

China Healthcare Weekly (May.5)- 2nd Wave of COVID, Valuation Logic of China's Core Assets, Lifetech

It's time to talk about the 2nd wave of COVID in China.Investors need to understand deep meaning/valuation logic of China's core assets so as not...

Xinyao (Criss) Wang

Beijing Tong Ren Tang Chinese Medicine (3613.HK) 22H1 - Performance Recovery in 22H2 Is Uncertain

H2 performance recovery depends not only on the control of pandemic but also the sustainability of demand for non-rigid medical products.Overseas...

Xinyao (Criss) Wang

Beijing Tongrentang (600085.CH)- Neither Brand Nor Angong Niuhuang Pills Can Secure Future Prospects

Angong Niuhuang Pill is the major performance driver. Due to economic downturn, its price hike will lead to inventory overstocking. Without high...

Xinyao (Criss) Wang

Pre-IPO Weimeizi (Guangdong) - The Market Position Is Not Solid

WEIMEIZI develops oral care market via large promotion, but its market position is not solid due to fierce competition, unless it could create...

Xinyao (Criss) Wang

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

China Healthcare Weekly (May.5)- 2nd Wave of COVID, Valuation Logic of China's Core Assets, Lifetech

It's time to talk about the 2nd wave of COVID in China.Investors need to understand deep meaning/valuation logic of China's core assets so as not...

Xinyao (Criss) Wang

Shanghai Pharmaceuticals (2607.HK)- Low Profitability Is Big Problem; Share Price Would Underperform

Due to VBP, Shanghai Pharmaceuticals will face low margin. Weak COVID vaccine demand/uncertain synergistic effect of cooperation with Yunnan Baiyao...

Xinyao (Criss) Wang

Beijing Tong Ren Tang Chinese Medicine (3613.HK) 22H1 - Performance Recovery in 22H2 Is Uncertain

H2 performance recovery depends not only on the control of pandemic but also the sustainability of demand for non-rigid medical products.Overseas...

Xinyao (Criss) Wang

Beijing Tongrentang (600085.CH)- Neither Brand Nor Angong Niuhuang Pills Can Secure Future Prospects

Angong Niuhuang Pill is the major performance driver. Due to economic downturn, its price hike will lead to inventory overstocking. Without high...

Xinyao (Criss) Wang

Pre-IPO Weimeizi (Guangdong) - The Market Position Is Not Solid

WEIMEIZI develops oral care market via large promotion, but its market position is not solid due to fierce competition, unless it could create...

Xinyao (Criss) Wang