HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

<ul>
<li>The high price of EJiao discouraged consumers, leading to increasing inventory backlog in the distribution channel and reduction in payment collection, which finally resulted in Dong-E-E-Jiao’s net loss in 2019.</li>
<li>Although the performance has showed a recovery trend since 2020,concerns on raw material shortage, low inventory turnover, single product structure, high selling expense ratio and fierce market competition still remain.</li>
<li>There is still a long way to go for the Company to get back to peak, so we are conservative about <a href="https://www.smartkarma.com/entities/dong-e-e-jiaoco-ltd-a" target="_blank" data-smartkarma-citation="entities:8470:1" rel="noopener">Dong E E Jiaoco Ltd A (000423 CH)</a>’s outlook.</li>
</ul>


The high price of EJiao discouraged consumers, leading to increasing inventory backlog in the distribution channel and reduction in payment collection, which finally resulted in Dong-E-E-Jiao’s net loss in 2019.
Although the performance has showed a recovery trend since 2020,concerns on raw material shortage, low inventory turnover, single product structure, high selling expense ratio and fierce market competition still remain.
There is still a long way to go for the Company to get back to peak, so we are conservative about Dong E E Jiaoco Ltd A (000423 CH)’s outlook.


Dong E E Jiao (000423.CH) - Could the New Chairman Turn Things Around?

Thematic (Sector/Industry)

<ul>
<li>The recent rally in TCM sector is mainly driven by new favorable policies, but it may not be sustainable. It could also squeeze out the development space of innovative drugs. </li>
<li>The concerns on TCM mainly include limited medical insurance fund, VBP on TCM, difficulties in internationalization, unclear adverse reactions and contradiction with ESG investment philosophy.</li>
<li>In China, it's not wise to go against policy.Therefore, a smart play in the short term is to “follow the policy”.We analyzed different TCM varieties to identify good investment opportunities.</li>
</ul>


The recent rally in TCM sector is mainly driven by new favorable policies, but it may not be sustainable. It could also squeeze out the development space of innovative drugs. 
The concerns on TCM mainly include limited medical insurance fund, VBP on TCM, difficulties in internationalization, unclear adverse reactions and contradiction with ESG investment philosophy.
In China, it's not wise to go against policy.Therefore, a smart play in the short term is to “follow the policy”.We analyzed different TCM varieties to identify good investment opportunities.


The Concerns and Outlook About the Recent Rally in Traditional Chinese Medicine (TCM) Sector

<ul>
<li>Last week, the 14th Five-Year Plan for the medical device industry was released, which is actually China's first state-level industrial development plan for the medical device sector.</li>
<li>The NHSA and State Administration of TCM issued the new guidelines on medical insurance to support the development of TCM from top to bottom, and various measures are being implemented.</li>
<li>The recent rally in TCM sector may not the sustainable, and our view on this sector is conservative.</li>
</ul>


Last week, the 14th Five-Year Plan for the medical device industry was released, which is actually China's first state-level industrial development plan for the medical device sector.
The NHSA and State Administration of TCM issued the new guidelines on medical insurance to support the development of TCM from top to bottom, and various measures are being implemented.
The recent rally in TCM sector may not the sustainable, and our view on this sector is conservative.


China Healthcare Weekly (Dec.31)-1st State-Level Device Policy,TCM Guideline,TCM Rally Unsustainable

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

China Yangtze Power Co, Ltd. / Event-Driven

<ul>
<li>There are 5 changes to the <a href="https://www.smartkarma.com/entities/shanghai-stock-exchange-sse-50-a-share-index" target="_blank" data-smartkarma-citation="entities:31073:1" rel="noopener">SSE50 Index (SSE50 INDEX)</a> as a part of the December rebalance. One-way turnover is 6% and the one-way trade is CNY 3.3bn.</li>
<li>There is same way flow on <a href="https://www.smartkarma.com/entities/zhangzhou-pientzehuang-pharmaceutical-co-ltd" target="_blank" data-smartkarma-citation="entities:15709:1" rel="noopener">Zhangzhou Pientzehuang Pharmaceutical Co., Ltd. (600436 CH)</a>, <a href="https://www.smartkarma.com/entities/china-telecom-corp-ltd" target="_blank" data-smartkarma-citation="entities:34045:1" rel="noopener">China Telecom (601728 CH)</a> and <a href="https://www.smartkarma.com/entities/sanan-optoelectronics-co-ltd" target="_blank" data-smartkarma-citation="entities:4436:1" rel="noopener">Sanan Optoelectronics Co (600703 CH)</a> around the time of the SSE50 inclusion.</li>
<li>With active futures contracts traded on the CFFEX, there will be cash and carry positions and the rebalancing could add to the impact on the inclusions and exclusions.</li>
</ul>


There are 5 changes to the SSE50 Index (SSE50 INDEX) as a part of the December rebalance. One-way turnover is 6% and the one-way trade is CNY 3.3bn.
There is same way flow on Zhangzhou Pientzehuang Pharmaceutical Co., Ltd. (600436 CH), China Telecom (601728 CH) and Sanan Optoelectronics Co (600703 CH) around the time of the SSE50 inclusion.
With active futures contracts traded on the CFFEX, there will be cash and carry positions and the rebalancing could add to the impact on the inclusions and exclusions.


SSE50 Index Rebalance: 5 Changes and Same Way Index Flow

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

China Conch Venture Holdings / Event-Driven

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<p><em><strong>This week in StubWorld ...</strong></em></p>
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<div class="content-highlight">
<p><a href="https://www.smartkarma.com/entities/china-conch-venture-holdings-ltd" target="_blank" data-smartkarma-citation="entities:19943:1" rel="noopener">China Conch Venture Holdings (586 HK)</a> remains highly elevated as <a href="https://www.smartkarma.com/entities/anhui-conch-cement-co-ltd" target="_blank" data-smartkarma-citation="entities:159:1" rel="noopener">Anhui Conch Cement (914 HK)</a> faces possible deletion from the FTSE China A50 Index.</p>
</div>
</div>
<div>
<p>Preceding my comments on China Conch/Anhui Conch are the weekly setup/unwind tables for Asia-Pacific Holdcos.</p>
</div>
<div>
<p>These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.</p>
</div>


This week in StubWorld ...



China Conch Venture Holdings (586 HK) remains highly elevated as Anhui Conch Cement (914 HK) faces possible deletion from the FTSE China A50 Index.



Preceding my comments on China Conch/Anhui Conch are the weekly setup/unwind tables for Asia-Pacific Holdcos.


These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.


StubWorld: China Conch Venture (586 HK) Trading Rich

China

Zhangzhou Pientzehuang Pharmaceutical Co., Ltd. manufactures and markets Chinese traditional medicines, including Pientzehuang, Pientzehuang capsules, Pientzehuang lozenge, cough syrup, and other related products.

Zhangzhou Pientzehuang Pharmaceutical Co., Ltd. (600436 CH)

Zhangzhou Pientzehuang Pharmaceutical Co., Ltd.

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Zhangzhou Pientzehuang Pharmaceutical Co., Ltd. (600436 CH)

Dong E E Jiao (000423.CH) - Could the New Chairman Turn Things Around?

The raw material (donkey skin) shortage is a big concern for Dong-E-E-Jiao's future development, together with low inventory turnover,fierce...

Xinyao (Criss) Wang

The Concerns and Outlook About the Recent Rally in Traditional Chinese Medicine (TCM) Sector

The insight mainly analyzed the logic behind the recent rally in TCM sector, the policy impact, the concerns on limited resources, VBP,...

Xinyao (Criss) Wang

China Healthcare Weekly (Dec.31)-1st State-Level Device Policy,TCM Guideline,TCM Rally Unsustainable

This insight analyzed the 14th Five-Year Plan for medical device industry, the new guideline on medical insurance to support TCM development, and...

Xinyao (Criss) Wang

SSE50 Index Rebalance: 5 Changes and Same Way Index Flow

There are 5 changes to the SSE50 Index at the Dec rebalance and there are stocks that have over 1.5 days of ADV to trade. With CFFEX traded futures...

Brian Freitas

StubWorld: China Conch Venture (586 HK) Trading Rich

Anhui Conch may be subject to FTSE China A50 Index deletion in December. Yet the market is assigning HK$15.1bn (US$1.94bn) more to China Conch's...

David Blennerhassett

Price Gauge

52-week Range

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