ChinaDaily Briefs

China: Simcere Pharmaceutical Group, Weihai City Commercial Bank and more

In today’s briefing:

  • Simcere Pharmaceutical IPO Initiation: A Rough Patch?
  • A Different Angle – Simcere Pharmaceutical VS Everest Medicines (01952.HK)
  • Weihai City Commercial Bank IPO Trading – Lacks Demand but Tightly Allocated

Simcere Pharmaceutical IPO Initiation: A Rough Patch?

By Arun George

Simcere Pharmaceutical Group (SIMCERE HK) is engaged in the R&D, production and commercialisation of pharmaceuticals and is primarily focused on generic pharmaceuticals. The products are focused on three main therapeutic areas which are oncology (including cell therapy), central nervous system diseases and autoimmune diseases. Simcere will shortly launch a Hong Kong IPO to raise $500 million, according to press reports.  

The timing of the IPO is not ideal as Simcere is coming off a weak 1H20. However, for investors willing to look past the 2020 results, Simcere is putting in place the right measures to ensure that the 1H20 was an exception rather than the rule. 

A Different Angle – Simcere Pharmaceutical VS Everest Medicines (01952.HK)

By Xinyao (Criss) Wang

Everest Medicines was listed in Hong Kong stock market on October 9, 2020 and closed at HK$72.75 (up 32.27% on the first day) . From the establishment of the Company to IPO, Everest Medicines only took 39 months. To some extent, the listing of Everest Medicines means that the license-in business model once again came to the center of the capital world (one precedent was Zai Lab). Another traditional generic pharmaceutical company, Simcere Pharmaceutical, also plans to IPO in Hong Kong in the near future. Simcere is famous for its sales capacity and is actively seeking transformation in recent years. It is also the epitome of a large number of traditional generic pharmaceutical enterprises in China. At this moment, it is still too early to tell whether the old brand traditional pharmaceutical enterprises can revive or which kind of business model can win the future market. 

Weihai City Commercial Bank IPO Trading – Lacks Demand but Tightly Allocated

By Sumeet Singh

Weihai City Commercial Bank (WECCBZ CH) (WCCB) raised around US$370 via its Hong Kong listing. 

WCCB is the third largest city commercial bank headquartered in Shandong Province, in terms of total assets, deposits and loans, as of Jun 2019. It is headquartered in Weihai City in Shandong Province. Its principal business includes corporate banking, retail banking and financial markets.

Over FY17-19, WCCB’s loans grew at 17.9% CAGR, while total income growth, at 12.5% CAGR, and pre-provision operating profit expanded at 18.8% CAGR. While WCCB has registered decent asset and earnings growth, the bank seems to be in the middle of a makeover, with investment book falling and loan book growing, deposit mix shifting etc. 

I looked at some of the above points in my previous note, links to which are below. In this note, I’ll talk about the subscription levels and provide a table with implied valuation at different share price levels.

Our previous coverage of the IPO:

Before it’s here, it’s on Smartkarma