In today’s briefing:
- WuXi AppTec (2359 HK) Placement: Strong Momentum & Index Flows
- Wuxi AppTec Placement – Momentum Is Very Strong, Though It Is a Bit Opportunistic
- Asian Equity: Changes to Model Portfolio: Korea, HK/CN Overweight. India Neutral; ASEAN Underweight
- Eastenova (东方妍美) Pre-IPO: Recalibration of Potentials
- Pre-IPO Ab&B Bio-Tech (PHIP Updates) – Some Points Worth the Attention
WuXi AppTec (2359 HK) Placement: Strong Momentum & Index Flows
- WuXi AppTec (2359 HK) is looking to raise US$650m at a price range of HK$104.16-106.4/share, a 5-7% discount from last close.
- There will be passive buying from global index trackers around the time of settlement of the placement shares. Then there will be some Hang Seng Index buying in August.
- Short interest in WuXi AppTec (2359 HK) has spiked and some shorts could cover into the placement. The AH premium could move higher following the placement.
Wuxi AppTec Placement – Momentum Is Very Strong, Though It Is a Bit Opportunistic
- WuXi AppTec (2359 HK) aims to raise around US$650m via its H-share placement.
- The stock has been on a roll this year and recently announced strong earnings as well. Although it’s now trading at its 52-week highs.
- In this note, we will talk about the placement and run the deal through our ECM framework.
Asian Equity: Changes to Model Portfolio: Korea, HK/CN Overweight. India Neutral; ASEAN Underweight
- Since inception on May 15, our Model Portfolio (up 6.2%) underperformed the MSCI Asia-ex-Japan index (up 7.87%) due to underperforming stock picks in India, ASEAN and China consumer proxies.
- The main themes: China’s changing consumption and investment patterns, Korea’s improving corporate governance, continuing global infrastructure investments and India’s earnings disappointment. Korea, HK/China remain overweight; India is downgraded to Neutral.
- We exclude Meituan, Titan, Infosys, Bharat Dynamics, Krafton. We include Laopu Gold, Lonking Holdings, China Hongqiao, AIA and Hyundai Engineering and Construction. We are now Neutral Industrials and Underweight Technology.
Eastenova (东方妍美) Pre-IPO: Recalibration of Potentials
- Eastenova, a China-based regenerative medicine specialist, is looking to raise at least US$100 million via a Hong Kong listing. The sole bookrunner is CCBI.
- In this note, we take a look at the company’s core product, XH301.
- Our research suggests that recalibration of the company’s potential is necessary given the intense competition and market deceleration.
Pre-IPO Ab&B Bio-Tech (PHIP Updates) – Some Points Worth the Attention
- Quadrivalent subunit influenza vaccine has been approved for market launch, but performance deteriorated due to product returns and provision for impairment of inventories.Fierce competition has intensified the pressure on profits.
- Core founding shareholders have no background in vaccine R&D.Ab&B lags behind in terms of R&D capabilities/forward-looking vision, leading to insufficient depth of pipeline layout and a decline in future competitiveness.
- After Series B financing, post-money valuation reached RMB4.2 billion. We think Ab&B Bio-Tech (ABB HK)’s valuation should be lower than CanSino, but would be higher than AIM Vaccine (6660 HK).
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