HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

Gan & Lee Pharmaceuticals / Equity Bottom-Up

Gan & Lee Pharmaceuticals Co. Ltd. manufactures and distributes pharmaceutical products. The Company produces synthetic human insulins, insulin materials, insulin glargine injections, and other products. Gan & Lee Pharmaceuticals also produces medical equipment.

<ul>
<li>The performance of most TCM formula granule enterprises showed slow growth or even decline due to VBP in 2023. Although VBP will continue, it also brings opportunities for related companies. </li>
<li>Customized production, expensive upstream raw materials/production equipment, complex supply chain systems, etc. are all major reasons for the high prices of CAR-T therapy, but we see hope for changes.</li>
<li>
<a href="https://www.smartkarma.com/entities/gan-lee-pharmaceuticals-co-ltd" target="_blank" data-smartkarma-citation="entities:36237:1" rel="noopener">Gan &amp; Lee Pharmaceuticals (603087 CH)</a>’s core insulin business will continue to have decent growth based on positive VBP renewal results. It's expected that in 2024, performance would further rebound.</li>
</ul>


The performance of most TCM formula granule enterprises showed slow growth or even decline due to VBP in 2023. Although VBP will continue, it also brings opportunities for related companies. 
Customized production, expensive upstream raw materials/production equipment, complex supply chain systems, etc. are all major reasons for the high prices of CAR-T therapy, but we see hope for changes.

Gan &amp; Lee Pharmaceuticals (603087 CH)’s core insulin business will continue to have decent growth based on positive VBP renewal results. It's expected that in 2024, performance would further rebound.


China Healthcare Weekly (Apr.28)-TCM Formula Granule Outlook, Reduce CAR-T's Price, Gan & Lee Pharma

Equity Capital Markets

<ul>
<li>Sunho’s pipeline has high risk and there is a long way to go to demonstrate their final clinical value. It’s highly uncertain if Sunho would bring expected return to investors.</li>
<li>The entities involved in the process of reorganization were all related parties. Investment from Efung Anhe/Efung Ansheng sparked concern from CSRC. Sunho is required to explain whether there’s any benefit transfer.</li>
<li>Due to the lack of strong fundamentals, there is no reason for high valuation. It’s not surprising if Sunho’s valuation finally falls below HKD1.53 billion (or even below HK$1 billion).  </li>
</ul>


Sunho’s pipeline has high risk and there is a long way to go to demonstrate their final clinical value. It’s highly uncertain if Sunho would bring expected return to investors.
The entities involved in the process of reorganization were all related parties. Investment from Efung Anhe/Efung Ansheng sparked concern from CSRC. Sunho is required to explain whether there’s any benefit transfer.
Due to the lack of strong fundamentals, there is no reason for high valuation. It’s not surprising if Sunho’s valuation finally falls below HKD1.53 billion (or even below HK$1 billion).  


Pre-IPO Sunho Biologics (PHIP Updates) - Some Points Worth the Attention

Event-Driven

Beijing Tiantan Biological Products / Event-Driven

Beijing Tiantan Biological Products Corporation Limited researches, develops, and commercializes biological products.  The Company provides treatment for hepatitis and offers a line of vaccine products including hepatitis vaccines and rubella vaccines.

Beijing Tiantan Biological Products (600161 CH)

<ul>
<li>Guangming District State-owned Assets Supervision and Administration Bureau reached a cooperation agreement with China National Biotec to establish a joint venture, which will become the new controlling shareholder of Weiguang.</li>
<li>Since Tiantan is already Sinopharm’s subsidiary, there will be horizontal competition issue in the field of blood product business between Tiantan and Weiguang, mainly due to significant business overlap.</li>
<li>Some spin-offs and integrations are expected between Tiantan and Weiguang. As the reform of SOE enters a new stage, the two companies could end up very different.</li>
</ul>


Guangming District State-owned Assets Supervision and Administration Bureau reached a cooperation agreement with China National Biotec to establish a joint venture, which will become the new controlling shareholder of Weiguang.
Since Tiantan is already Sinopharm’s subsidiary, there will be horizontal competition issue in the field of blood product business between Tiantan and Weiguang, mainly due to significant business overlap.
Some spin-offs and integrations are expected between Tiantan and Weiguang. As the reform of SOE enters a new stage, the two companies could end up very different.


Tiantan (600161CH) To Acquire Weiguang (002880CH)- New King Rises in China's Blood Products Industry

Sichuan Baicha Baidao Industrial / Equity Capital Markets

Sichuan Baicha Baidao Industrial Co., Ltd. manufactures and distributes tea drink products. The Company produces seasonal tea drinks, local tea, and other products. Sichuan Baicha Baidao Industrial also offers enterprise management, supply chain management, and other services.

Sichuan Baicha Baidao Industrial (2555 HK)

<ul>
<li>Baicha Baidao’s profit model doesn’t rely on tea drink sales, but on continuous expansion of store size.However, rapid expansion brought by the franchise model has led to significant management challenges.</li>
<li>The profitability/market attractiveness of ChaPanda stores are declining, which not only reflects franchisees' concerns about future profit prospects,but also reflects the market's re-evaluation of the attractiveness of Baicha Baidao brand.</li>
<li>Although current financial performance of Baicha Baidao seems acceptable, after IPO, its performance could decline year by year, leading to a collapse in stock price/valuation if this is the case.</li>
</ul>


Baicha Baidao’s profit model doesn’t rely on tea drink sales, but on continuous expansion of store size.However, rapid expansion brought by the franchise model has led to significant management challenges.
The profitability/market attractiveness of ChaPanda stores are declining, which not only reflects franchisees' concerns about future profit prospects,but also reflects the market's re-evaluation of the attractiveness of Baicha Baidao brand.
Although current financial performance of Baicha Baidao seems acceptable, after IPO, its performance could decline year by year, leading to a collapse in stock price/valuation if this is the case.


Pre-IPO Sichuan Baicha Baidao Industrial (PHIP Updates) - Some Points Worth the Attention

RemeGen Co., Ltd. operates biotechnology businesses. The Company develops therapeutic antibody drugs such as antibody drug conjugates (ADC), antibody fusion proteins, monoclonal antibodies and double antibodies. RemeGen provides solutions autoimmune diseases, tumor diseases, and ophthalmic diseases.

<ul>
<li>Remegen’s product revenue fails to cover R&amp;D expenses and its sales profit is negative, which means that RemeGen’s cost control is disappointing, and the main problem is high selling expenses.</li>
<li>If RemeGen continues to follow the old path, breakeven will be further out of reach. In other words, we don’t think that the A-share placement will materially change the outlook.</li>
<li>Remegen’s reasonable market value is RMB12-18 billion. If above RMB18 billion, it’s recommended investors take profits in time. If below RMB12 billion, investors could buy and wait for a rebound.</li>
</ul>


Remegen’s product revenue fails to cover R&amp;D expenses and its sales profit is negative, which means that RemeGen’s cost control is disappointing, and the main problem is high selling expenses.
If RemeGen continues to follow the old path, breakeven will be further out of reach. In other words, we don’t think that the A-share placement will materially change the outlook.
Remegen’s reasonable market value is RMB12-18 billion. If above RMB18 billion, it’s recommended investors take profits in time. If below RMB12 billion, investors could buy and wait for a rebound.


Remegen (9995.HK/688331.CH) - The Placement Won’t Solve the Problem

Over 15 years' experience in both finance and healthcare, covering clinic operations, investment and equity research in both China and overseas.

Xinyao (Criss) Wang
HK/China Healthcare Analyst (ex-Fosun Pharma)

China Healthcare Weekly (Apr.28)-TCM Formula Granule Outlook, Reduce CAR-T's Price, Gan & Lee Pharma

TCM formula granule VBP brings challenge for company, but it also brings hope. There're breakthrough point of CAR-T's price decline. Gan & Lee has...

Xinyao (Criss) Wang

Pre-IPO Sunho Biologics (PHIP Updates) - Some Points Worth the Attention

Sunho's high-risk pipeline makes future return highly uncertain. Reorganization with related parties and "sudden" capital increase raised concern...

Xinyao (Criss) Wang

Tiantan (600161CH) To Acquire Weiguang (002880CH)- New King Rises in China's Blood Products Industry

The change of Weiguang's actual controller will bring about a series of restructuring.As SOE reform enters new stage, investors will have good...

Xinyao (Criss) Wang

Pre-IPO Sichuan Baicha Baidao Industrial (PHIP Updates) - Some Points Worth the Attention

Baicha Baidao's valuation/stock price has collapsed faster than we expected. This precisely indicates that the market/investors do not recognize...

Xinyao (Criss) Wang

Remegen (9995.HK/688331.CH) - The Placement Won’t Solve the Problem

Remegen's breakeven becomes out of reach due to high selling expenses. A-share placement unlikely to improve outlook. Investors advised to monitor...

Xinyao (Criss) Wang

China Healthcare Weekly (Apr.28)-TCM Formula Granule Outlook, Reduce CAR-T's Price, Gan & Lee Pharma

TCM formula granule VBP brings challenge for company, but it also brings hope. There're breakthrough point of CAR-T's price decline. Gan & Lee has...

Xinyao (Criss) Wang

Pre-IPO Sunho Biologics (PHIP Updates) - Some Points Worth the Attention

​Sunho's high-risk pipeline makes future return highly uncertain. Reorganization with related parties and "sudden" capital increase raised concern...

Xinyao (Criss) Wang

Tiantan (600161CH) To Acquire Weiguang (002880CH)- New King Rises in China's Blood Products Industry

The change of Weiguang's actual controller will bring about a series of restructuring.As SOE reform enters new stage, investors will have good...

Xinyao (Criss) Wang

Pre-IPO Sichuan Baicha Baidao Industrial (PHIP Updates) - Some Points Worth the Attention

Baicha Baidao's valuation/stock price has collapsed faster than we expected. This precisely indicates that the market/investors do not recognize...

Xinyao (Criss) Wang

Remegen (9995.HK/688331.CH) - The Placement Won’t Solve the Problem

​Remegen's breakeven becomes out of reach due to high selling expenses. A-share placement unlikely to improve outlook. Investors advised to monitor...

Xinyao (Criss) Wang

Sunho's high-risk pipeline makes future return highly uncertain. Reorganization with related parties and "sudden" capital increase raised concern...

Remegen's breakeven becomes out of reach due to high selling expenses. A-share placement unlikely to improve outlook. Investors advised to monitor...