EUR 93.44 For Business Accounts Only

Shenzhen Hepalink (æµ·ç‘žæ™®) A+H - FY2019 results snippet and valuation update

Shenzhen Hepalink is seeking an up to USD 500 million in an A+H listing.

In our previous note, we discussed that Shenzhen Hepalink is a dominant heparin supplier on a global scale but it is not as prominent in branded heparin segment. The heparin market is a mature market and will grow at a low-single digit rate. The heparin API business is more or less a commodity, just like other medical APIs. The company is trying to develop the biotech segment by investment in biotech startups with a focus on first-in-class drug candidates. The most promising drug, oregovomab, targets ovarian cancer that has not been well covered by the existing targeted therapy. The company has a long history dating back to 1998 and is mainly held by founders before its H-share listing. We think there is nothing too exciting about the company and that it should just trade at a discount to its A-shares.

In this insight, we will look at the company's snapshot FY2019 results published for its A-share listing and update our valuation given the changes of sector A-H premium and peer valuation. We also provide an update to the relative based valuation. We think consensus estimates for the company's 2020E profit by A-share brokers have room for de-rating.