|Bid||0.0000 x 0|
|Ask||0.0000 x 0|
|Day's Range||1.1300 - 1.1800|
|52 Week Range||1.1300 - 2.0000|
|Beta (5Y Monthly)||0.81|
|PE Ratio (TTM)||35.76|
|Forward Dividend & Yield||0.01 (0.56%)|
|Ex-Dividend Date||Dec 11, 2019|
|1y Target Est||N/A|
(Bloomberg Opinion) -- The national security law China imposed on Hong Kong this week will damage civil liberties with long jail sentences and grant immunity to Chinese agents working in the territory. For investors who depend on the city as a financial center, though, there may be an extra sting in the tail.The law could increase self-censorship by Hong Kong’s analysts and economists, and damage the credibility of research reports, the Financial Times reported this week. The need to maintain relationships with mainland clients has influenced coverage in the past, but many fear the new law will exacerbate this trend.It’s a bit late to be worrying about that, though. Self-censorship isn’t just a matter of avoiding gratuitous digs and glib phrases. If you look at the ratings given by equity analysts in recent years, it seems to include portraying companies with strong mainland connections as better investments than they actually are.Take the 50 companies on the Hang Seng Index. You can easily break them into three groups: 15 Chinese state-owned enterprises, or SOEs, such as Bank of China Ltd. and PetroChina Ltd.; 13 civilian-controlled mainland Chinese businesses, or COEs, such as Tencent Ltd. and Sino Biopharmaceutical Ltd.; and 22 other, mostly locally controlled stocks, such as HSBC Holdings Plc, CK Hutchison Holdings Ltd. and AIA Group Ltd(1). Then look at the extent to which analysts’ consensus target prices have exceeded actual stock prices in recent years. SOEs get the most favorable treatment, with target prices exceeding actual prices by an average of 24% since the start of 2016, compared to 16% for the COEs and 13% for non-mainland companies.It’s not just in Hong Kong that brokers’ target prices tend to run higher than the actual market — there’s a reason they’re called sell-side analysts. China is still an emerging market, too, so it’s not impossible that its stocks simply have more upside than those operating out of a mature economy such as Hong Kong. So perhaps the reason state-owned enterprises get a target price premium over local companies is simply that they’re better investments that will deliver higher returns to investors?If only. Thanks to booming tech and biotech stocks and the huge run-up in prices during 2017, civilian-owned Chinese companies did achieve pretty stunning average total returns of 31% over the past four-and-a-half years. SOEs, however, averaged a measly 1.9%, far less than the 6.1% achieved by the non-mainland stocks.It’s not totally irrational that possessing a wealthy patron should be seen as an advantage for some investments. The Chinese state tends to put its thumb heavily on the scales in favor of its own organs, with diminishing benefits the further you get from the commanding heights of the economy, as my colleague Shuli Ren has written.In particular, it’s logical for credit analysts to give state-owned enterprises a better rating than those that can’t count on the backing of the Chinese government to bail them out. Even there, you’ve not been paying attention if you think the interests of private bondholders are going to be treated equally with those of better-connected investors.Still, when looking at the equity market, the proof should be in the pudding. If analysts predict a stock will consistently outperform — as they tend to do in relation to SOEs — then it should do that. If not, they’re either bad at their jobs or misleading their clients.There are many things to worry about in Hong Kong’s new national security law. The integrity of equity research is probably not one of them. Sell-side brokers themselves gave that away long ago.(1) We've equal-weighted each of these baskets of stocks so that a few stocks with huge market caps like Tencent, HSBC or China Construction Bank don't skew the overall result.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.David Fickling is a Bloomberg Opinion columnist covering commodities, as well as industrial and consumer companies. He has been a reporter for Bloomberg News, Dow Jones, the Wall Street Journal, the Financial Times and the Guardian.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Today, we'll introduce the concept of the P/E ratio for those who are learning about investing. We'll look at Sino...
Chinese cancer drugs developer Akeso is banking on a marketing tie-up with pharmaceutical major Sino Biopharmaceutical to catch up with competitors after a record-setting initial stock offering in Hong Kong.The firm aims to apply by June for approval to sell its drug candidate for classical Hodgkin's lymphoma patients, who either did not respond to treatments or relapsed after at least two treatments. Rivals Innovent Biologics and Beigene started selling their blood cancer drugs in late 2018 and late 2019, respectively.Michelle Xia Yu, co-founder and CEO of Zhongshan, Guangdong-based cancer drugs developer Akeso. Photo: Handout alt=Michelle Xia Yu, co-founder and CEO of Zhongshan, Guangdong-based cancer drugs developer Akeso. Photo: HandoutThe move could enhance the company's appeal among investors who have rushed to participate in its HK$2.6 billion (US$335 million) initial stock offering last week. The IPO has locked up HK$166.5 billion of funds from retail investors, according to a stock exchange filing, a record amount under Hong Kong's listing regime for biotechnology firms.The stock, offered at HK$16.18 each, will start trading on Friday.The Zhongshan, Guangdong-based company is seeking to strengthen its ties with Sino Biopharmaceutical, one of the largest in mainland China with more than 12,000 sales staff, according to Xia, after inking a joint venture last year.Sino Biopharmaceutical last year paid 344.7 million yuan (US$48.7 million) for the exclusive right to sell Akeso's lead drug candidate penpulimab in China. It belongs to the so-called "PD-1 inhibitor" injection drugs category, which are antibodies that bind to "targets" on the body's immune cells and could restore their ability to kill cancer cells."We've seen a lot of interest from our customers in Chinese biotech names, given the large room for market expansion," said Jay Lee, who analyses health care stocks at Morningstar in Hong Kong. "A common strategy is to first launch low-risk products, like a PD-1, to establish revenue and build a sales network, and use the cash to fund development of riskier but more innovative drugs."PD-1 inhibitors have been shown to be able to shrink tumours, partially or completely, for 22 per cent of cancer patients, according to a 2018 study on 6,700 patients cited in Akeso's IPO prospectus.If approved, penpulimab will compete with other PD-1 inhibitors like sintilimab from Innovent Biologics, camrelizumab from Jiangsu Hengi Medicine and tislelizumab from Beigene. They were approved for sales since late 2018 for classical Hodgkin's lymphoma. They cost between 101,000 yuan to 119,000 yuan per year.However, since certain PD-1 inhibitors have mostly been approved for treating many kinds of cancers abroad, they are mainly used in China to treat conditions they have not received approval for. They are typically sought by late-stage patients.In the bigger oncology diseases in China, such as lung, colorectal and liver cancers, Xia believes Akeso still has a good chance of grabbing market shares even as giants like Merck and Bristol-Myers Squibb's inhibitors have won approval in China to treat lung cancers with more than a year of head start.Akeso aims to complete clinical trials on penpulimab and apply for approval to treat lung, liver and nasopharyngeal cancers in China from next year and 2022, CEO Xia said.She added that penpulimab has shown more complete removal of the so-called ADCC effect " which erodes antibody drugs' efficacy " compared to opdivo from Bristol-Myers Squibb. It could potentially achieve higher efficacy, Xia added.Opdivo was approved in China last month for treating gastric cancer. Together with Merck's keytruda, they are approved for treating multiple cancers including lung cancer in China. They sold for 222,000 yuan to 323,000 yuan per year of prescription."We may be a latecomer for the small disease categories [such as lymphoma] but we are fairly in line with our domestic rivals when it comes to the major disease categories such as lung, liver and gastric cancers," Xia said. "The lung cancer drug market is very large with some 700,000 new patients every year, and Chinese firms can beat the multinationals on price."Sign up now and get a 10% discount (original price US$400) off the China AI Report 2020 by SCMP Research. Learn about the AI ambitions of Alibaba, Baidu & JD.com through our in-depth case studies, and explore new applications of AI across industries. The report also includes exclusive access to webinars to interact with C-level executives from leading China AI companies (via live Q&A; sessions). Offer valid until 31 May 2020.This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2020 South China Morning Post Publishers Ltd. All rights reserved. Copyright (c) 2020. South China Morning Post Publishers Ltd. All rights reserved.