Sino BioPharmaceutical – Initial Thoughts

Sino BioPharmaceutical (1177.HK)

[August 29, 2019]

Interim Result Announcement @ JW Marriott

Background

I attended the meeting because of recommendation from a friend. The attendance was high reflecting interest of market for whatever reason (no preparation before the announcement as I was in auto-pilot exploration mode).

Initial Thoughts

I was super impressed by their briefing. The executive started with an one-hour presentation covering pipeline, coverage, policy/regulation, medical insurance, its current development and the implication on medicine, market, competition and more. I even thought I could start covering some biotech companies after this comprehensive introduction (obviously this is not the case). I was later told that this was the first time that the company present in this format. That is probably because the company did a price cut of ~90% on a drag to gain insurance status for the drag shocking the market. The stock price had already recovered most of the loss by the day of interim result announcement. The presentation clearly reassured the market and the market welcomed transparency. I felt comfortable with the management team but due diligence on the management team / founding family is still needed.

Whether to Dig Deeper and Study More

  • To decide whether to put more resources into this stock might be a timing / horizon question. The stock has recovered from its low in this January and is around 17% away from its historical high. Be long term.
  • Entry barrier is relatively high to study biotech stocks. What is the chance to have an edge on fundamental and is there a way to construct an alternative analytic edge on the stock.
  • Future exposure might be an incentive. If you know you’re going to spend several days meeting with biotech companies and attending an expensive conference, the motivation to learn more about the industry is clear. Still waiting for the trip to firm up.

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