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Chen Haolian: Hong Kong has many advantages to attract families to settle down.

Photo: Chen Haolian, deputy director of the Finance Bureau, said that there are many advantages in developing family offices in Hong Kong. In recent years, the SAR Government has made great efforts to attract family offices to settle in Hong Kong. In March last year, it issued the "Policy Declaration on Developing Family Office Business in Hong Kong" to create a competitive and favorable environment. Chen Haolian, Deputy Director of the Financial Services and the Treasury Bureau, said that Hong Kong has many advantages in developing a family office, including: Hong Kong is an international financial center, and under "one country, two systems", Hong Kong continues to be prosperous and stable, serving as a gateway to China and the international community, and with a huge foreign exchange reserve of over US$ 420 billion, which is 1.7 times the monetary base of the Hong Kong dollar, as well as top-notch professional services and talent support, which makes Hong Kong very attractive in developing a family office. Therefore, as of the end of May, the new entry scheme for capital investors was launched in March this year, and about 250 applications and more than 3,000 inquiries have been received, with enthusiastic response. New investment immigrants receive 250 applications. Talking about the advantages of developing the family office in Hong Kong, Chen Haolian said that under "one country, two systems", Hong Kong has continued to be prosperous and stable, making it a superior position as a bridge between the East and the West. At the same time, as a leading international financial center in Asia, Hong Kong has performed well in many aspects. First of all, in terms of new shares, the amount of new shares raised last year reached 46.3 billion yuan, ranking sixth in the world, and the average daily turnover of the stock market reached 105 billion yuan. Second, Hong Kong is the largest offshore RMB business center in the world. By the end of March 2024, the total amount of RMB deposits (including certificates of deposit) reached 1,058 billion yuan. Third, Hong Kong is a leading regional bond center. In addition, according to a study conducted by a consultant commissioned by InvestHK and published in March this year, it is estimated that there were about 2,700 single family offices operating in Hong Kong at the end of last year, of which more than half were set up by ultra-high net worth individuals with assets exceeding US$ 50 million. InvestHK's family office team provides one-stop support services for family offices and ultra-high net worth individuals who want to develop in Hong Kong, and has received many inquiries from the Mainland, ASEAN countries, the Middle East, Europe and America. In order to attract more college students and graduate students to join the family office industry, the Hong Kong Family Office Association launched a summer internship program to interact with people in the industry through training, visits, seminars and workshops, so as to increase their understanding of the industry.

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Fed Harker: The Fed is expected to cut interest rates once in 2024

Philadelphia Federal Reserve Bank President Patrick Harker, a voting member of the 2026 Federal Open Market Committee (FOMC), recently expressed his views on the current economic situation and future monetary policy at an event in Philadelphia. Harker said that while May's inflation report was "comforting," the Fed still needs more evidence to be confident that inflation is moving steadily toward its 2 percent target. Harker stressed that based on his base case, if the economy comes in line with expectations, he thinks one rate cut before the end of the year would be appropriate. However, he also cautioned that in the face of economic uncertainty, there is also the possibility that the Fed will cut interest rates twice or not in 2024, and the decision will be entirely dependent on future economic data. Harker further explained that he would consider supporting a rate cut if data over the next few months consistently showed inflation moving in the right direction. However, he also noted that it was not yet time to act, caution was needed, and he hoped to see further improvement in inflation in the coming months. It's worth noting that while Harker is open to a rate cut in 2024, he doesn't vote on monetary policy this year. Last week, Fed officials decided to keep their benchmark interest rate at a two-decade high and pared back their expectations for a rate cut in 2024. According to the latest median forecast, policymakers expect only one rate cut this year, down from the three they predicted in March. Harker's outlook for interest rates is in line with the median, and he expects economic growth to slow, but remain above trend, while unemployment will rise modestly. He believes that the process of achieving the Fed's inflation target will be a long adjustment process. Although Harker does not have a vote on monetary policy this year, he still believes that the current level of interest rates is sufficient to continue to reduce inflation. Harker said the current policy rate, which has been unchanged for nearly 11 months, is expected to work for longer, helping the Fed stay tight to achieve its inflation target and mitigate upside risks. Harker concluded that it makes sense to keep policy rates on hold and wait for more economic data. He needs to be cautious and wants to watch the data for a few more months, noting that companies' biggest concerns are the cost of capital and uncertainty. He also noted that the U.S. job market is far from "materially deteriorating," while global interest rates are falling, but at different speeds. Risk warning and disclaimer The market is risky and investment needs to be cautious. This article does not constitute personal investment advice and does not take into account the particular investment objectives, financial circumstances or needs of individual users. Users should consider whether any opinion, opinion or conclusion in this article is appropriate for their particular situation. Invest accordingly at your own risk.

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Offshore products need to be more abundant to promote the internationalization of RMB.

Figure: Trend of RMB deposits in Hong Kong. Hong Kong is not only a financial bridge between the mainland and the world, but also the largest offshore RMB center. Joseph Yam said that the offshore RMB business in Hong Kong has developed for 20 years. In the future, it is necessary to cooperate with national policies, strengthen the interconnection of domestic and foreign financial markets, and improve the level of cross-border investment and financing facilitation. He pointed out that in terms of interconnection channels and taking care of financial security in the Mainland, Hong Kong should study how to expand its capacity and how to involve more investors. Joseph Yam said that Hong Kong, as the main channel for financing between the mainland and other places, has restrictions on measures such as the amount, types and participation qualifications because the mainland needs to manage the risks of financial security. Regarding the development of interconnection business, he pointed out that there are many suggestions in the market at present, new measures will definitely be taken, expansion will definitely be considered, and more institutional or individual investors will be considered to participate in these channels. "For example, foreign investors come to Hong Kong and use interconnection to buy mainland agricultural products; Another example is how funds from the Middle East can invest in the mainland through this channel. We must continue to push forward in this regard. 」 Facilitate international investors to use Renminbi. In promoting the internationalization of RMB, Joseph Yam said that international transactions in current account can already be paid in RMB, and Hong Kong is already doing it in capital account, but it can make more efforts. "Last year, the dual-counter model of the exchange was launched, and more than 20 stocks can be traded in RMB. Can it be expanded in the future? Can there be an optimized model 2.0, for example, more than 80 stocks in the Hang Seng Index can be bought and sold in RMB? When Hong Kong has enriched RMB assets, foreign investors can easily use RMB for investment. As an international currency, RMB will play the role of wealth storage. 」 Ren Zhigang also mentioned that the central government proposed to steadily and cautiously promote the internationalization of RMB, adhere to market-driven and independent choice of enterprises, and create a new mutually beneficial cooperative relationship based on the free use of RMB. He singled out the word "free use", pointing out that when the RMB joined the Special Drawing Rights of the International Monetary Fund, there was a condition that the RMB did not need to be freely convertible, but it should be freely used. "At that time, the People's Bank of China and I both reached a consensus that the RMB was freely used offshore. 」 Joseph Yam believes that there is no resistance for the SAR Government to promote RMB as an international currency as an offshore trading medium, and whether it needs the approval of the central government can be discussed. But personally, he thought it was unnecessary, because according to the concept at that time, Hong Kong's 1 trillion yuan of liquidity could be used freely. However, he mentioned that if Hong Kong proposes some interconnection measures, of course, it must be supported and approved by the central government, such as the IPO, because it involves financial risks in the Mainland, and it must be well managed and discussed.

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The signal released by the Federal Reserve: It implies to cut interest rates once this year, but it is open to cutting interest rates twice.

The weak US CPI data in May attracted the revelry in the US stock market overnight, and the S&P Nasdaq continued to hit a new high. Although the Fed tends to identify the CPI in May as a single data point and the bitmap in June is biased, the resolution statement still recognizes the progress of slowing inflation. Many market participants believe that the Fed is open to cutting interest rates by 25bp twice this year. The interest rate resolution in June showed that the Federal Reserve kept the benchmark interest rate in the range of 5.25% to 5.5% for the seventh time in a row, maintaining a new high in more than 20 years. The bitmap shows that nearly 80% of officials expect to cut interest rates at least once this year, and the number of people who don't cut interest rates this year is expected to double to four compared with March. However, the resolution statement released after the meeting no longer said that there was no further progress in reducing inflation, but said that it had made moderate further progress. The statement continued to reiterate that it would cut interest rates only if it was more confident that inflation would fall to 2%. It is particularly noteworthy that in his statement after the meeting, Federal Reserve Chairman Powell said that the core CPI inflation in May was "encouraging" and hinted that the bitmap may not fully reflect this positive factor. He explained that when receiving such data near the end of the monetary policy meeting, "most people usually don't" update their forecasts in time. On the whole, although Powell's statement after the meeting was hesitant and deliberately played down the cooling of CPI data in May, it was still dovish: Whether it is enough to curb demand remains to be seen. But obviously, the monetary policy has been tightened and is producing the desired effect. In the voting committee, Dallas Fed President Logan believes that higher interest rates may not be as restrictive to the economy as previously expected. New york Fed President William insisted that the current policy orientation is conducive to reducing inflation to the Fed's target level. Kathy Bostjancic, chief economist of Norris Federal Mutual Insurance Company, told the media: It is still possible for the Fed to start cutting interest rates twice in September this year, but it needs data support to enhance confidence. It is understandable to be conservative. They tend to be cautious. However, I think the door to cut interest rates is still open. According to the observation tool of the Federal Reserve of the Chicago Stock Exchange, at present, the futures market expects the probability of interest rate cut at the September meeting to exceed 60%. Risk warning and exemption clause The market is risky and investment needs to be cautious. This paper does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, viewpoints or conclusions in this article are in line with their specific situation. Invest accordingly at your own risk.

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The "exciting Wednesday" came, and the US debt bulls closed their positions overnight, and Asian traders stayed up late to prepare for the war.

On Wednesday, the US CPI data and the Federal Reserve's interest rate decision appeared one after another. The market is doomed to be restless, and global investors have begun to prepare for a rainy day. After the unexpected strong impact of non-agricultural data last Friday, traders are rapidly withdrawing their bullish bets on US Treasury bonds. In Asia, traders are highly vigilant and ready to "stay up late to prepare for war". Us debt bulls closed their positions overnight. The pricing of US Treasury bond futures market shows that the expectation that the Fed will keep high interest rates for a long time now prevails, replacing the optimistic expectation that interest rate cuts are approaching. The data shows that since last Friday, the open position of US 10-year Treasury futures has decreased by about 80,000 contracts, reflecting that traders are releasing their bullish bets. JPMorgan Chase's survey of its US Treasury customers shows that investors' net long positions have fallen to the lowest point in two months. Specifically, in the week ending June 10th, JPMorgan Chase's US debt customers reduced their long positions by 7 percentage points and adopted a neutral position, which made the net long positions fall to the lowest level since April 8th. In the same period, direct short positions have not changed. After the employment report was released last Friday, the yield of 10-year US Treasury bonds climbed from the lowest 4.27% to nearly 4.48%, indicating that traders have greatly adjusted their interest rate cut expectations. In the face of the "double shock" on Wednesday, Nathan Thooft, global chief investment officer of Manulife Investment Management, said: "In the face of such a meeting, we don't want to take a big position and bet in any direction. In view of the uncertainty of the Fed's policy trends and timing, we have generally reduced the scale of bets this year. " John Madziyire, senior portfolio manager of Pioneer Group, also said: "Before the CPI data and the Fed meeting, we became very cautious and lightened our position." In the options market related to the guaranteed overnight financing rate (SOFR), traders have begun to bet that the policy interest rate will remain high in recent weeks, even until late next year or even early 2026. Asian traders are ready. Due to the difference in time zones, traders in Asia need to work overtime in the early hours of the morning to cope with the huge fluctuations that the US inflation data and the Fed's interest rate expectation bitmap may bring to the stock market, bond market and foreign exchange market. According to media reports, Motonari Sakai, head of the Tokyo Department of the Foreign Exchange and Financial Products Trading Department of Mitsubishi UFJ Trust Bank, is preparing to stay up all night to spend the most important day of this month: "I don't have dinner plans, and I plan to avoid drinking at home just to concentrate on watching the CPI release in the United States, and then I may wait all night for the Fed's decision announced at 3 am." Sakai is not a case. In Singapore, Vishnu Varathan, head of economics and strategy at Mizuho Bank, said that he would set the alarm clock to welcome a particularly early morning: "The ideal preparation method is to take a day off, sleep in the afternoon, get up at 11 o'clock in the evening, make a cup of coffee, eat some snacks, and sit in front of the computer and wait." Risk warning and exemption clause The market is risky and investment needs to be cautious. This paper does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, viewpoints or conclusions in this article are in line with their specific situation. Invest accordingly at your own risk.

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Forget about "continuous interest rate cuts"! The European Central Bank threw cold water on the market.

Christine lagarde, President of the European Central Bank, warned that although the interest rate was cut by 25 basis points at the last monetary policy meeting, this does not mean that the European Central Bank will start to cut interest rates continuously. In a joint interview with four European media on Monday, she stressed that interest rates may be kept unchanged at monetary policy meetings more than once in the future: We are still in the austerity stage, so as long as the inflation rate has not returned to 2%, we need to continue. Last week, after maintaining high interest rates for 22 months in a row, the European Central Bank announced that it would cut interest rates by 25 basis points ahead of the Federal Reserve and the Bank of England. The main refinancing rate fell to 4.25%, the marginal lending rate fell to 4.50%, and the deposit mechanism rate fell to 3.75%. However, from the data point of view, the inflation trend in the euro zone is still unstable, and the harmonized CPI rose from 2.4% in April to 2.6% in May, prompting the European Central Bank to raise its inflation forecast for the next two years. Lagarde's remarks poured cold water on the market's expectation that the European Central Bank will cut interest rates sharply one after another. Investors had bet that the European Central Bank would cut interest rates sharply this year to cope with the pressure of slowing inflation. However, Lagarde stressed that the ECB needs to wait and evaluate the trend of data such as labor costs before deciding whether to cut interest rates further. Lagarde pointed out that the inflation data really "could have been better", but she thought that the decision to cut interest rates was "appropriate" and "the downward trend of inflation has been fully promoted", but the European Central Bank needs to maintain interest rates at a certain level and continue to curb demand and curb inflation. She pointed out that factors such as rising labor costs, rising corporate profits and declining productivity have aggravated inflationary pressures and are "weaknesses of the European Central Bank". Only when the data in these areas develop in a good direction will the ECB consider cutting interest rates again. Risk warning and exemption clause The market is risky and investment needs to be cautious. This paper does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, viewpoints or conclusions in this article are in line with their specific situation. Invest accordingly at your own risk.

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Franklin Templeton launched a new fund to invest in digital currency outside Bitcoin and Ethereum.

Franklin Templeton, an old mutual fund company named after Benjamin Franklin, the founding father of the United States, is planning to launch a brand-new cryptocurrency fund. According to informed sources, the fund will invest in a series of digital assets called "alternative coins" other than Bitcoin and Ethereum, which is quite rare among traditional asset management companies. The new fund will face institutional investors and appear in the form of private equity funds, avoiding the regulatory obstacles faced by ETFs. Franklin Templeton manages $1.6 trillion in assets and has been involved in digital assets since 2018. In 2021, the company launched a money market fund based on blockchain, three years earlier than the similar fund of asset management giant BlackRock. Nevertheless, subject to legal and regulatory uncertainties, many asset management companies remain cautious in investing in cryptocurrencies. In January this year, the US Securities and Exchange Commission approved an ETF that directly holds Bitcoin, enabling individual investors to invest in Bitcoin as easily as buying stocks. In the same month, Franklin Templeton and other large fund companies launched bitcoin ETFs, with total assets of about $60 billion. In May this year, the US Securities and Exchange Commission took the first step to approve the Ethereum ETF, including Franklin's application. Franklin Templeton's new fund will not face the regulatory obstacles of ETF, because it is not for small investors. The fund is expected to invest by actively managing or tracking the cryptocurrency index, and the fund manager will select tokens for investment. In addition, the fund may also provide a bet reward, and investors will get a reward for the fund mortgaging their assets to verify blockchain transactions. At present, asset management companies focusing on cryptocurrencies such as Grayscale and Galaxy Digital have launched token funds including Solana, Avalanche and XRP. Franklin Templeton had previously launched a private equity fund for wealthy investors, and provided a series of independently managed accounts of encrypted tokens through Eaglebrook Advisors. In addition, the company is actively expanding its digital asset business outside the United States. In April this year, Franklin Templeton set up a joint venture in the United Arab Emirates to explore the development of a "income currency" similar to a stable currency but able to pay interest. Jenny Johnson, CEO of the company, said that more people will get investment opportunities through blockchain in the future, and revealed that the company is considering creating token investment opportunities for traditional ETFs in the market, making them easier for investors to manage and use. Risk warning and exemption clause The market is risky and investment needs to be cautious. This paper does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, viewpoints or conclusions in this article are in line with their specific situation. Invest accordingly at your own risk.

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It will be put into commercial operation as early as next year, and the "eVTOL leader" in the United States has obtained key regulatory certification.

Key progress has been made in the "low-altitude economy" of the United States, and Archer Aviation, the manufacturer of electric vertical take-off and landing aircraft (eVTOL), has been recognized by the regulatory authorities and is one step closer to commercial operation. On Wednesday, local time, Archer Aviation said that the FAA had issued a Part 135 aviation operation certificate to it. The whole certification process lasted about two years, and Archer Aviation submitted more than 2,000 pages of documents and 14 manuals, detailing operating procedures, training and maintenance. Obtaining this certificate means that Archer Aviation can participate in the commercial operation of traditional aircraft. The "Midnight" four-seat eVTOL developed by the company needs to be improved and certified by FAA before it can finally be put into commercial service. Archer Aviation is expected to be realized as early as next year. EVTOL is regarded as a more environmentally friendly and advanced new mode of transportation. Traditional airlines such as United Airlines have placed an order for Archer Aviation's eVTOL in 2021, and believe that this new technology can reduce carbon emissions in urban congested areas. Passengers are expected to fly to the airport in big cities in the future. Nationally, Archer Aviation's competitors, such as Joby Aviation, are one step ahead in obtaining the certificate. They obtained the Part 135 certificate two years ago and reached cooperation with the US military and Delta Air Lines. However, Adam Goldstein, CEO of Archer Aviation, believes that Joby Aviation's eVTOL design is simpler and the authentication process will be smoother. Archer Aviation currently plans to cooperate with the car company Stellantis to produce hundreds of eVTOL. The standard version of "Maker" has a cruising range of 60 miles and a speed of 150 miles per hour. The "Midnight" model extends the cruising range to 100 miles, but it is usually used for short-distance operation. Risk warning and exemption clause The market is risky and investment needs to be cautious. This paper does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, viewpoints or conclusions in this article are in line with their specific situation. Invest accordingly at your own risk.

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The economy is improving/companies registered in Hong Kong have hit record highs.

Hong Kong's sustained economic recovery, coupled with the advantages of being backed by the motherland and connected to the world, has always been the first choice for business development. According to the latest data from the Companies Registry, as of April 2024, there were more than 1.43 million local companies and 15,000 non-Hong Kong companies in Hong Kong, both reaching record highs. Thus, for enterprises, Hong Kong is definitely a vibrant, reliable and convenient place to do business. Newly established enterprises continued their net growth. As of April this year, the number of new companies established has continued to record growth, with about 12,000 new companies added every month, which is higher than about 7,400 dissolved companies and continues to record net growth. As for bankruptcy and liquidation, the number of bankruptcy petitions and liquidation petitions filed in April this year decreased month by month, and the number of bankruptcy petitions filed in April was 742, a decrease of 5% compared with 783 in March; The number of liquidation petitions filed in the same month was 66, a decrease of 4.3% compared with 69 in March. On the other hand, the number of non-Hong Kong companies registered in Hong Kong has also continued to grow, from 14,826 at the end of 2023 to 14,942 at the end of April this year, with 116 non-Hong Kong companies more than four months later, with an increase of 0.8%. In the first four months of this year, the number of newly registered non-Hong Kong companies with business locations reached 349, which was higher than the number of non-Hong Kong companies that no longer had business locations of 233.

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Xinbang Pharmaceutical's tearful sale company is going to the Hong Kong Stock Exchange.

The IPO filing tide of the Hong Kong Stock Exchange may be coming. Since May this year, 22 companies have submitted IPO applications to the Hong Kong Stock Exchange, while the Shanghai and Shenzhen Stock Exchanges are still in a state of "0 acceptance". As a member of the mighty IPO application army, Ted Medicine (Zhejiang) Co., Ltd. (hereinafter referred to as "Ted Medicine") is making a sprint to the Hong Kong Stock Exchange. According to the application materials, Taide Medicine mainly provides services for the discovery and synthesis of fruiting bodies (CRO) and chemical production, manufacture and control of peptides (CDMO) in the new branch of peptides to pharmaceutical companies. During the reporting period, Ted Medicine has achieved profitability. From 2021 to 2023, the income was 282 million yuan, 351 million yuan and 337 million yuan respectively, and the net profit in the same period was 80 million yuan, 54 million yuan and 49 million yuan respectively. It is worth mentioning that Zhongti Biochemical Co., Ltd. (hereinafter referred to as "Zhongti Biochemical"), the core subsidiary of Ted Pharmaceutical, was once an asset of Xinbang Pharmaceutical (002390.SZ). In 2015, Xinbang Pharmaceutical purchased the equity of Zhongpeptide Biochemical at a transaction price of 2 billion yuan, but it was transferred to Ted Pharmaceutical at a price of 718 million in 2020 five years later. This means that Ted Pharmaceuticals began to sprint to the Hong Kong Stock Exchange only three complete natural years after it seized Chinese peptide biochemistry. Although Xinbang Pharmaceutical thought that there was a bottleneck in the performance development of Chinese peptide biochemistry, the revenue and net profit of Ted Pharmaceutical (Chinese peptide biochemistry) in 2021 increased by 63% and 48.15% respectively compared with 2019. Whether it is Xinbang Pharmaceutical "seeing away" or there is something hidden behind it, the market is still paying attention. It was on sale three years ago. Polypeptides, which rise from the east wind of "diet pills", are attracting market attention. According to the definition, the so-called polypeptide generally refers to a compound formed by the condensation of less than 100 amino acids through peptide bonds, with a molecular weight between small molecules and biological agents, and is a bioactive substance involving various cell functions in organisms. GLP-1 analogue, a popular "slimming drug" on the market at present, is just one kind of polypeptide. According to the application materials, Ted Pharmaceutical is a CRDMO (Contract Research, Development and Production Organization) enterprise focusing on peptides, which can provide pharmaceutical companies with full-cycle services from early detection, preclinical research and clinical development to commercial production. In 2023, the revenue and net profit of Ted Pharmaceutical were 337 million yuan and 49 million yuan respectively. According to Jost Sullivan's statistics, Ted Medicine will become the third largest polypeptide CRDMO in the world by virtue of its revenue scale in 2023. It is worth mentioning that Ted Medicine was founded in 2020, and it has been less than four years. Being able to gain such a position in a short period of time is not unrelated to peptide biochemistry, the core subsidiary of Ted Medicine. Founded in 2001, the latter is the first batch of domestic enterprises engaged in polypeptide CRDMO. The capital market may be no stranger to peptide biochemistry, which was previously purchased by Xinbang Pharmaceutical, an A-share company, at a transaction valuation of 2 billion yuan, and finally sold at a "fracture sale" of 750 million yuan. In 2001, Li Xiang, the actual controller of Ted Medicine, established Chinese Peptide Biochemistry, holding 100% of its shares through UCPharm Company Ltd and American Peptide Company. Until 2012, Zhongti Biochemical also introduced a number of shareholders, one of whom was Xu Qi, the general manager of the company at that time, who held 9.66% equity of Zhongti Biochemical through Senhai Medicine. However, only three years later, Li Xiang and other leaders "sold themselves" to Xinbang Pharmaceutical. Looking back at this transaction, it can be described as "a big injury" for Xinbang Pharmaceutical. In 2015, Xinbang Pharmaceutical purchased 100% equity of CPP Biochemical from all shareholders of CPP Biochemical at a transaction valuation of 2 billion yuan. The transaction is divided into three parts. First, Xinbang Pharmaceutical issued shares to seven shareholders including UCPharm Company Ltd to purchase 89.98% shares of CPP Biochemical. Second, Xinbang Pharmaceutical acquired 10.02% shares of CPP Biochemical held by shareholders such as Senhai Pharmaceutical with its own funds of 200 million yuan. Third, it raised 1.92 billion yuan from investment institutions. At the same time, Li Xiang and Xu Qi also entered the board of directors of Xinbang Pharmaceutical Co., Ltd., respectively, as vice-chairmen and non-independent directors. It is worth mentioning that the transaction valuation of 2 billion yuan of China Peptide Biochemistry is 727.27% higher than the book value on the benchmark date. When Xinbang Pharmaceutical acquired Chinese peptide biochemistry at such a high premium, it was "full of expectations". "The business development path of Chinese peptide biochemistry is extending from abroad to China, and innovative drugs are expanding to the generic drug market." Xinbang Pharmaceutical pointed out, "This development path helps China Peptide Biochemistry to make use of the technology and market advantages accumulated in the international innovative drug market to feed back the domestic market and form a unique core competitiveness and market competition barrier." However, in 2018, less than four years after the acquisition, the performance of Zhongti Biochemical was affected by the changes of polypeptide customers' own business, and the performance declined. Xinbang Pharmaceutical immediately accrued a goodwill impairment of 1.536 billion yuan in that year, and the net loss returned to the mother in the current period reached 1.297 billion yuan. In 2020, Xinbang Pharmaceuticals chose to spin off the companies such as Zhongpeptide Biochemical on the grounds that there were bottlenecks in the development of subsidiaries such as Zhongpeptide Biochemical, which required huge funds to build factories overseas or had a negative impact on the performance of listed companies. For this reason, Li Xiang and Xu Qi jointly established Ted Medicine as the main body to acquire the equity of companies such as China Peptide Biochemical. "Dr. Xu and Ms. Li jointly decided to set up the company to acquire AHPP Biochemistry from Xinbang, so as to lead its growth and expansion under its control, and continue to focus on and develop CRDMO with a global business footprint." Ted medicine said. The controversial part of this transaction lies in the transaction price-Xinbang Pharmaceutical transferred the equity of Zhongpeptide Biochemical to Ted Pharmaceutical at a "fracture price" of 718 million yuan. This means that the Chinese peptide with a valuation of 2 billion yuan in that year was sold at a discount of over 60%. In this regard, Ted Medicine also emphasized that it is a normal business practice in the application materials. "The consideration of the acquisition in 2020 was delivered in December 2020. The directors believe that the acquisition in 2020 is conducted on normal commercial terms and is beneficial to the Group and shareholders as a whole. " Ted medicine pointed out. In fact, judging from the consideration of Xinbang Pharmaceutical issuing shares to UCPharm Company Ltd to purchase Chinese peptide biochemistry, it is basically the same as that in Ted Pharmaceutical's acquisition of peptide biochemistry. In 2015, Xinbang Pharmaceutical issued 96.4609 million shares to UCPharm Company Ltd at a price of 7.75 yuan per share, with a total price of 748 million yuan. However, the performance trend of Ted Medicine (Chinese Peptide Biochemistry) is quite coincidental. During the performance commitment period from 2015 to 2017, the profit of Zhongti Biochemical performed well. In three years, it realized a total net profit of 332 million yuan after deducting non-return, and completed 101.71% of the profit forecast. However, in 2018, when the performance commitment ended, the net profit of China Peptide Biochemical fell sharply, only 60 million yuan; More dramatically, with the efforts of Li Xiang and Xu Qi, Ted Pharmaceutical's performance picked up less than two years after the acquisition of Zhongti Biochemical. In 2021, the income and net profit of Ted Pharmaceutical, which was put into Zhongti Biochemical, reached 282 million yuan and 80 million yuan respectively, up by 63.01% and 66.67% respectively compared with 2019. Profits have shrunk dramatically. With the rapid growth of the sales of GLP-1 target polypeptide drugs represented by Smegrupeptide and Texiparide, the upstream polypeptide raw material manufacturers have entered the public's field of vision. In this context, it is indeed a good time for Ted Medicine, a CRDMO company specializing in peptides, to choose to sprint the IPO of the Hong Kong Stock Exchange at this moment. According to the data of Jost Sullivan, peptide drug companies are more dependent on CXO companies. In 2023, pharmaceutical and biotechnology companies that outsource clinical development and production to third-party service providers will account for 70% of the global polypeptide drug market, which is about 30% to 40% higher than that of biological agents. At present, the annual production capacity of polypeptide API (active pharmaceutical ingredient) of Ted Pharmaceutical in Hangzhou production base is 500 kg, and the production capacity of each batch of polypeptide is 20 kg, which can handle multiple polypeptide orders of 100 kg class. Compared with the leading A-share peptide CXO enterprise, Nuotai Bio (688076.SH) still has a gap. Nuotai Bio's polypeptide bulk drug production capacity has reached more than tons, and two new polypeptide workshops are under planning and construction. It is estimated that the polypeptide bulk drug production capacity will reach several tons by the end of 2025. The purpose of this IPO is to use the raised funds to expand the polypeptide production capacity of the existing Qiantang Park and Rochlin Park in the United States. However, it seems that the problem before Ted Medicine is not the capacity, but the customer demand. Although the performance is warmer than that in 2019, the performance of Ted Pharmaceutical showed a downward trend during the reporting period. In 2023, revenue and net profit decreased by 19.50% and 38.75% respectively compared with 2021. In contrast, as a peer, the growth rate of Nuotai Bio is remarkable. In 2023, its revenue reached 1.034 billion yuan, which is the first time that it broke the 1 billion mark since its listing. In the same period, its net profit reached 165 million yuan, an increase of 51.38% compared with 2021. In this regard, Ted Medicine also admitted that the demand of its main customers is decreasing. "Three major customers have greatly reduced their demand for our services due to changes in their own polypeptide drug development resources, plans and cycles." Ted medicine said. However, the advantages of Ted Medicine still exist, and its current main income comes from the US and European markets. In 2023, these two markets contributed a total of 177 million yuan, accounting for more than 50%. In the same period, overseas regions including the United States, Japan and Europe contributed a total of 263 million yuan in revenue, accounting for 78%. Among them, the growth rate of the European market is obvious, and in 2023, it contributed 63 million yuan of income, up 35.02% year-on-year. However, influenced by geopolitics, at present, large pharmaceutical companies seem to be more inclined to build their own production capacity, which may also be a potential risk for peptide CDMO manufacturers. In May this year, Lilly announced an additional $5.3 billion to expand the production capacity of its production base in Lebanon, Indiana, USA, for the production of active pharmaceutical ingredients of telpotide. From this point of view, it remains to be seen whether Ted Medicine can find customers to pay for this expansion of production capacity. Risk warning and exemption clause The market is risky and investment needs to be cautious. This paper does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, viewpoints or conclusions in this article are in line with their specific situation. Invest accordingly at your own risk.

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SG International Group

One-stop world-class wealth management platform

SG International is an independent, all-in-one and global wealth management platform to provide total solutions to achieve your financial goals

You can enjoy our personalized services of a boutique organization and the global resources of the largest and most respected financial firms in the world through SG International. Our financial advisors are able to find solutions that address to your specific needs in terms of strategic investment approach, designing portfolio and macro capital management services.

Shanggu Advantages

  • Investment management - Trinity

    Trinity service, to provide you with more professional and convenient investment services

    1. ·Investment bank
    2. ·EAM (Enterprise asset management system)
    3. ·Insurance
  • Professional

    Built on professional personal wealth management experience.

    Our wealth managers provide a comprehensive solution for customers through banks, trusts, global investment platforms and insurance solutions.

  • Integrated offshore financial platforms

    Professional team makes diversified products and various types of platforms more in line with personal needs, asset security worry free.

    1. ·Private banking platform
    2. ·Family trust platform
    3. ·Securities platform
    4. ·Individual: insurance platform
    5. ·Fund platform
    6. ·Personalized service
    7. ·Investment banking platform
    8. ·Business: Law Package

Shanggu Business

Securities

The full range of securities trading platform, more professional analysis and guidance.

Financial Consultant

To invest as a leading and provide a full range of corporate financial services.

Asset Management

Provide two services for private banking and family offices, asset analysis and management for individuals and families

Fund Customized Services

Analyze assets to customers and provide professional asset manageme

Insurance

Provide a comprehensive solution to meet customer needs. Provide the most suitable choice of insurance products and companies to meet customer needs.