Wen 丨 Cai Jian Dao, Author 丨 Zhang Yuqi Han Yudi An Fujian, Editor 丨 Yang Zhongxu
Zhang Lei said in the book "Value" that he should be a friend of time. However, in the first three quarters of this year, Hillhouse, a head investment institution known for its intensive layout of the pharmaceutical track, has significantly reduced its holdings or liquidated at least 5 pharmaceutical white horses, and the latest one is the "eye mao" Aier Ophthalmology (300015. SZ), 5x profit. Valuation, it seems, is the real friend.
According to the third quarterly report of Aier Ophthalmology released on October 25, Q3 revenue was 4.248 billion yuan, down 3.48% year-on-year; net profit was 888 million yuan, an increase of only 2.05%; deduction of non-net profit was -5.38%, and the performance slipped significantly.
Hillhouse's reduction in pharmaceutical white horse, in addition to the well-known Aier Ophthalmology, Kai Lai Ying (002821. SH), and Fonda Holdings (1521. HK), 3SBio (1530. HK), Jianfan Bio (300529. SZ) and so on.
Hillhouse's increase and decrease in holdings has always been a bellwether for pharmaceutical stocks. Since the beginning of this year, Hillhouse has continuously reduced its holdings, what does it mean for the entire medical and health industry?
<h2>01, Hillhouse changed lanes, this year has sold 5
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Compared with the semi-annual report and third quarterly report data of Aier Ophthalmology, the number of Hillhouse shares has dropped from 82.168 million shares to less than 23.43 million shares, slipping out of the tenth from the sixth largest shareholder. Previously, Hillhouse Capital's shareholding ratio reached 2.58%.
Not only hillhouses retreated, but also "100 billion top stream" E Fangda Zhang Kun also withdrew from the top ten shareholders.
Since 2019, with the hot track, Aier Ophthalmology Dynamic P/E ratio has exceeded 200 times, and the valuation has exceeded 100 times in 5 years. In the past four months, Aier Ophthalmology has acquired a total of 13 hospitals, totaling about 740 million yuan. Superimposed on the impact of the new crown, once the impairment, the company's performance may be significantly impacted. It is in this context that Hillhouse and E Fangda have reduced their positions at a high level.
It is worth noting that Aier Ophthalmology is not the only listed pharmaceutical company that Hillhouse has reduced its holdings since 2021.
According to Gloria Young's 2021 semi-annual report, Hillhouse Capital reduced its position by about 2.2026 million shares in the second quarter, a 50% reduction from the first quarter. The first reduction of holdings directly reduced its position by half, and Hillhouse fell from the sixth largest shareholder who originally held 4.4053 million shares out of the top ten. Affected by this news, in just three trading days after August 16, Gloria Ying fell by more than 17%.
Frost & Sullivan's 2020 revenue statistics show that Gloria Ingen is the world's fifth-largest innovative pharmaceutical API CDMO company and China's largest commercialization stage chemical drug CDMO company.
According to the comprehensive combing of "Caijian Dao", this year, Hillhouse has reduced its holdings or liquidated five biomedical companies, in addition to Aier Ophthalmology, Gloria Ying, and Fangda Holdings (1521. HK), 3SBio (1530. HK), Jianfan Bio (300529. SZ）。
3SBio went from 44 times PE in 2018, and since then its stock price has fallen all the way and has not improved. Looking back at the stock price of 3SBio, the period of Hillhouse liquidation (June 29, 8.77 yuan / share) is almost the highest price after Hillhouse investment (from March 18, 2020 7.01 yuan / share).
Another company sold by Hillhouse is Jianfan Bio. Jianfan Bio's main blood perfusion device is not a necessity for dialysis treatment. Behind the company's revenue growth year after year, the marketing investment cost is huge. Hillhouse Capital's overseas UBS AG account reduced its stake in the company for the fourth consecutive quarter, with a reduction of 3.7853 million shares in the second quarter of this year.
Fangda Holdings, the leading company in the CRO field, also suffered from Hillhouse's reduction. After the reduction of holdings on 24 September 2021, Hillhouse's share of the total share capital decreased from 5.581% to 4.511%.
<h2>02. Biomedicine is still the main line of Hillhouse's investment
Of the 89 holding companies invested by Hillhouse, nearly half of them still account for companies in the biomedical sector. It has been laid out in biomedicine for many years, and the primary market, A-shares, Hong Kong stocks and US stocks are all involved, and medical devices, innovative drugs, service outsourcing, medical services and other segments are included.
On August 17, Hillhouse announced its U.S. stock holdings at the end of the second quarter of 2021 at the U.S. Securities and Exchange Commission (SEC). Hillhouse holds shares in 89 companies in the U.S. stock market with a total market capitalization of $9.7 billion, down from $10.1 billion at the end of the first quarter of this year. The top ten heavy stocks are BeiGene, Pinduoduo, iQiyi, Tianjing Biological, Ensta, ZOOM, BRIDGEBIO, Airbnb, JD.com, and Saifushi.
Looking at Hillhouse's position adjustment in the second quarter of this year, among Hillhouse's 89 holding companies, nearly half of the enterprises in the life science field accounted for.
Hillhouse is not just going in and out of medicine. Since 2021, Hillhouse has continued to buy Jinsrui Biotechnology, Luye Pharmaceutical, Livzon Group, etc.
According to the statistics of "2020 Hurun China Top 100 Healthy Private Enterprises", Hillhouse has invested in 7 of the top ten private pharmaceutical companies in terms of domestic market capitalization.
<h2>03, "sell Aier ophthalmology" special case, long-term holding is the mainstream of Hillhouse?
At the end of 2020, Hillhouse partner Yi Nuoqing clearly expressed his continued optimism about the pharmaceutical industry in an interview with the media. He said, "Hillhouse has no short-term exit demand in 2021 and will invest in excellent companies to the end."
Hillhouse Capital's investment style is generally interpreted as a "strategic" investment. In the medical and health industry, Hillhouse has always been "a fish from the beginning to the end", and has invested in BeiGene for eight consecutive rounds in a loss-making state.
In 2016, BeiGene was listed on the NASDAQ, landed on the Hong Kong Stock Exchange in 2018, and was registered in the IPO of the Science and Technology Innovation Board on July 28 this year, with a plan to raise 20 billion yuan. After listing on the Star Market, BeiGene will become the first global biotechnology company to be listed on the NASDAQ, the Hong Kong Stock Exchange and the Shanghai Stock Exchange.
In addition, WuXi AppTec is listed in A-shares, WuXi Biologics is issuing additional issues in the Hong Kong market, and Hillhouse is continuing to bet. WuXi AppTec, Aier Ophthalmology, Tigermed and other hillhouse-invested listed companies have a market value of more than 100 billion. Gan & Lee Pharmaceutical, Kailaiying, Jianfan Biology, Kailitai and other stock markets are worth 10-100 billion yuan, and are generally leading enterprises in the pharmaceutical industry.
Morgan Stanley's latest report, "China Is Resetting the Logic of Its Economic Underclass," argues that now is an important turning point for China's economy and capital markets. Morgan Stanley said that it is still necessary to temporarily avoid the policy-bearish industry sectors (people's livelihood, security-related targets), and pay more attention to clean energy, data and network security, high-end manufacturing, semiconductor supply chain controllability, innovative biopharmaceuticals and other new economic sectors.
The biomedical industry has been affected by the epidemic and has a general high valuation situation, which has killed a wave of valuations since the third quarter. Any move by Hillhouse on the pharmaceutical track is a bellwether. Interestingly, while Hillhouse was intensively reducing its holdings in the first three quarters, another star fund manager, Glen, was adding Aier Ophthalmology. The two head institutions are right and wrong, and only time this friend can give the answer.