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1、BuyHoldBuyDeutsche BankMarkets ResearchAsiaChinaHealth CareHealth CareIndustryChina HealthcareDate3 January 2013Industry UpdateJack Hu, Ph.DChina Edge P101: Monthly datatracker, December 2012Deutsche Bank monthly data tracker, December 2012Recent data suggest: 1) government healthcare spending incre
2、ased 2% YoY inNovember; 2) patient monitor and ultrasound exports from Shenzhen customsremained flat in November; 3) the 6-APA price and 7-ACA price were slightlylower than in November; and 4) TCM raw material pricing rebounded slightlyResearch Analyst(+852) 2203 Companies FeaturedSihuan Pharmaceuti
3、cal(0460.HK),HKD3.422011A 2012E 2013Eafter a sharp decline over the past few months due to de-stocking. We adviseinvestors to exercise caution when interpreting these data points.Government healthcare spending up 2% YoY in NovemberP/E (x)EV/EBITDA (x)Price/book (x)20.311.91.714.68.01.912.66.71.7Gove
4、rnment healthcare spending was RMB61.3bn in November, representing2% YoY and 28% MoM growth, vs. 2% YoY and -33% MoM in October. Wecontinue to expect 20-25% growth in 2012, as the annual budget suggested.Shanghai Pharmaceuticals(2607.HK),HKD15.162010A 2011E 2012EFAI in healthcare remains relative he
5、althyWe have started to track FAI (fixed asset investment) data, as most FAI flowsinto hospital construction. FAI witnessed stable growth at over 15% growthP/E (x)EV/EBITDA (x)Price/book (x)0.017.38.21.316.15.51.3YTD in 2012. We expect healthcare FAI to remain in the high double digits in2013 vs. 15
6、% YoY and 23% YoY in YTD 2012 and 2011, respectively. Wehighlight that healthcare FAI is lower than overall FAI in 2012.The United Laboratories(3933.HK),HKD3.872011A 2012E 2013EShenzhen exports remain flat: 0% YoY growth in November 2012Exports of patient monitors and ultrasounds from Shenzhen custo
7、ms wererecorded at 0% YoY and 21% MoM in November 2012, compared withP/E (x)EV/EBITDA (x)Price/book (x)121.219.61.120.18.61.016.17.31.03%/11% YoY increases in September/October 2012, respectively. On a rollingthree-month basis from September to November, shipments remained flat at4% YoY. This new da
8、ta point suggests a moderate rebound. If such growthcontinues, we expect 4Q12 international growth to be better than that of 3Q12.Mindray Medical (MR.N),USD32.70 Buy2011A 2012E 2013EP/E (x) 16.8 18.3 16.2EV/EBITDA (x) 11.5 11.9 10.26-APA and 7-ACA prices were lower than last monthPrice/book (x)2.62.
9、92.5As of December 2012, the 6-APA price reached RMB185/kg and 7-ACA pricewas RMB520/kg, both slightly lower than the previous month. We estimate thenational breakeven price for 7-ACA at RMB500-550/kg. We anticipate priceincreases for many companies suspending or halting production and inventoryde-s
10、tocking. In the past nine months, corn prices increased 1%. We remaincautious on the long-term pricing trend for 6-APA and 7-ACA.TCM raw material prices: QKL and Shen Mai ingredients reboundSince the National Development and Reform Commission issued guidelines torelease stock and lower prices in Jul
11、y 2011, we saw a steep decline in prices.The prices of honeysuckle and indigowoad root (the main ingredients used inShineways flagship product, Qing Kai Ling) fell 6% MoM and increased 3%WuXi PharmaTech (WX.N),USD15.75 Buy2011A 2012E 2013EP/E (x) 12.0 11.6 10.5EV/EBITDA (x) 7.0 6.0 4.8Price/book (x)
12、 1.5 1.9 1.5China Shineway (2877.HK),HKD13.34 Buy2011A 2012E 2013EP/E (x) 13.9 12.5 10.8EV/EBITDA (x) 8.8 7.2 6.1Price/book (x) 2.1 2.1 1.9MoM in December 2012, respectively. Shen Mais main ingredients,ophiopogon root and gadix ginseng, were down 4% and up 3%.We prefer multiples-based valuation; ris
13、ks relate mainly to policy/regulationsWe use a multiples-based valuation approach in light of the sustainable growththat we expect from the sector. Industry risks relate mainly to governmentpolicies and regulatory changes in China, in particular healthcare reforms,which could negatively affect prici
14、ng. Additional risks generally relate to risingraw material costs and over-exposure to the EDL and RDL.Related recent researchChina Edge P89: Monthly datatracker, August 2012China Edge P92: Monthly datatracker, September 2012China Edge P94: Monthly datatracker, October 2012China Edge P99: Monthly da
15、tatracker, November 2012Date27 August201227 September201201 November201228 November2012_Deutsche Bank AG/Hong KongDeutsche Bank does and seeks to do business with companies covered in its research reports. Thus, investors shouldbe aware that the firm may have a conflict of interest that could affect
16、 the objectivity of this report. Investors shouldconsider this report as only a single factor in making their investment decision. DISCLOSURES AND ANALYSTCERTIFICATIONS ARE LOCATED IN APPENDIX 1. MICA(P) 072/04/2012.Jul-07Jul-08Jul-09Jul-10Jul-11May-07May-08May-09May-10May-11May-12Jan-07Mar-07Jan-08
17、Mar-08Jan-09Mar-09Jan-10Mar-10Jan-11Mar-11Jan-12Mar-12Nov-07Nov-08Nov-09Nov-10Nov-11Jul-12Nov-12Sep-07Sep-08Sep-09Sep-10Sep-11Sep-1254.456.23 January 2013Health CareChina HealthcareNovember healthcarespending up 2% YoY2% YoY growth in NovemberAfter weak growth of 8% YoY in 2Q12, government spending
18、growth rebounded to 21%YoY in 3Q12. However, in November growth again decelerated to 2% YoY. This breaksdown to 16%/14%/31%/2%/2% YoY in July/August/September/October and November2012, respectively. Total government healthcare spending in November wasRMB61.3bn, up 2% YoY and 28% MoM. See Figure 4 fo
19、r details on spending on amonthly basis.We highlight that the 2% YoY is in line with the 7% YoY growth for total government fiscalspending, vs. 27% and 21% YoY growth for healthcare spending and total governmentfiscal spending in 1H12, respectively. We remind investors that 2012 budgets for fiscalin
20、come and spending represent 9.5% and 14.1% growth, vs. 2011 actual income/spendinggrowth of 21.3% and 21.2%, respectively. These data points confirm our projection ofconstraints in local government financing for healthcare spending, as mentioned in ourreport 2012 Outlook: A year of stabilization, pu
21、blished 12 December 2011.Figure 1: Monthly government spending on healthcare(January 2007 to November 2012)Figure 2: Annual government spending on healthcare(2000 to 2011)RMB bnMonthlyYoY %RMB bn700150125143.0118.6133.290%70%60050026% CAGR (2000-11)47563710080.850%4003997557.158.166.056.249.260.275.
22、371.166.861.357.255.130%3002765046.4 47.4 46.849.347.910%2001992517.025.228.531.2-1010049576478851041320-300200020012002200320042005200620072008200920102011Source: CEIC; January and February 2011 data was extrapolated from YTD April 2011 data, as both monthswere not provided by the governmentPage2So
23、urce: CEICDeutsche Bank AG/Hong Kong1Q072Q073Q074Q071Q082Q083Q084Q081Q092Q093Q094Q091Q102Q103Q104Q101Q112Q113Q114Q111Q122Q123Q123 January 2013Health CareChina HealthcareFigure 3: Quarterly government spending on healthcare (1Q07 to 3Q12)RM B b n250Q uarterly sp end ing (LHS)YO Y g ro wth (RHS)240.28
24、0%211.0200195.1168.6181.8182.460%150124.9111.5102.7151.1129.340%10088.076.920%500Source: CEICDeutsche Bank AG/Hong Kong0%Page33 January 2013Health CareChina HealthcareFigure 4: Monthly government spending on healthcare (January 2008 to November 2012)RMB bnJan-08Feb-08Mar-08Apr-08May-08Jun-08Jul-08Au
25、g-08Sep-08Oct-08Nov-08Dec-08Jan-09Feb-09Mar-09Apr-09May-09Jun-09Jul-09Aug-09Sep-09Oct-09Nov-09Dec-09Jan-10Feb-10Mar-10Apr-10May-10Jun-10Jul-10Aug-10Sep-10Oct-10Nov-10Dec-10Jan-11Feb-11Mar-11Apr-11May-11Jun-11Jul-11Aug-11Sep-11Oct-11Nov-11Dec-11Monthly9.48.015.015.817.023.118.219.025.220.523.680.812.
26、112.821.624.624.233.626.920.128.521.031.0143.011.713.424.332.332.238.228.535.547.434.258.1118.618.518.539.946.456.266.047.449.254.446.860.2133.2MOM %-84%-15%89%5%8%36%-21%5%32%-19%15%243%-85%6%68%14%-2%39%-20%-25%42%-26%47%361%-92%14%81%33%0%19%-25%24%34%-28%70%104%-84%0%115%16%21%17%-28%4%11%-14%29
27、%121%YOY %61%15%46%8%73%33%28%28%48%54%34%42%28%61%43%56%42%45%48%6%13%3%31%77%-3%5%13%31%33%14%6%77%66%63%88%-17%58%38%64%44%75%73%66%39%15%37%4%12%Annual total275.7399.4474.5636.7YOY %39%45%19%34%YTD9.417.432.448.265.288.4106.6125.6150.8171.3194.9275.712.124.946.471.095.2128.8155.7175.8204.4225.42
28、56.4399.411.725.149.481.7113.8152.1180.6216.1263.5297.8355.9474.518.537.076.9123.3179.5245.5292.9342.1396.5443.3503.5636.7YOY %61%36%41%28%37%36%35%34%36%38%37%39%28%43%43%47%46%46%46%40%36%32%32%45%-3%1%6%15%20%18%16%23%29%32%39%19%58%47%56%51%58%61%62%58%50%49%41%34% of annual3%3%5%6%6%8%7%7%9%7%9
29、%29%3%3%5%6%6%8%7%5%7%5%8%36%2%3%5%7%7%8%6%7%10%7%12%25%3%3%6%7%9%10%7%8%9%7%9%21%Jan-12Feb-12Mar-12Apr-12May-12Jun-12Jul-12Aug-12Sep-12Oct-12Nov-1231.231.266.849.357.275.355.156.271.147.961.3-77%0%114%-26%16%32%-27%2%27%-33%28%69%69%68%6%2%14%16%14%31%2%2%31.262.5129.3178.6235.8311.1366.2422.4493.5
30、541.4602.769%69%68%45%31%27%25%23%24%22%20%Source: CEIC; January and February 2011 data was extrapolated from YTD April 2011 data, as both months were not provided by the governmentPage4Deutsche Bank AG/Hong Kong0%3 January 2013Health CareChina HealthcareFixed asset investments (FAI)FAI in healthcar
31、e sector reboundedIn this section, we track monthly and quarterly government fixed asset investments andfixed asset investment in the healthcare sector.FAI witnessed broadly stable growth with a slight downward trend over our trackingperiod; however, FAI in the healthcare sector registered a signifi
32、cant fluctuation overthe same period. The growth rate dropped from a historical high of 76% in 2Q09 to ahistorical low of 8.3% in 2Q10. FAI growth in healthcare recovered recently. It hasregistered a strong uptick since 2Q12.Figure 5: FAI vs. FAI in healthcare sector (quarterly)Figure 6: FAI in heal
33、thcare sector growth (quarterly)80%70%60%50%40%FAI in Health YOYFAI YOYRMB (bn)70.060.050.040.030.0FAI in Health (RHS)FAI in Health YOY80%70%60%50%40%30%30%20%10%09/Q1 09/Q2 09/Q3 09/Q4 10/Q1 10/Q2 10/Q3 10/Q4 11/Q1 11/Q2 11/Q3 11/Q4 12/Q1 12/Q2 12/Q320.010.0-09/Q1 09/Q2 09/Q3 09/Q4 10/Q1 10/Q2 10/Q
34、3 10/Q4 11/Q1 11/Q2 11/Q3 11/Q4 12/Q1 12/Q2 12/Q320%10%0%Source: Deutsche Bank research; CIRCSource: Deutsche Bank research; CIRCDecelerated growth of FAI and FAI in healthcare in November 2012In November 2012, FAI recorded RMB3,369bn, representing 20% YoY vs. 23%/22% YoYin September and October, re
35、spectively. On healthcare FAI, RMB20bn was recorded, up9% vs. 25%/10% in September and October, respectively. (See Figure 7 and Figure 8 formonthly details.)FAI remains relatively healthy; the average growth remains over 15%. We expecthealthcare FAI to remain in the high double digits in 2013 vs. 15
36、% YoY and 23% YoY inYTD 2012 and 2011, respectively.Deutsche Bank AG/Hong KongPage5Dec-11Feb-11Sep-11Feb-12Sep-12Jun-11Nov-11Dec-11Jun-12Jul-11Jul-12May-11May-12Mar-11Mar-12Nov-11Nov-12Mar-11Mar-12May-11May-12Nov-12Oct-11Jan-11Jan-12Aug-11Aug-12Apr-11Feb-11Sep-11Jun-11Jun-12Feb-12Apr-12Aug-11Aug-12S
37、ep-12Oct-11Apr-11Apr-12Oct-12Oct-12Jul-11Jan-11Jan-12Jul-123 January 2013Health CareChina HealthcareFigure 7: Monthly FAI data (as of November 2012)Figure 8: Monthly FAI in health (as of November 2012)RMB (bn)4,5004,000FAI (LHS)FAI YOY (RHS)24%23%RMB (bn)3025FAI in Health (LHS)FAI in Health YOY (RHS
38、)35%30%3,5003,00022%2025%2,5002,00021%20%1520%15%1,5001,00019%1010%500-18%17%5-5%0%Source: Deutsche Bank research; CIRCPage6Source: Deutsche Bank research; CIRCDeutsche Bank AG/Hong KongJul-08Jul-09Jul-10Jul-11May-08May-09May-10May-11May-12Jan-08Mar-08Jan-09Mar-09Jan-10Mar-10Jan-11Mar-11Jan-12Mar-12
39、Nov-08Nov-09Nov-10Nov-11Jul-12Nov-12Sep-08Sep-09Sep-10Sep-11Sep-123 January 2013Health CareChina HealthcareShenzhen customs data onequipment exports0% YoY growth in November 2012In this section, we track monthly and quarterly export shipments (the total of black andwhite ultrasound, color ultrasound
40、 and patient monitors) from the Shenzhen customsdata. Shenzhen is a tier-one city in Guangdong, Chinas southernmost province, and theclosest Chinese city to Hong Kong.Annual growth was 26% in 2009, 28% in 2010 and 22% in 2011. The data are seasonal,as 1Q typically represents about 20% of annual ship
41、ments, while 4Q typically representsabout 30% of annual shipments.Ultrasound and patient monitor shipments worth USD40.3m were recorded inNovember 2012, an increase of 0% YoY and 21% MoM vs. 11% YoY and -19% MoM inOctober 2012.On a rolling three-month basis from September to November 2012, growth wa
42、s 4%YoY, lower than the 30% YoY increase from September to November 2011.Flat YoY growth in 3Q12 Shenzhen shipment data3Q12 saw a 0% YoY increase compared with a 19% YoY increase in 2Q12 and 8% YoYin 1Q12 (see Figure 11 for quarterly details). We note that 3Q11, which saw 36% YoYgrowth, served as a
43、strong base of comparison for 3Q12.Figure 9: Monthly Shenzhen customs export data (as ofNovember 2012)Figure 10: Annual Shenzhen customs export data (as ofNovember 2012)US m60Monthly export (LHS)YOY growth (RHS)80%(USD mn)450403.8504060%40%400350330.1383.7300257.5302010020%0%-20%-40%2502001501005002
44、04.320082009201020112012YTDSource: Shenzhen custom statistics (the total of black & white ultrasound, color ultrasound and patientmonitors)Deutsche Bank AG/Hong KongSource: Shenzhen custom statistics (the total of black & white ultrasound, color ultrasound and patientmonitors)Page7-4%3 January 2013H
45、ealth CareChina HealthcareFigure 11: Monthly and quarterly Shenzhen customs export data (as of November 2012)Mon thl y dataUS$ m20082009201020112012Jan13.613.720.131.123.3Feb8.714.219.019.630.0Mar16.118.230.936.140.7Apr17.919.623.528.835.4May16.416.727.925.930.7Ju n18.722.732.435.541.2Ju l14.221.824
46、.935.534.3Au g15.121.928.832.632.9Se p23.825.225.940.041.4Oct14.822.128.430.233.4Nov18.828.830.940.240.3Dec26.132.637.348.2T otal2 04 .32 57 .53 30 .14 03 .8Mon thl y: Ye ar-ov e r-ye ar grow thJanFebMarAprMayJu nJu lAu gSe pOctNovDecT otal20092010201120120%47%55%-25%63%34%3%53%13%70%17%13%10%19%23%
47、23%2%68%-7%19%22%43%10%16%53%14%42%-3%45%31%13%1%6%3%54%3%49%29%6%11%53%7%30%0%25%14%29%26%28%22%Qu arte rl y dataQu arte rly: Ye ar-ov e r-ye ar grow thUS$ m1Q2Q3Q4QT otal1Q2Q3Q4QT otal200820092010201138.546.069.986.752.959.083.890.253.269.079.7108.159.783.596.7118.72 0 4 .32 5 7 .53 3 0 .14 0 3 .8
48、2008200920102011n/a20%52%24%n/a11%42%8%n/a30%16%36%n/a40%16%23%n /a26%28%22%201294.0107.4108.620128%19%0%Source: Shenzhen custom statistics (the total of black & white ultrasound, color ultrasound and patient monitors)Data directionally correlates to Mindray international sales growthNovember data s
49、how moderate rebound to Mindrays international revenue growthThe historical trend shows that actual reported growth is directionally correlated toShenzhen data. In 1Q11, 2Q11, 3Q11, 4Q11, 1Q12 and 2Q12, MR reported internationalrevenue growth of 30%, 18%, 26%, 21%, 17%, 21%, and 12% compared withShe
50、nzhens export growth of 24%, 8%, 36%, 23%, 8%, 19%, and 0%, respectively (seeFigure 12). Based on the November data point, that could be a rebound to Mindraysinternational sales growth in 4Q12Figure 12: Shenzhens customs export growth vs. Mindray Medicals internationalrevenue growth70%Shenzhen expor
51、 tsMi ndr ay s i nter nati onal60%50%61%52%40%40%42%36%30%20%10%20%11%30%6%17%27%18%16%20%16%30%24%18%8%26%23%15%17%8%21%19%12%0%1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12-1%0%-10%Source: Shenzhen custom statistics (the total of black & white ultrasound, color ultraso
52、und and patient monitors); Mindray Medical company data, Deutsche BankestimatesPage8Deutsche Bank AG/Hong KongOct-07Oct-08Oct-09Oct-10Oct-11Oct-12Jan-07Jan-08Jan-09Jan-10Jan-11Jan-12Apr-07Apr-08Apr-09Apr-10Apr-11Apr-12Jul-07Jul-08Jul-09Jul-10Jul-11Jul-12Jan-12May-10May-11May-12Jan-10Jan-11Mar-10Mar-
53、11Mar-12Jul-10Jul-11Jul-12Sep-10Sep-11Sep-12Nov-10Nov-11Nov-123 January 2013Health CareChina HealthcareActive pharmaceuticalingredient (API) pricingBoth 7-ACA and 6-APA prices rebounded from a two-year nadir6-APA (aminopenicillanic acid) is the core active pharmaceutical ingredient (API) used inpeni
54、cillin antibiotics. It is a by-product of corn. 7-ACA (aminocephalosporanic acid) is thecore API used in cephalosporins antibiotics. For a description of these antibiotics, refer toour reinstating coverage report on The United Laboratories (3933.HK), published on 18November 2010.6-APA price declined
55、 slightly in DecemberCurrently, the 6-APA price is RMB185/kg, showing a slight decline from RMB190/kg inNovember and near the bottom of the historical levels of RMB163-350/kg. Pricesdeclined 29% in 2011 and continue to decline MoM; however, there has been a 16%rebound from the trough of RMB160/kg in
56、 2H11.The range between January 2010 and December 2011 was RMB163/kg (December2011) to RMB230/kg (November to December 2010). The current prices are near two-year lows.Outlook for 2013The prices of 6-APA in China were relatively sluggish during 1H10 and reached troughlevels of RMB175/kg in April 201
57、0. Subsequently, there were signs of recovery, asprices peaked at RMB230/kg in December 2010, about 8% lower and 41% higher thanthe 2009 peak and trough levels of RMB250/kg and RMB163/kg, respectively, as shownin Figure 13 and Figure 14. The price of 6-APA was relatively stable with a slight upwardt
58、rend in 2012. We expect volumes to pick up in 1H13, given the deceleration of inflationand a lower base in 1H12 amid the implementation of restrictions on the use ofantibiotics.Figure 13: 6-APA (January 2007 to December 2012)(RMB/kg)5004003002001000Source: HDeutsche Bank AG/Hong KongFigure 14: 6-APA
59、 (January 2010 to December 2012)(RMB/kg)5004003002001000Source: HPage9Jan-07Jan-08Jan-09Jan-10Jan-11Oct-07Oct-08Oct-09Oct-10Oct-11Jan-12Oct-12Jul-07Jul-08Jul-09Jul-10Jul-11Apr-07Apr-08Apr-09Apr-10Apr-11Apr-12Jul-12Jan-10Jan-11May-10May-11Jan-12May-12Mar-10Mar-11Mar-12Jul-10Jul-11Sep-10Sep-11Jul-12No
60、v-10Nov-11Sep-12 Nov-123 January 2013Health CareChina Healthcare7-ACA price is lower than in previous monthFrom November 2010, prices declined every month until February 2012, when theywent up 9%. The prices of 7-ACA are still near five-year lows. In China, the price of 7-ACA was RMB520/kg as of Dec
61、ember 2012, slightly lower than the previous month andup 20% from the trough of RMB435/kg in January 2012, but down 44% since year-end2010. Prices declined as a result of the limited usage restriction on cephalosporinantibiotics in China and the large capacity increases of 7-ACA facilities. However,
62、 webelieve the recent uptick in 7-ACA prices is a result of lower supply, as several 7-ACAproducers are ceasing or halting production.Figure 15: 7-ACA (January 2007 to December 2012)(RMB/kg)10008006004002000Source: HFigure 16: 7-ACA (January 2010 to December 2012)(RMB/kg)10008006004002000Source: HCo
63、rn prices remained flatSince the beginning of 2009, corn prices in China have increased 75% to RMB2,585/ton.They hit a new high in the 38th week of 2011, when the price was RMB2,600/ton. Sincethen, prices have dropped 8% to the current level of RMB2,400/ton, which remained flatover the previous mont
64、h.Despite a significant rise in corn prices, 6-APA prices have not followed the same path.Thus, we conclude that 6-APA prices are, instead, largely determined by supply anddemand.Page10Deutsche Bank AG/Hong Kong10003 January 2013Health CareChina HealthcareFigure 17: Weekly corn prices in China(RMB/t
65、on)3000250020001500W1 W5 W9 W13 W17 W21 W25 W29 W33 W37 W41 W45 W49 W1 W5 W9 W13 W17 W21 W25 W29 W33 W37 W41 W45 W49 W1 W5 W9 W13 W17 W21 W25 W29 W33 W37 W41 W45 W49 W1 W5 W9 W13 W17 W21 W25 W29 W33 W37 W41 W45 W492009201020112012Source: China JCIFigure 18: Weekly corn prices in ChinaWeekly dataRMB/
66、ton2009201020112012W11475182520602395W51500182520752405W91550182521302420W131650190021602470W171650194022202485W211625200023002498W251625192523502502W291725197523752530W331725202524202580W371775200025752570W411725201025002410W451750207524002390W491800205023602400Y TD22%12%15%0%Weekly: Year-over-y ea
67、r growthW1W5W9W13W17W21W25W29W33W37W41W45W49Total20102011201224%13%16%22%14%16%18%17%14%15%14%14%18%14%12%23%15%9%18%22%6%14%20%7%17%20%7%13%29%0%17%24%-4%19%16%0%14%15%2%14%15%2%Source: China JCIDeutsche Bank AG/Hong KongPage11Jan-08Jan-09Jan-10Jan-11Jan-12Oct-08Oct-09Oct-10Oct-11Oct-12Jul-08Jul-09
68、Jul-10Jul-11Apr-08Apr-09Apr-10Apr-11Apr-12Jul-12Jan-10Jan-11Jan-12May-10May-11May-12Mar-10Mar-11Mar-12Jul-10Jul-11Jul-12Sep-10Sep-11Sep-12Nov-10Nov-11Nov-123 January 2013Health CareChina HealthcareTCM raw material pricesPrices rebound slightlyHoneysuckle (flos lonicerae) was down 6% from previous mo
69、nthHoneysuckle, or flos lonicerae, is a key element used for treating influenza, and the majorraw material for Qing Kai Ling products.As of December 2012, the price was RMB85/kg, down 6% MoM. Currently, the price is75% below the peak level of February 2010. Following this peak, prices dropped andwer
70、e stable between August 2010 and April 2011. However, since then prices havefallen 65%.We believe prices could fall further to the January 2008 levels, the lowest we have seen.Prices increased from RMB70/kg in January 2008 to RMB340/kg in February 2010.Then, seasonally weak demand dragged the price
71、down to RMB187/kg in June 2010,and it picked up slightly thereafter in the peak influenza season.Figure 19: Flos lonicerae (Jan 2008 to Dec 2012)RMB/kg400350300250200150100500Source: Zhong Guo Yao Cai Shi ChangFigure 20: Flos lonicerae (Jan 2010 to Dec 2012)RMB/kg400350300250200150100500Source: Zhon
72、g Guo Yao Cai Shi ChangIndigowoad root (radix isatidis) increased 3% vs. previous monthIndigowoad root, or radix isatidis, is another major raw material for Qing Kai Lingproducts and is often used to treat laryngitis and pharyngitis.The roots price rose significantly from November 2009 (at RMB13/kg)
73、 and peaked inMay 2010 (at RMB27.25/kg). Since then, prices have declined 66% to RMB9.3/kg as ofDecember 2012, down 23% since year-end 2010. In December 2012, prices were up 3%MoM, vs. a significant MoM drop of 14% in December 2011. Industry sources say thatoversupply issues were the main cause of t
74、he recent decline.Page12Deutsche Bank AG/Hong KongMar-08Mar-09Mar-10Mar-11Mar-12Jun-08Jun-09Jun-10Jun-11Dec-08Dec-09Dec-10Dec-11Jun-12Dec-12Sep-08Sep-09Sep-10Sep-11Sep-12Jan-10Jan-11May-10May-11Jan-12May-12Mar-11Mar-10Mar-12Jul-10Jul-11Sep-10Sep-11Jul-12Nov-10Nov-11Sep-12Jul-12Jan-12Jan-11Jan-10Jan-
75、09Jan-08Oct-12Oct-11Oct-10Oct-09Oct-08Jul-11Jul-12Jul-10Jul-09Jul-08Apr-12Apr-11Apr-10Apr-09Apr-08Jan-08Jan-09Jan-10Jan-11Jan-12Oct-08Oct-09Oct-10Oct-11Oct-12Jul-08Jul-09Jul-10Jul-11Apr-08Apr-09Apr-10Apr-11Apr-12Nov-123 January 2013Health CareChina HealthcareFigure 21: Radix isatidis (Mar 2008 to De
76、c 2012)RMB/kg302520151050Source: Zhong Guo Yao Cai Shi ChangFigure 22: Radix isatidis (Jan 2010 to Dec 2012)RMB/kg302520151050Source: Zhong Guo Yao Cai Shi ChangOphiopongon root (radix ophiopogonis) dropped 4% vs. previous monthOphiopongon root, or radix ophiopogonis, is often used with red ginseng
77、to reduceperspiration and moisten the lungs and body. It is a major ingredient of Shen Maiproducts.The root has been a hot topic in the TCM raw materials market, as its price rose sharply(by 908%), from the trough levels of March 2008 to the July 2011 peak, as a result of asubstantial reduction in i
78、ts planting area. Since year-end 2010, prices decreased 35% toRMB55/kg currently. The large price increase restrained demand, which depressedprices thereafter, in our view.In 2011, prices peaked twice: at RMB139/kg in April 2011 and RMB145/kg in July 2011.Since the July 2011 peak, prices declined 63
79、% to RMB53/kg currently. Moreover,following the price rebound in the past few months, we have seen a sharp decrease of32% from RMB80/kg since January 2012.Figure 23: Radix ophiopogonis (Jan 2008 to Dec 2012)RMB/kg160140120100806040200Source: Zhong Guo Yao Cai Shi ChangDeutsche Bank AG/Hong KongFigur
80、e 24: Radix ophiopogonis (Jan 2010 to Dec 2012)RMB/kg160140120100806040200Source: Zhong Guo Yao Cai Shi ChangPage13Jul-12Sep-12Nov-12Jan-10Jan-11May-10May-11Jan-12May-12Mar-10Mar-11Mar-12Jul-10Jul-11Jan-09Jan-10Jan-11May-09May-10May-11Jan-12May-12Sep-10Sep-11Jul-12Mar-09Mar-10Mar-11Mar-12Nov-10Nov-1
81、1Sep-12Jul-09Jul-10Jul-11Sep-09Sep-10Nov-09Nov-10Sep-11Nov-11Nov-123 January 2013Health CareChina HealthcareGadix ginseng (red ginseng) increased 3% from previous monthRed ginseng, or gadix ginseng, is a major ingredient in Shen Mai products and is usedto invigorate the central nervous system, leadi
82、ng to increased energy and circulation.There was a sharp price increase throughout 2010 to August 2011, peaking atRMB215/kg, and prices have since declined 16% to RMB180/kg in December 2012.There is low visibility in determining near-term prices. Prices currently are atRMB180/kg, similar to the leve
83、ls seen at 1Q11.Figure 25: Gadix ginseng (Jan 2008 to Dec 2012)RMB/kg250.00200.00150.00100.0050.00-Source: Zhong Guo Yao Cai Shi ChangPage14Figure 26: Gadix ginseng (Jan 2010 to Dec 2012)RMB/kg250.00200.00150.00100.0050.00-Source: Zhong Guo Yao Cai Shi ChangDeutsche Bank AG/Hong KongAppendix 1Import
84、ant DisclosuresAdditional information available upon requestFor disclosures pertaining to recommendations or estimates made on securities other than the primary subject of thisresearch, please see the most recently published company report or visit our global disclosure look-up page on ourwebsite at
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86、recommendation or view in this report. Jack HuEquity rating keyEquity rating dispersion and banking relationshipsBuy: Based on a current 12- month view of total share-holder return (TSR = percentage change in share pricefrom current price to projected target price plus pro-jected dividend yield ) ,
87、we recommend that investorsbuy the stock.45040035030025020056 %38 %Sell: Based on a current 12-month view of total share-holder return, we recommend that investors sell thestock15010050013 %15 %6%11 %Hold: We take a neutral view on the stock 12-monthsBuyHoldSellout and, based on this time horizon, d
88、o notrecommend either a Buy or Sell.Notes:Companies CoveredCos. w/ Banking Relationship1. Newly issued research recommendations and targetprices always supersede previously publishedresearch.2. Ratings definitions prior to 27 January, 2007 were:Buy: Expected total return (including dividends)of 10%
89、or more over a 12-month periodAsia-Pacific UniverseHold:Expectedtotalreturn(includingdividends) between -10% and 10% over a 12-month periodSell: Expected total return (including dividends)of -10% or worse over a 12-month periodDeutsche Bank AG/Hong KongPage15Regulatory Disclosures1. Important Additi
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