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Haohai Biological Technology (6826.HK)SH-HK Stock Connect Contributes to Liquidity
Biggest domestic winner of IOL GPO — GPO on IOL was introduced in 23 
provnces and alliances, starting from Anhui (Aug 19), to Jiangsu (Sep 19) JingJn-Ji (May 2020), Shaanxi alliance (Jul 20), Yunnan (Aug 20) and Shanghai (Sep 20). With muti-brand strategy, Haohai is the biggest domestic winner with The most products that were selected in GPO With GPO implementation gradually starting from 3Q20, mgmt. is confident to maintain the market share in GPO market, keep stable margin on cost advantage and further penetrate private hosptal market with high-end IOL. 
Recovery of product sales on track; pipeline progress — As hospital operation and general surgeries resumed in China, most of the company's segment growth turned positive in 3Q20 Ophthalmology, medical aesthetics, ortho and anti-adhesion saw sales recovery in Q3, recording +10%/+8%/ +15%/ 
+17% yoy growth respectively. We forecast a strong rebound n 2021E sales 
increase of 32% vs. -15% in 2020E. For pipeline, the company initiated a clinical tra on near cross-inked sodium hyaluronate gel for intraocular implant for the treatment of rhegmatogenous retinal detachment in Aug 2020; another study on IOL for vsual correction after phacoemulsification surgery started in Sep 2020 Each tra woud take 2-3 years or so.
SH-HK stock connect to fuel more liquidity — According to the amended 
Measures for Shanghai-Hong Kong Stock Connect Pilot Program announced on Jan 22, Haohai stock would be eligible for the program from Feb 1 We believe ths would improve the liquidity for the stock and reduce liquidity risk 
Implications — We maintain Buy/High Risk on Haohai Bio with TP unchanged at HK$100.