• BUY Entry – 1.11 Target – 1.32 Stop Loss – 1.02
  • TIAN’s businesses cover a wide range of products including Chinese patent medicine, Chinese medicinal drinks, Chinese medicinal raw materials, biotechnology medicine, chemical raw material medicine and preparations, and nutritional and health products. It has over 800 medicinal products in over 20 types of formulations. 
  • Left behind by its A-share counterpart. TIAN is dual-listed in China and Singapore. Shares of TIAN, having gained less than 5% in December, are currently lagging the 20% MTD rally of its A-share listed shares (600329). While the spread between the two widened over the past year, it contracted in the third quarter but began widening again in December. We think this is an excellent arbitrage opportunity. 
  • Analyst estimates. Both the A-share and SGX-listed shares are not well covered despite the US$2.9bn market cap of its Shanghai listed shares (as of 23 Dec), with only one buy rating and a TP of RMB50. Hence we may need to take forecasts with a huge dose of salt and apply a 30% discount. Even then, given a 30% discount to estimates, we still arrive at a 12M TP of RMB35, implying a 18% potential upside from the last close price. 

Spread between the Shanghai listed shares and the Singapore listed shares have once again widened in December