Global Healthcare Analyst

Tina Banerjee

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/aurobindo-pharma-ltd" target="_blank" data-smartkarma-citation="entities:19974:1" rel="noopener">Aurobindo Pharma (ARBP IN)</a> shares have corrected more than 40% from peak and are trading at discount to peers. The company’s U.S. business is under pressure, resulting in deteriorating profitability.</li>
<li>We are not seeing any immediate respite in the U.S. formulation business. Hence, investors can avoid Aurobindo Pharma shares.  </li>
<li>However, value unlocking through stake sale in injectable business can be a near-term catalyst, resulting in relief rally in the stock.</li>
</ul>



Aurobindo Pharma (ARBP IN) shares have corrected more than 40% from peak and are trading at discount to peers. The company’s U.S. business is under pressure, resulting in deteriorating profitability.
We are not seeing any immediate respite in the U.S. formulation business. Hence, investors can avoid Aurobindo Pharma shares.  
However, value unlocking through stake sale in injectable business can be a near-term catalyst, resulting in relief rally in the stock.


Aurobindo Pharma (ARBP IN): Pain Continues in the U.S. Formulation Business

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

A "Buyback" is where (for our purposes) a publicly-listed company repurchases its shares from existing shareholders, sometimes in the market, sometimes in a structured buyback off exchange, and sometimes at a price higher than market price (in this insight, we will use the nouns "Buy-back" and "Buyback" interchangeably; the official regulatory documents in India often use the form with the hyphen).When companies use excess cash to buy back shares, they often not only end up optimising their capital structure but also "achieve" EPS accretion with the aid of a reduction in the total share count of the company. Some companies use buy-backs to support their share prices during sluggish periods and others attempt to use it as a defence mechanism against hostile takeover situations.  Still others in India use it to return capital to their promoters.All that is pretty well-known.In India, such Buy-backs are governed by the <a href="https://www.sebi.gov.in/legal/regulations/jul-2019/securities-and-exchange-board-of-india-buy-back-of-securities-regulations-2018-last-amended-on-april-17-2020-_40327.html" target="_blank" rel="noopener">SEBI (BUY-BACK OF SECURITIES) REGULATIONS, 2018</a> (last amended on 17th April 2020) and are principally executed through three main mechanisms - Tender Offers, On-Market Transactions, and Book-building Processes. This insight is the first of a two-part series by Quiddity on Indian Buy-backs.In this insight, we will look into the regulations that govern each of the buy-back mechanisms to discover the basis for how they get executed.

A "Buyback" is where (for our purposes) a publicly-listed company repurchases its shares from existing shareholders, sometimes in the market, sometimes in a structured buyback off exchange, and sometimes at a price higher than market price (in this insight, we will use the nouns "Buy-back" and "Buyback" interchangeably; the official regulatory documents in India often use the form with the hyphen).When companies use excess cash to buy back shares, they often not only end up optimising their capital structure but also "achieve" EPS accretion with the aid of a reduction in the total share count of the company. Some companies use buy-backs to support their share prices during sluggish periods and others attempt to use it as a defence mechanism against hostile takeover situations.  Still others in India use it to return capital to their promoters.All that is pretty well-known.In India, such Buy-backs are governed by the SEBI (BUY-BACK OF SECURITIES) REGULATIONS, 2018 (last amended on 17th April 2020) and are principally executed through three main mechanisms - Tender Offers, On-Market Transactions, and Book-building Processes. This insight is the first of a two-part series by Quiddity on Indian Buy-backs.In this insight, we will look into the regulations that govern each of the buy-back mechanisms to discover the basis for how they get executed.

Quiddity India Buy-Back Guide 2021: Regulations & Patterns

ASEAN Insight Provider, CrossASEAN Research

Angus Mackintosh

ASEAN Insight Provider

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

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Indonesia's leading diagnostics company, <a href="https://www.smartkarma.com/entities/prodia-widyahusada" target="_blank" data-smartkarma-citation="entities:23663:1" rel="noopener">Prodia Widyahusada (PRDA IJ)</a> just released a strong set of FY2020 numbers, confirming the company's ability to adapt and thrive in the face of the pandemic. It looks set to resume its expansion and trades on very attractive valuations.
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<a href="https://www.smartkarma.com/entities/prodia-widyahusada" target="_blank" data-smartkarma-citation="entities:23663:1" rel="noopener">Prodia Widyahusada (PRDA IJ)</a> saw its net profit increase by  +7.4% to IDR1,873.38bn, with revenues from each customer segment increasing and making a significant contribution.
Individual and referral customers from doctors made up 61.2% of revenues, whilst third-party referrals and corporate clients made up 38.8% of total revenues.
In 2020, the total number of tests reached 13.99m from 3.06m visits, with the demand for esoteric testing increasing by +191.5% YoY in 2020 to 1.6 million tests. Revenue from esoteric tests increased by +131.8% in 2020 to IDR700.3bn.
<a href="https://www.smartkarma.com/entities/prodia-widyahusada" target="_blank" data-smartkarma-citation="entities:23663:1" rel="noopener">Prodia Widyahusada (PRDA IJ)</a> continues to provide assistance to the government in dealing with the COVID-19 pandemic by providing tests for COVID-19 using the rapid test method, EIA antibody serology test, and PCR COVID-19,  and performing more than 1m COVID-19 tests in Indonesia in 2020.
<a href="https://www.smartkarma.com/entities/prodia-widyahusada" target="_blank" data-smartkarma-citation="entities:23663:1" rel="noopener">Prodia Widyahusada (PRDA IJ)</a> continues to expand the capacity for PCR COVID-19 examinations to more than 2,000 tests/day by adding the Cobas 6800 automatic testing tool.
<a href="https://www.smartkarma.com/entities/prodia-widyahusada" target="_blank" data-smartkarma-citation="entities:23663:1" rel="noopener">Prodia Widyahusada (PRDA IJ)</a> continues to add to its digital capabilities to aims to provide convenience for customers, without them having to visit the Prodia Lab through teleconsulting and the Prodia App. 
The company plans to expand its clinical labs, hospital labs, POC outlets, and add one specialty clinic in 2021, after a pause in 2020. Apart from growing its network of outlets, the company plans to upgrade its existing clinical labs to provide a greater array of tests.
<a href="https://www.smartkarma.com/entities/prodia-widyahusada" target="_blank" data-smartkarma-citation="entities:23663:1" rel="noopener">Prodia Widyahusada (PRDA IJ)</a> valuations are very attractive versus healthcare peers in Indonesia but also Indian diagnostic peers, which trade on significantly higher multiples.


Indonesia's leading diagnostics company, Prodia Widyahusada (PRDA IJ) just released a strong set of FY2020 numbers, confirming the company's ability to adapt and thrive in the face of the pandemic. It looks set to resume its expansion and trades on very attractive valuations.

Prodia Widyahusada (PRDA IJ) saw its net profit increase by  +7.4% to IDR1,873.38bn, with revenues from each customer segment increasing and making a significant contribution.
Individual and referral customers from doctors made up 61.2% of revenues, whilst third-party referrals and corporate clients made up 38.8% of total revenues.
In 2020, the total number of tests reached 13.99m from 3.06m visits, with the demand for esoteric testing increasing by +191.5% YoY in 2020 to 1.6 million tests. Revenue from esoteric tests increased by +131.8% in 2020 to IDR700.3bn.
Prodia Widyahusada (PRDA IJ) continues to provide assistance to the government in dealing with the COVID-19 pandemic by providing tests for COVID-19 using the rapid test method, EIA antibody serology test, and PCR COVID-19,  and performing more than 1m COVID-19 tests in Indonesia in 2020.
Prodia Widyahusada (PRDA IJ) continues to expand the capacity for PCR COVID-19 examinations to more than 2,000 tests/day by adding the Cobas 6800 automatic testing tool.
Prodia Widyahusada (PRDA IJ) continues to add to its digital capabilities to aims to provide convenience for customers, without them having to visit the Prodia Lab through teleconsulting and the Prodia App. 
The company plans to expand its clinical labs, hospital labs, POC outlets, and add one specialty clinic in 2021, after a pause in 2020. Apart from growing its network of outlets, the company plans to upgrade its existing clinical labs to provide a greater array of tests.
Prodia Widyahusada (PRDA IJ) valuations are very attractive versus healthcare peers in Indonesia but also Indian diagnostic peers, which trade on significantly higher multiples.

Prodia Widyahusada (PRDA IJ) - Diagnosed as Resilient

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

Gland Pharma Ltd / Equity Capital Markets

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<a href="https://www.smartkarma.com/entities/gland-pharma-ltd" target="_blank" data-smartkarma-citation="entities:29723:1" rel="noopener">Gland Pharma (7172753Z IN)</a> raised around US$900m in one of India’s largest IPOs in 2020. The company was established in 1978 by P.V.N. Raju. KKR invested in the company in 2014 and <a href="https://www.smartkarma.com/entities/shanghai-fosun-pharmaceutical-group" target="_blank" data-smartkarma-citation="entities:8045:1" rel="noopener">Shanghai Fosun Pharmaceutical (Group) (2196 HK)</a> bought a 74% stake in the company in 2017. 
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I have covered the background of the deal in my earlier note, <a href="https://www.smartkarma.com/insights/gland-pharma-ipo-high-on-growth-but-low-on-details" target="_blank" rel="noopener">Gland Pharma IPO - High on Growth but Low on Details.</a>
In this note, I'll talk about the deal updates and provide a table with implied valuations at different share price levels.
</div>


Gland Pharma (7172753Z IN) raised around US$900m in one of India’s largest IPOs in 2020. The company was established in 1978 by P.V.N. Raju. KKR invested in the company in 2014 and Shanghai Fosun Pharmaceutical (Group) (2196 HK) bought a 74% stake in the company in 2017. 


I have covered the background of the deal in my earlier note, Gland Pharma IPO - High on Growth but Low on Details.
In this note, I'll talk about the deal updates and provide a table with implied valuations at different share price levels.


Gland Pharma IPO Trading - Squeezed Through, Now for the Real Test

<a href="https://www.smartkarma.com/entities/gland-pharma-ltd" target="_blank" data-smartkarma-citation="entities:29723:1" rel="noopener">Gland Pharma (7172753Z IN)</a> aims to raise around US$900m in what would be one of India’s largest IPOs in 2020. The company was established in 1978 by P.V.N. Raju. KKR invested in the company in 2014 and <a href="https://www.smartkarma.com/entities/shanghai-fosun-pharmaceutical-group" target="_blank" data-smartkarma-citation="entities:8045:1" rel="noopener">Shanghai Fosun Pharmaceutical (Group) (2196 HK)</a> bought a 74% stake in the company in 2017. Gland Pharma was one of the fastest growing generic injectables-focused companies by revenue in the United States from 2014 to 2019. GP sells its products primarily via a B2B model in over 60 countries, including US, Europe, Canada, Australia, and India. It also operates a B2C model in India.GP’s revenue has grown at 28.78% CAGR over FY18-20 and was up another 29.4% in 1Q21. At the same time, PAT margins have increased from 19.2% in FY18 to 34.2% in 1Q21. Thus, PAT has grown at 55.15% CAGR and was up another 70.6% in 1Q21. However, the company hasn’t provided a whole lot of details about the revenue breakdown for its products. In addition, not all the pre-IPO shareholders will be locked-up post listing.

Gland Pharma (7172753Z IN) aims to raise around US$900m in what would be one of India’s largest IPOs in 2020. The company was established in 1978 by P.V.N. Raju. KKR invested in the company in 2014 and Shanghai Fosun Pharmaceutical (Group) (2196 HK) bought a 74% stake in the company in 2017. Gland Pharma was one of the fastest growing generic injectables-focused companies by revenue in the United States from 2014 to 2019. GP sells its products primarily via a B2B model in over 60 countries, including US, Europe, Canada, Australia, and India. It also operates a B2C model in India.GP’s revenue has grown at 28.78% CAGR over FY18-20 and was up another 29.4% in 1Q21. At the same time, PAT margins have increased from 19.2% in FY18 to 34.2% in 1Q21. Thus, PAT has grown at 55.15% CAGR and was up another 70.6% in 1Q21. However, the company hasn’t provided a whole lot of details about the revenue breakdown for its products. In addition, not all the pre-IPO shareholders will be locked-up post listing.

Gland Pharma IPO - High on Growth but Low on Details

India

Dr. Reddy's Laboratories Limited provides a complete range of pharmaceutical services. The Company manufactures bulk drugs and formulations including verapamil and cephalexin. The Company also manufactures and exports molecules such as norfloxacin, ciprofloxacin, and varieties of semi-synthetic penicillin. The Company markets its products in India and around the world.

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Dr. Reddy's Laboratories (DRRD IN)

Aurobindo Pharma (ARBP IN): Pain Continues in the U.S. Formulation Business

Aurobindo’s U.S. formulation business is witnessing price erosion, which is impacting the revenue and margin. However, value unlocking in...

Tina Banerjee

Quiddity India Buy-Back Guide 2021: Regulations & Patterns

This insight is a basic primer of Indian buyback types, rules and regulations, and is part of a two-part series, with the other part being a

Travis Lundy

Prodia Widyahusada (PRDA IJ) - Diagnosed as Resilient

Prodia remains one of our top healthcare picks in Indonesia, showing resilience during the pandemic, just releasing a strong set of numbers, and...

Angus Mackintosh

Gland Pharma IPO Trading - Squeezed Through, Now for the Real Test

Gland Pharma raised around US$900m in one of India’s largest IPOs in 2020. The company was established in 1978. KKR invested in 2014 and Fosun...

Sumeet Singh

Gland Pharma IPO - High on Growth but Low on Details

Gland Pharma aims to raise around US$900m in what would be one of India’s largest IPOs in 2020. Fosun Pharmaceutical bought a 74% stake in the...

Sumeet Singh

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