Japan Specialist

Mark Chadwick

Equity Bottom-Up

<ul>
<li>NAVF and Dalton invest heavily in Hogy Medical, eyeing its market dominance and growth potential in disposable surgical equipment</li>
<li>Despite past underperformance, NAVF's proactive engagement signals a push for a more aggressive overseas expansion</li>
<li>We see a number of continued catalysts for future shareholder value enhancement and improved corporate governance position</li>
</ul>


NAVF and Dalton invest heavily in Hogy Medical, eyeing its market dominance and growth potential in disposable surgical equipment
Despite past underperformance, NAVF's proactive engagement signals a push for a more aggressive overseas expansion
We see a number of continued catalysts for future shareholder value enhancement and improved corporate governance position


Hogy Medical (3593): A Prescription for Renewed Growth

Global Healthcare Analyst

Tina Banerjee

<ul>
<li>
<a href="https://www.smartkarma.com/entities/hogy-medical-co-ltd" target="_blank" data-smartkarma-citation="entities:10493:1" rel="noopener">Hogy Medical (3593 JP)</a> reported mixed FY23 result. Revenue and operating profit were ahead of guidance while net profit missed guidance mainly due to a one-off loss of ¥464M. </li>
<li>For FY24, Hogy guided for 5% revenue growth. However, operating, and net profits are expected to decline 23% and 19%, respectively, due to rising costs and exchange rate fluctuations.</li>
<li>While Hogy will continue cost cutting and improving productivity, the company is not expected to fully offset the cost pressure. Hence near-term outlook for the company remains bleak.</li>
</ul>



Hogy Medical (3593 JP) reported mixed FY23 result. Revenue and operating profit were ahead of guidance while net profit missed guidance mainly due to a one-off loss of ¥464M. 
For FY24, Hogy guided for 5% revenue growth. However, operating, and net profits are expected to decline 23% and 19%, respectively, due to rising costs and exchange rate fluctuations.
While Hogy will continue cost cutting and improving productivity, the company is not expected to fully offset the cost pressure. Hence near-term outlook for the company remains bleak.


Hogy Medical (3593 JP): Mixed FY23 Result; Soaring Cost to Negatively Impact Profit in FY24

<ul>
<li>The med-tech sector is ripe for consolidation. Smaller players like <a href="https://www.smartkarma.com/entities/hogy-medical-co-ltd" target="_blank" data-smartkarma-citation="entities:10493:1" rel="noopener">Hogy Medical (3593 JP)</a> , and <a href="https://www.smartkarma.com/entities/eiken-chemical-co-ltd" target="_blank" data-smartkarma-citation="entities:12675:1" rel="noopener">Eiken Chemical (4549 JP)</a>  exhibit sub-par growth and lagging valuations</li>
<li>Activist investors like ValueAct Capital, Dalton and Asset Value have recognized an opportunity for growth and potential M&amp;A</li>
<li>Both Hogy and Eiken trades at a deep discount to larger domestic peers and stand to benefit the most from any consolidation</li>
</ul>


The med-tech sector is ripe for consolidation. Smaller players like Hogy Medical (3593 JP) , and Eiken Chemical (4549 JP)  exhibit sub-par growth and lagging valuations
Activist investors like ValueAct Capital, Dalton and Asset Value have recognized an opportunity for growth and potential M&amp;A
Both Hogy and Eiken trades at a deep discount to larger domestic peers and stand to benefit the most from any consolidation


Consolidation in the Med-Tech Sector? Eiken and Hogy to Benefit

<ul>
<li>
<a href="https://www.smartkarma.com/entities/hogy-medical-co-ltd" target="_blank" data-smartkarma-citation="entities:10493:1" rel="noopener">Hogy Medical (3593 JP)</a> reported 6.2% growth in revenue to ¥29.5B during 9MFY23, driven by healthy sales of Premium Kit and other non-woven products. Sales of Premium Kit climbed 12%.</li>
<li>Rising cost pressure has negatively impacted margins. Gross profit margin contracted 180bps YoY to 40.6% in 9MFY23. Operating profit margin declined 20bps YoY to 17.1%.</li>
<li>Hogy continued to expect revenue to rise 5.3% YoY to ¥38.7B, operating profit to grow 6.1% YoY to ¥6.5B, and net profit to increase 4.6% YoY to ¥4.57B in FY23.</li>
</ul>



Hogy Medical (3593 JP) reported 6.2% growth in revenue to ¥29.5B during 9MFY23, driven by healthy sales of Premium Kit and other non-woven products. Sales of Premium Kit climbed 12%.
Rising cost pressure has negatively impacted margins. Gross profit margin contracted 180bps YoY to 40.6% in 9MFY23. Operating profit margin declined 20bps YoY to 17.1%.
Hogy continued to expect revenue to rise 5.3% YoY to ¥38.7B, operating profit to grow 6.1% YoY to ¥6.5B, and net profit to increase 4.6% YoY to ¥4.57B in FY23.


Hogy Medical (3593 JP): Strong Nine-Month Result as COVID Had Minimal Impact on Surgery Volume

<ul>
<li>
<a href="https://www.smartkarma.com/entities/mani-inc" target="_blank" data-smartkarma-citation="entities:6534:1" rel="noopener">Mani Inc (7730 JP)</a> reported Q2FY22 revenue ahead of guidance, mainly driven by demand recovery in the surgical segment and positive effect of foreign exchange. However, profitability declined year-over-year.</li>
<li>Despite revenue beat in H1FY22, management reiterated FY22 guidance due to geographical risk. Outlook seems to be uncertain for China and India, which together contribute 33% of total revenue.</li>
<li>Mani shares plunged 20% since I published bearish note on the company in January 2022. Investors should avoid Mani due to its uncertain revenue outlook and deteriorating profitability in short-term.</li>
</ul>



Mani Inc (7730 JP) reported Q2FY22 revenue ahead of guidance, mainly driven by demand recovery in the surgical segment and positive effect of foreign exchange. However, profitability declined year-over-year.
Despite revenue beat in H1FY22, management reiterated FY22 guidance due to geographical risk. Outlook seems to be uncertain for China and India, which together contribute 33% of total revenue.
Mani shares plunged 20% since I published bearish note on the company in January 2022. Investors should avoid Mani due to its uncertain revenue outlook and deteriorating profitability in short-term.


Mani Inc (7730 JP): Q2 Result Exceeds Expectation Aided by Demand Recovery; FY22 Guidance Reiterated

Japan

HOGY MEDICAL CO., LTD. manufactures and sells medical supply and related products including sterilized tools and disposable injectors and masks used by surgeons.

Hogy Medical (3593 JP)

Hogy Medical (3593): A Prescription for Renewed Growth

NAVF and Dalton invest in Hogy Medical for market dominance in disposable surgical equipment, signaling aggressive overseas expansion and...

Mark Chadwick