Japan Specialist

Mark Chadwick

Equity Bottom-Up

<ul>
<li>It is time to throw off the old valuation models. Fujifilm is no longer a dusty old camera maker</li>
<li>The healthcare business is already the biggest earnings driver and with aggressive capex.... </li>
<li>Fujifilm will become the biggest biopharma contract manufacturing company in the world. <strong>Valuations don't reflect that</strong>. </li>
</ul>


It is time to throw off the old valuation models. Fujifilm is no longer a dusty old camera maker
The healthcare business is already the biggest earnings driver and with aggressive capex.... 
Fujifilm will become the biggest biopharma contract manufacturing company in the world. Valuations don't reflect that. 


Fujifilm (4901) | Bio Pharma Giant Is a Double

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

Novotech Holdings / Equity Capital Markets

<div><p><a href="https://www.smartkarma.com/entities/novotech-health-holdings-ltd" target="_blank" data-smartkarma-citation="entities:33411:1" rel="noopener">Novotech Holdings (NVT HK)</a> is a global contract research organisation (CRO). Novotech is the third-largest Asia-Pacific-based CRO and the largest biotech-specialist CRO in the Asia-Pacific region, both in terms of revenue in 2020, according to Frost &amp; Sullivan. The controlling shareholder is TPG and the other shareholders include GIC, Kaiser Foundation Hospitals and Sequoia Capital. Novotech has started pre-marketing an HKEx IPO to raise $0.5-1.0 billion, according to press reports.</p></div><div>
<div><p>In <a href="https://www.smartkarma.com/insights/novotech-health-ipo-initiation-on-demand-science" target="_blank" data-smartkarma-citation="insights:57198" rel="noopener">Novotech Health IPO Initiation: On-Demand Science</a>, we noted that, unlike other H-listed CRO peers, Novotech gives investors an avenue to gain exposure to the broader Asia-Pacific CRO industry. We concluded that Novotech’s fundamentals are solid and the IPO is worth a look for investors willing to brave the current weak sentiment on HKEx IPOs. </p></div>
<div><div><p>In <a href="https://www.smartkarma.com/insights/novotech-health-ipo-a-solid-start-to-2021" target="_blank" data-smartkarma-citation="insights:57255" rel="noopener">Novotech Health IPO: A Solid Start to 2021</a>, we examined the PHIP which discloses the 1Q21 results along with additional disclosures and recent developments. Overall, we maintained our view that the fundamentals look attractive. </p></div></div>
</div><div><div><div class="content-highlight"><p>In this note, we present our forecasts and take the first look at Novotech's potential valuation range. </p></div></div></div>

Novotech Holdings (NVT HK) is a global contract research organisation (CRO). Novotech is the third-largest Asia-Pacific-based CRO and the largest biotech-specialist CRO in the Asia-Pacific region, both in terms of revenue in 2020, according to Frost &amp; Sullivan. The controlling shareholder is TPG and the other shareholders include GIC, Kaiser Foundation Hospitals and Sequoia Capital. Novotech has started pre-marketing an HKEx IPO to raise $0.5-1.0 billion, according to press reports.
In Novotech Health IPO Initiation: On-Demand Science, we noted that, unlike other H-listed CRO peers, Novotech gives investors an avenue to gain exposure to the broader Asia-Pacific CRO industry. We concluded that Novotech’s fundamentals are solid and the IPO is worth a look for investors willing to brave the current weak sentiment on HKEx IPOs. 
In Novotech Health IPO: A Solid Start to 2021, we examined the PHIP which discloses the 1Q21 results along with additional disclosures and recent developments. Overall, we maintained our view that the fundamentals look attractive. 
In this note, we present our forecasts and take the first look at Novotech's potential valuation range. 

Novotech Health IPO: Valuation First-Look

Equity L/S Analyst | Forensic Accounting | India, Yellowstone Equity

Ankit Agrawal, CFA

Equity L/S Analyst | Forensic Accounting | India

<p>Over the next few weeks/months, we will be initiating coverage on a few key players in the Global CDMO space, where we see interesting growth trends. Our focus in particular will be on biopharma focused CDMOs where the processes are highly technology driven leading to significant barriers to entry. These CDMOs are also seeing strong growth backed by accelerated growth in biologics, increased outsourcing and potential market share consolidation among the large biopharma CDMO players.</p>
<p>We begin with our deep-dive coverage on <a href="https://www.smartkarma.com/entities/lonza-group-ag" target="_blank" data-smartkarma-citation="entities:22580:1" rel="noopener">Lonza Group AG (LONN VX)</a>, a global leader in the CDMO space with strong offerings in the bio-pharma CDMO space. Lonza has a market-leading presence across biopharma and small molecules end-to-end CDMO offerings. It has a strong operational and regulatory track record built over the past many decades that has enabled it to establish a wide-reaching client base. Lonza was founded in 1897 and is based out of Switzerland. Its operations and client reach span globally.</p>
<h3>Insight Flow</h3>
<ul>
<li>Business Background</li>
<li>Investment Thesis</li>
<li>Valuation</li>
<li>Catalysts</li>
<li>Risks</li>
<li>Conclusion</li>
</ul>

Over the next few weeks/months, we will be initiating coverage on a few key players in the Global CDMO space, where we see interesting growth trends. Our focus in particular will be on biopharma focused CDMOs where the processes are highly technology driven leading to significant barriers to entry. These CDMOs are also seeing strong growth backed by accelerated growth in biologics, increased outsourcing and potential market share consolidation among the large biopharma CDMO players.
We begin with our deep-dive coverage on Lonza Group AG (LONN VX), a global leader in the CDMO space with strong offerings in the bio-pharma CDMO space. Lonza has a market-leading presence across biopharma and small molecules end-to-end CDMO offerings. It has a strong operational and regulatory track record built over the past many decades that has enabled it to establish a wide-reaching client base. Lonza was founded in 1897 and is based out of Switzerland. Its operations and client reach span globally.
Insight Flow

Business Background
Investment Thesis
Valuation
Catalysts
Risks
Conclusion


Lonza: A Bellwether Biopharma Focused CDMO | At Inflection Point, To Benefit from Ongoing Capex

Asia Long-Short PM/Analyst

Curtis Lehnert

<p>WuXi Apptec is set to be the newest A/H pair with its upcoming HK listing that is set to raise USD 1 billion. The A-share (603289 CH) recorded 15 straight limit up days after listing and the stock now stands at +274% since the IPO in January (it was up over 500% at one point). The H-share listing probably will not experience the same phenomenon, but that doesn't mean the IPO won't go well. WuXi rides on the HK pharma/biotech wave started by pre-revenue biotech firm <a href="https://www.smartkarma.com/entities/27265" target="_blank" data-smartkarma-citation="entities:27265:1">Ascletis Pharma Inc (1672 HK)</a> a couple months ago, but generates more revenue than any other pharmaceutical R&amp;D outsourcing firm in China.</p>
<p>The H-share pricing will be done on a relative basis to the A-share, so performance of the A-share over the coming days will be critical to the strike price of the H-share IPO. Currently, old favorites <a href="https://www.smartkarma.com/entities/389" target="_blank" data-smartkarma-citation="entities:389:1">Anhui Conch Cement Co Ltd A (600585 CH)</a> and <a href="https://www.smartkarma.com/entities/24682" target="_blank" data-smartkarma-citation="entities:24682:1">Ping An Insurance Group Co Of (601318 CH)</a> are the only A-shares trading at a discount to the H, which should cap some of the upside in this deal, but there would still be room for a solid pop upon listing. As the newest entrant to the A/H universe and a company well-positioned for future growth, this is one deal worth spending some time on.</p>
<p>In this insight I will explore the below:</p>
<p>I. The Industry</p>
<p>II. The Company</p>
<p>III. Financials</p>
<p>IV. Recent CDMO Acquistion Data Points</p>

WuXi Apptec is set to be the newest A/H pair with its upcoming HK listing that is set to raise USD 1 billion. The A-share (603289 CH) recorded 15 straight limit up days after listing and the stock now stands at +274% since the IPO in January (it was up over 500% at one point). The H-share listing probably will not experience the same phenomenon, but that doesn't mean the IPO won't go well. WuXi rides on the HK pharma/biotech wave started by pre-revenue biotech firm Ascletis Pharma Inc (1672 HK) a couple months ago, but generates more revenue than any other pharmaceutical R&amp;D outsourcing firm in China.
The H-share pricing will be done on a relative basis to the A-share, so performance of the A-share over the coming days will be critical to the strike price of the H-share IPO. Currently, old favorites Anhui Conch Cement Co Ltd A (600585 CH) and Ping An Insurance Group Co Of (601318 CH) are the only A-shares trading at a discount to the H, which should cap some of the upside in this deal, but there would still be room for a solid pop upon listing. As the newest entrant to the A/H universe and a company well-positioned for future growth, this is one deal worth spending some time on.
In this insight I will explore the below:
I. The Industry
II. The Company
III. Financials
IV. Recent CDMO Acquistion Data Points

Wuxi Apptec 药明康德 IPO: Welcome to the A/H Universe

Founder

Kemp Dolliver, CFA

Cherrystone Hill Research

<p>Recent developments in <a href="https://www.smartkarma.com/entities/22932" target="_blank" data-smartkarma-citation="entities:22932:1">Samsung Biologics Co., (207940 KS)</a>'s business have been mixed with a negative skew. First, partner <a href="https://www.smartkarma.com/entities/26820" target="_blank" data-smartkarma-citation="entities:26820:1">Merck &amp; Co Inc (MRK UN)</a> terminated a product development project, reducing long-term revenue and earnings prospects. Second, recent biosimilar product launches face increased competition relative to prior launches. Third, the CMO business' capacity is expanding dramatically while backlogs have been stagnant. Fourth, accounting controversies are returning to the fore. The company's US$27 billion market cap remains a function of earnings prospects in 4-5 years, which we think are likely to disappoint.</p>

Recent developments in Samsung Biologics Co., (207940 KS)'s business have been mixed with a negative skew. First, partner Merck &amp; Co Inc (MRK UN) terminated a product development project, reducing long-term revenue and earnings prospects. Second, recent biosimilar product launches face increased competition relative to prior launches. Third, the CMO business' capacity is expanding dramatically while backlogs have been stagnant. Fourth, accounting controversies are returning to the fore. The company's US$27 billion market cap remains a function of earnings prospects in 4-5 years, which we think are likely to disappoint.

Switzerland

Lonza is a global partner to the pharmaceutical, biotech and nutrition markets. The company works with healthcare customers to develop, manufacture and commercialize medical treatments and technologies to treat patients against a range of diseases. Founded in the Swiss Alps, Lonza now operates across Europe, North America, South America, Asia and Oceania.

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Lonza Group (LONN SW)

Fujifilm (4901) | Bio Pharma Giant Is a Double

We are bullish on Fujifilm for two reasons: (1) the company’s earnings structure is now dominated by healthcare, and (2) the market is mis-pricing...

Mark Chadwick

Novotech Health IPO: Valuation First-Look

Novotech is pre-marketing an HKEx IPO to raise $0.5-1.0 billion. In this note, we present our forecasts and take the first look at Novotech's...

Arun George

Lonza: A Bellwether Biopharma Focused CDMO | At Inflection Point, To Benefit from Ongoing Capex

Over the next few weeks/months, we will be initiating coverage on a few key players in the Global CDMO space, where we see interesting growth...

Ankit Agrawal, CFA

Wuxi Apptec 药明康德 IPO: Welcome to the A/H Universe

WuXi Apptec is set to be the newest A/H pair with its upcoming HK listing that is set to raise USD 1 billion. The A-share (603289 CH) recorded 15...

Curtis Lehnert

Samsung BioLogics Update

Recent developments in Samsung Biologics Co., (207940 KS)'s business have been mixed with a negative skew. First, partner Merck & Co Inc (MRK...

Kemp Dolliver, CFA

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