Index Rebal Trades & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Index Rebal Trades & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Event-Driven

<ul>
<li>The TOPIX liquidity factor removal names (upweights) for April 2023 were announced after the close on Friday 7th April 2023 as expected.</li>
<li>According to the announcement, 22 names will see their Liquidity Factors removed and experience index inflows later this month. </li>
<li>Today was the first day of trading post-announcement and the 22 names gained +1.1% (+0.47% vs the TOPIX Index). I feel there could be more upside for some names.</li>
</ul>


The TOPIX liquidity factor removal names (upweights) for April 2023 were announced after the close on Friday 7th April 2023 as expected.
According to the announcement, 22 names will see their Liquidity Factors removed and experience index inflows later this month. 
Today was the first day of trading post-announcement and the 22 names gained +1.1% (+0.47% vs the TOPIX Index). I feel there could be more upside for some names.


TOPIX Big April Basket 23: 100% Hit Rate for High Conviction Basket; Focus on Surprises Next

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

<ul>
<li>
<a href="https://www.smartkarma.com/entities/dai-nippon-printing-co-ltd" target="_blank" data-smartkarma-citation="entities:19388:1" rel="noopener">Dai Nippon Printing (7912 JP)</a> is a range trade. The juice is in the speed of the Corporate Buyback and how excited people get.</li>
<li>With the renewal of the gaming concession in the bag and <a href="https://www.smartkarma.com/entities/melco-crown-entertainme-adr" target="_blank" data-smartkarma-citation="entities:810:1" rel="noopener">Melco Resorts (MLCO US)</a> up 128% in the past six months, <a href="https://www.smartkarma.com/entities/melco-international-development-ltd" target="_blank" data-smartkarma-citation="entities:809:1" rel="noopener">Melco (200 HK)</a> has extracted ~HK$2.5bn from MLCO.</li>
<li>
<a href="https://www.smartkarma.com/entities/hosokawa-micron-corp" target="_blank" data-smartkarma-citation="entities:6433:1" rel="noopener">Hosokawa Micron (6277 JP)</a>'s current PER of 9.9x ignores that net cash and securities holdings is about half of market cap. This is a cheap stock.  </li>
</ul>



Dai Nippon Printing (7912 JP) is a range trade. The juice is in the speed of the Corporate Buyback and how excited people get.
With the renewal of the gaming concession in the bag and Melco Resorts (MLCO US) up 128% in the past six months, Melco (200 HK) has extracted ~HK$2.5bn from MLCO.

Hosokawa Micron (6277 JP)'s current PER of 9.9x ignores that net cash and securities holdings is about half of market cap. This is a cheap stock.  


Last Week in Event SPACE: Dai Nippon Printing, Melco, Hosokawa Micron,Tencent/Meituan, Ihara Science

Travis Lundy

<ul>
<li>
<a href="https://www.smartkarma.com/entities/sosei-group-corp" target="_blank" data-smartkarma-citation="entities:770:1" rel="noopener">Sosei Group (4565 JP)</a> is a Tokyo-based biopharma group which started small, got big and exciting, and hasn't grown in market cap in years, while it has grown in ambition.</li>
<li>It has strategic relationships with AbbVie, Biohaven, Genentech, GSK, Takeda, Pfizer, AstraZeneca, and Takeda and a market cap near ¥200bn.</li>
<li>It has always had impressive shareholder support. Now after nearly 20 years on TSE Mothers/Growth (the limit was supposed to be 10yrs), it moves to TSE Prime and TOPIX.</li>
</ul>



Sosei Group (4565 JP) is a Tokyo-based biopharma group which started small, got big and exciting, and hasn't grown in market cap in years, while it has grown in ambition.
It has strategic relationships with AbbVie, Biohaven, Genentech, GSK, Takeda, Pfizer, AstraZeneca, and Takeda and a market cap near ¥200bn.
It has always had impressive shareholder support. Now after nearly 20 years on TSE Mothers/Growth (the limit was supposed to be 10yrs), it moves to TSE Prime and TOPIX.


Sosei Group (4565 JP) TSE Prime Promotion and TOPIX Inclusion... Finally

Global Healthcare Analyst

Tina Banerjee

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/sosei-group-corp" target="_blank" data-smartkarma-citation="entities:770:1" rel="noopener">Sosei Group (4565 JP)</a> is currently eligible for total milestone payment of more than $9.5B for its existing collaborations. During 9MFY23, Sosei reported revenue growth of 141% YoY to ¥8.6B.</li>
<li>
<a href="https://www.smartkarma.com/entities/pfizer-inc" target="_blank" data-smartkarma-citation="entities:1131:1" rel="noopener">Pfizer Inc (PFE US)</a> has dosed first subject in phase 2 clinical trial of type 2 diabetes drug candidate PF-07081532. Achievement of this milestone triggers a $10M payment to Sosei.</li>
<li>Sosei has four programs in preclinical studies and 10+ in discovery phase, which are still unpartnered. The company has a cash runway into 2025 to fund its drug discovery activities.</li>
</ul>



Sosei Group (4565 JP) is currently eligible for total milestone payment of more than $9.5B for its existing collaborations. During 9MFY23, Sosei reported revenue growth of 141% YoY to ¥8.6B.

Pfizer Inc (PFE US) has dosed first subject in phase 2 clinical trial of type 2 diabetes drug candidate PF-07081532. Achievement of this milestone triggers a $10M payment to Sosei.
Sosei has four programs in preclinical studies and 10+ in discovery phase, which are still unpartnered. The company has a cash runway into 2025 to fund its drug discovery activities.


Sosei Group (4565 JP): Partners’ Pipeline Progress Reflects Power of Drug Discovery Platform

<ul>
<li>
<a href="https://www.smartkarma.com/entities/sawai-group-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:35512:1" rel="noopener">Sawai Group Holdings (4887 JP)</a> is negatively impacted by drug reimbursement pricing in Japan. H1FY23 revenue, operating profit, net profit decreased 1%, 36% y/y, and 29%, y/y, respectively.</li>
<li>Generic pharmaceutical companies are more affected by the drug price revisions than their branded counterparts. In addition, APIs are impacted by increases in the cost of oil and exchange rates.</li>
<li>The sustainability of the U.S. business rebound is still uncertain. We want to watch Sawai from sidelines and wait for full-year FY23 results, FY24 guidance, and NHI pricing decision.</li>
</ul>



Sawai Group Holdings (4887 JP) is negatively impacted by drug reimbursement pricing in Japan. H1FY23 revenue, operating profit, net profit decreased 1%, 36% y/y, and 29%, y/y, respectively.
Generic pharmaceutical companies are more affected by the drug price revisions than their branded counterparts. In addition, APIs are impacted by increases in the cost of oil and exchange rates.
The sustainability of the U.S. business rebound is still uncertain. We want to watch Sawai from sidelines and wait for full-year FY23 results, FY24 guidance, and NHI pricing decision.


Sawai Group Holdings (4887 JP): Continued Price Erosion Is Weakening Earnings Prowess

Japan

Sosei Group Corporation is a holding company which was established through reorganization.  The Group companies are biopharmaceutical companies specializing in drug development.  Sosei Group enters into license agreements primarily with US, EU, and Japanese companies to market the licensed drugs in Japan and find alternative usage on such drugs.

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Sosei Group (4565 JP)

TOPIX Big April Basket 23: 100% Hit Rate for High Conviction Basket; Focus on Surprises Next

There could be around US$450mn of flows and an average of 12 days of ADV to buy for the 13 names which I identify as "surprise" names. I expect...

Janaghan Jeyakumar, CFA

Last Week in Event SPACE: Dai Nippon Printing, Melco, Hosokawa Micron,Tencent/Meituan, Ihara Science

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett