Category

Healthcare Sector

Brief Healthcare: Apollo Hospitals (APHS IN) and more

By | Daily Briefs, Healthcare Sector

In this briefing:

  1. Apollo Hospitals (APHS IN)
  2. BCH: Private Chain Hospital with High Sustainable Growth

1. Apollo Hospitals (APHS IN)

Apollo%20reorganisation

We build on Nitin Mangal ‘s Apollo Hospital Enterprise Limited: From Sunshine To ShadesApollo Hospitals Enterprise (APHS IN). Our focus for this Insight is the standalone pharmacy business that Apollo has recently reorganised.  We discuss our key takeaways from our meeting with a wholesale pharmaceutical distributor based out of Mumbai and visits to Jan Aushadi Kendras, Local pharma stores and Apollo Pharmacy stores. We believe over the next 5 years, the offline pharmacy retail business is going to change in India. In view of the competitive intensity in the Industry and deep discounting by online retailers,  management’s projected growth numbers look highly optimistic.  Apollo should also re-evaluate its strategy of purchasing medicines from related parties, and try sourcing directly or at more competitive terms which could possibly lead to some more improvement in operating margins.  

2. BCH: Private Chain Hospital with High Sustainable Growth

Capture2

We initiate coverage on BCH with a BUY rating, based on a target price of Bt21, which is derived from a DCF methodology (WACC 6.8% and terminal growth 0%), implying 43.8xPE’19E, a a 19% premium to the Thai Health Care sector.

The story:

  • Hospital with the most number of Social Security registered against an ageing society theme.
  • Market overreacted to earnings disappointment in 4Q18.
  • New strategies attract foreign patients, boosting flagship hospital
  • IVF Lab to create new growth opportunities
  • Adding three hospitals in areas of large potential demand.

Risks:

 Lack of medical personnel & changes in social security policy

Get Straight to the Source on Smartkarma

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Brief Healthcare: ECM Weekly (25 May 2019) – ESR Cayman, Hansoh Pharma, Tai Hing, China East Edu, Haitong UniTrust and more

By | Daily Briefs, Healthcare Sector

In this briefing:

  1. ECM Weekly (25 May 2019) – ESR Cayman, Hansoh Pharma, Tai Hing, China East Edu, Haitong UniTrust
  2. Mallinckrodt – The Volatility Continues?
  3. Hansoh Pharma (翰森制药) IPO: Thoughts on Valuation
  4. Shimadzu (7701 JP): Weak 4Q Indicates FY Mar-20 Guidance Too High
  5. Hansoh Pharma (翰森制药) IPO: Competitive Landscape of HS-10296, the 3rd Gen EGFR TKI for Lung Cancer

1. ECM Weekly (25 May 2019) – ESR Cayman, Hansoh Pharma, Tai Hing, China East Edu, Haitong UniTrust

Upcoming

Aequitas Research puts out a weekly update on the deals that have been covered by Smartkarma Insight Providers recently, along with updates for upcoming IPOs.

This will be the third week in a row we are saying: there are more IPOs coming in Hong Kong!Momentum seems to be holding up as we head into the end of Q2. First off, there will be 4 IPOs starting to trade throughout next week. Mulsanne Group Holding Ltd (1817 HK) will debut first on Monday.

This would be interesting to watch because the IPO utilized the new pricing mechanism in Hong Kong to price its IPO below the bottom end of its indicated price range rather than withdraw and refile. This mechanism reminds us of the pricing flexibility of US IPOs wherein companies could price below its indicative price range to ensure that it performs well on its debut despite poor demand during bookbuild. Xinyi Energy Holdings Ltd (3868 HK), Frontage Holdings (1521 HK), and MabPharm (2181 HK) will trade on Tuesday, Thursday, and Friday respectively.

For upcoming bookbuilds, Tai Hing (1719303D HK) and China Tobacco International (GHALPZ CH) have filed their PHIP this week and will be likely be opening their books next week. We are also hearing that CSSC Hong Kong Shipping Co Ltd (0931049D CH) and China East Education (EASTEDU HK) will open books on Monday while Hansoh Pharmaceutical (HANSOH HK) will be on Tuesday.

IPO activity in other countries have been fairly muted. Eagle Hospitality Trust (EAGLEHT SP)  finally started trading in Singapore. Its share price closed 6% down as the IPO was undersubscribed. We will leave the updates on the IPO to Sumeet Singh on Monday.

In the U.S, GSX Techedu (GSX US) will launch its book next week while Meten (MEDU US) which just filed its US$100m IPO with the SEC will be premarketing next week.

Accuracy Rate:

Our overall accuracy rate is 72.4% for IPOs and 63.9% for Placements 

(Performance measurement criteria is explained at the end of the note)

New IPO filings

  • Sinic Holdings (Hong Kong, >US$100m)
  • Meten International Edu (the U.S, US$100m)

Below is a snippet of our IPO tool showing upcoming events for the next week. The IPO tool is designed to provide readers with timely information on all IPO related events (Book open/closing, listing, initiation, lock-up expiry, etc) for all the deals that we have worked on. You can access the tool here or through the tools menu.

Source: Aequitas Research, Smartkarma

News on Upcoming IPOs

Analysis on Upcoming IPOs

NameInsight
Hong Kong
AB InbevAb InBev Asia Pre-IPO – A Brief History of the Asia Pacific Operations – Eeking Out Growth in China
AB InbevAb InBev Asia Pre-IPO – Quick Note – More like CR Beer Rather than Tsingtao
AB InbevAb InBev Asia Pre-IPO – On Its Way to Potentially Being the Biggest HK IPO This Year
AB Inbev

Budweiser Brewing APAC Pre-IPO – It Will Be a US$5bn+ Raise Owing to Its Clean Balance Sheet

AscentageAscentage Pharma (亚盛医药) IPO: Too Early for an IPO
Ant FinancialAnt Financial IPO Early Thought: Understand Fintech Empire, Growth & Risk Factors
CIMC VehCIMC Vehicle (中集车辆): Market Leader of Semi-Trailers but Little Growth Ahead
ClarityClarity Medical (清晰医疗) IPO: Proxy to HK SMILE Surgery Demand
ByteDance

ByteDance (字节跳动) IPO: How Jinri Toutiao Paves The Way for a Bigger Empire (Part 1)

ByteDance

ByteDance (字节跳动) IPO: Tiktok the No.1 Short Video App for a Good Reason (Part 2)

East EduChina East Education (中国东方教育) Pre-IPO – The Company Known for Its Culinary School
China TobacChina Tobacco International (IPO): The Monopolist Will Not Recover
China TobacChina Tobacco Intl (HK) IPO: Proxy For the Chinese Cigarette Consumption
CSSCCSSC (HK) Shipping IPO: A Cyclical Business Masked as an Income Stock
ESRESR Cayman Pre-IPO – A Giant in the Making
ESR

ESR Cayman Pre-IPO – Earnings and Segment Analysis 

ESR

ESR Cayman Pre-IPO- First Stab at Valuation

ESR

ESR Cayman Pre-IPO – Updates from PHIP – Growth Remains on Track 

ESR

ESR Cayman Pre-IPO – Updated Valuation and Key Risks

ESR

ESR Cayman Pre-IPO – Peer Comparison Quick Take – Bigger than Some, Much Smaller than Others 

Hansoh

Hansoh Pharma (翰森制药) IPO: New Numbers, Pre-IPO Dividend and Boyu Investment (Part 3)

Hansoh

Hansoh Pharma (翰森制药) IPO: Thoughts on Valuation

Hansoh

Hansoh Pharma (翰森制药) IPO: Competitive Landscape of HS-10296

Helenbergh

Helenbergh (海伦堡) Early Thoughts – The Usual Red Flag – Related Party Transactions

Hut Chi-Med

Hutchison-China Med (和黄医药) H-Share Listing: MNC Partnerships Endorsed Its R&D Capabilities

Jinxin

Jinxin Fertility (锦欣生殖) Pre-IPO: Strong Foothold in Sichuan but Weak Sentiment for Sector

MicuRxMicuRx Pharma (盟科医药) IPO: Betting on Single Drug in the Not so Attractive Antibiotic Segment
MabPharmMabPharma (迈博医药) IPO: Assembled for a Trade?
MabPharmMabPharm (迈博医药) IPO: Thoughts on Valuation (Part 2)
SH Henlius

Shanghai Henlius (复宏汉霖) IPO: Not an Impressive Biosimilar Portfolio 

TubatuTubatu Group Pre-IPO – Performing Better than Qeeka but Growing Much Slower, US$1bn a Stretch
TubatuTubatu Group Pre-IPO – Online -> Online + Offline -> Online -> ?
South Korea
KMH ShillaKMH Shilla Leisure IPO Preview (Part 1) – Highly Profitable Operator of Public Golf Courses in Korea
KMH ShillaKMH Shilla Leisure IPO Preview (Part 2) – Valuation Analysis
Plakor

Plakor IPO Preview (Part 1)

ZinusZinus IPO Preview (Part 1) – An Amazing Comeback Story (#1 Mattress Brand on Amazon)
India
Aakash EduAakash Education Pre-IPO – Fast Growth in an Attractive Sector
Anmol IndAnmol Industries Pre-IPO Quick Take – No Growth, Generous Payments to Founders
Bharat Hotels

Bharat Hotels Pre-IPO – Catching up with Peers 

CMS InfoCMS Info Systems Pre-IPO – When a PE Sells to Another PE… Only One Gets the Timing Right
Crystal CropCrystal Crop Protection Pre-IPO – DRHP Raises More Questions than in Answers
Flemingo Flemingo Travel Retail Pre-IPO – Its a Different Business in Every Country
NSENSE IPO Preview- Not Only Fast..its Risky and Expensive
NSENational Stock Exchange Pre-IPO Review – Bigger, Better, Stronger but a Little Too Fast for Some
MazagonMazagon Dock IPO Preview: A Monopoly Submarine Yard in India with Captive Navy Spending
Mrs. BectorMrs. Bectors Food Specialities Pre-IPO Quick Take – Sales for Its Main Segment Have Been Sta

Lodha

Lodha Developers Pre-IPO – Second Time Lucky but Not Really that Much Affordable
LodhaLodha Developers IPO: Presence in Affordable Segment Saves Lodha the Blushes in a Sluggish Mkt
IndiaMartIndiaMART Pre-IPO – Getting and Retaining Subscribers Seems to Be Difficult
PNB MetPNB Metlife Pre-IPO Quick Take – Doesn’t Stack up Well Versus Its Larger Peers
Malaysia
QSRQSR Brands Pre-IPO – As Healthy as Fast Food
The U.S
DouyuDouyu (斗鱼直播) IPO: Leader At a Cost
DouyuDouyu (斗鱼直播) IPO: Comparison with Huya (Part 2)
GSXGSX Techedu (跟谁学) IPO Early Thoughts – Successful Pivot Away from Marketplace Model
MetenMeten International Edu (美联国际教育) Early Thoughts – Unclear Strategies

2. Mallinckrodt – The Volatility Continues?

4

Although Mallinckrodt’s bonds are trading at a significant discount to par, we recommend investors remain side-lined given our assessment of the probability of further price volatility.

 Although we acknowledge the equity cushion given a conservative EV/EBITDA valuation of ~6x vs. total debt/EBITDA of ~ 5x, we expect continued price volatility.

Accordingly, we believe a more attractive entry point will present itself over the coming months at a lower price level. Despite this, we think that the business, or its individual segments, will remain a going concern with an eventual spin-off into separate entities as per management’s plan.

However, the issue is timing and we expect further volatility due to legal/regulatory risk which is difficult to quantify

3. Hansoh Pharma (翰森制药) IPO: Thoughts on Valuation

Peer%20valuation%20may%2022nd

Hansoh Pharma has started pre-marketing its IPO to raise USD 1bn in its IPO. In our previous insights, we covered the company’s major products and core drug candidates, its shareholders, the latest financials and the 4+7 centralized procurement, as well as a detailed discussion on its key product, the third generation EGFR TKI HS-10296. 

In this insight, I’ll provide a more detailed analysis of its valuation.


Our previous coverage on Hansoh Pharma

4. Shimadzu (7701 JP): Weak 4Q Indicates FY Mar-20 Guidance Too High

Screen%20shot%202019 05 22%20at%2016.04.22

In FY Mar-19 as a whole, sales and operating profit were both up 3.9%, but sales stopped growing and operating profit was down 2.7% year-on-year in 4Q, which is seasonally the company’s strongest quarter. In 1H, operating profit was up 10.7% year-on-year.

The breakdown of 4Q operating profit shows 30% – 40% year-on-year declines in Medical Systems and Aircraft Equipment and increases of 1% or less in Analytical & Measuring Instruments and Industrial Machinery (the company’s two most profitable divisions). Operating profits on Analytical & Measuring Instruments and Industrial Machinery were up 8.6% and 18.6%, respectively, in 1H.

For FY Mar-20, management is guiding for a 4.8% increase in sales and a 5.7% increase in operating profit. Our estimates are more conservative and given demand trends in the company’s user industries, we see no reason to change them now.

At ¥2,751 (May 22 closing price), the shares are selling at 25x our EPS estimate for FY Mar-20 and 24x our estimate for FY Mar-21. The five-year historical P/E range is 13x – 33x. The shares are not notably expensive, but a positive catalyst is lacking.

5. Hansoh Pharma (翰森制药) IPO: Competitive Landscape of HS-10296, the 3rd Gen EGFR TKI for Lung Cancer

Osimertinib

Hansoh Pharma has started pre-marketing its IPO to raise USD 1bn in its IPO. In our previous insights, we covered the company’s major products and core drug candidates, and its shareholders, the latest financials and the 4+7 centralized procurement. In this insight, we will provide more details on its key drug candidate, HS-10296, which is a third generation EGFR TKI. As the company provides little details on the HS-10296 besides briefly mentioning that the company has submitted NDA for the treatment of NSCLC. We believe that understanding HS-10296 is pivotal to the valuation of the company. 


Our previous coverage on Hansoh Pharma

Get Straight to the Source on Smartkarma

Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.



Brief Healthcare: Apollo Hospitals (APHS IN) and more

By | Daily Briefs, Healthcare Sector

In this briefing:

  1. Apollo Hospitals (APHS IN)
  2. BCH: Private Chain Hospital with High Sustainable Growth
  3. Viva Biotech IPO: Just About Supporting the Low-End IPO Price Range
  4. Hutchison-China Meditech (和黄医药) H-Share Listing: MNC Partnerships Endorsed Its R&D Capabilities

1. Apollo Hospitals (APHS IN)

Apollo%20reorganisation

We build on Nitin Mangal ‘s Apollo Hospital Enterprise Limited: From Sunshine To ShadesApollo Hospitals Enterprise (APHS IN). Our focus for this Insight is the standalone pharmacy business that Apollo has recently reorganised.  We discuss our key takeaways from our meeting with a wholesale pharmaceutical distributor based out of Mumbai and visits to Jan Aushadi Kendras, Local pharma stores and Apollo Pharmacy stores. We believe over the next 5 years, the offline pharmacy retail business is going to change in India. In view of the competitive intensity in the Industry and deep discounting by online retailers,  management’s projected growth numbers look highly optimistic.  Apollo should also re-evaluate its strategy of purchasing medicines from related parties, and try sourcing directly or at more competitive terms which could possibly lead to some more improvement in operating margins.  

2. BCH: Private Chain Hospital with High Sustainable Growth

Capture2

We initiate coverage on BCH with a BUY rating, based on a target price of Bt21, which is derived from a DCF methodology (WACC 6.8% and terminal growth 0%), implying 43.8xPE’19E, a a 19% premium to the Thai Health Care sector.

The story:

  • Hospital with the most number of Social Security registered against an ageing society theme.
  • Market overreacted to earnings disappointment in 4Q18.
  • New strategies attract foreign patients, boosting flagship hospital
  • IVF Lab to create new growth opportunities
  • Adding three hospitals in areas of large potential demand.

Risks:

 Lack of medical personnel & changes in social security policy

3. Viva Biotech IPO: Just About Supporting the Low-End IPO Price Range

Viva Biotech Holdings (1873 HK) is a leading global contract research organisation (CRO). It has launched its IPO to raise net proceeds of HK$1,232 million ($157 million), at the mid-point of the IPO price range.

Overall, with the caveat that Viva’s valuation is highly dependent on fair value gains (from its portfolio companies), we believe that Viva can just about justify the low-end of IPO price range

4. Hutchison-China Meditech (和黄医药) H-Share Listing: MNC Partnerships Endorsed Its R&D Capabilities

Fruquintinib%20 %20crc

Hutchison-China Meditech, China-based AIM and NASDAQ dual listed pharmaceutical company, is seeking to raise up to USD 500 million via a Hong Kong listing. In this insight, we will discuss the following topics:

  • Company background
  • Progress of clinical trials of its three key drug candidates
  • Key licensing agreements
  • Key takeaways from its financials
  • Shareholders of the company

Get Straight to the Source on Smartkarma

Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.



Brief Healthcare: BCH: Private Chain Hospital with High Sustainable Growth and more

By | Daily Briefs, Healthcare Sector

In this briefing:

  1. BCH: Private Chain Hospital with High Sustainable Growth
  2. Viva Biotech IPO: Just About Supporting the Low-End IPO Price Range
  3. Hutchison-China Meditech (和黄医药) H-Share Listing: MNC Partnerships Endorsed Its R&D Capabilities

1. BCH: Private Chain Hospital with High Sustainable Growth

Capture2

We initiate coverage on BCH with a BUY rating, based on a target price of Bt21, which is derived from a DCF methodology (WACC 6.8% and terminal growth 0%), implying 43.8xPE’19E, a a 19% premium to the Thai Health Care sector.

The story:

  • Hospital with the most number of Social Security registered against an ageing society theme.
  • Market overreacted to earnings disappointment in 4Q18.
  • New strategies attract foreign patients, boosting flagship hospital
  • IVF Lab to create new growth opportunities
  • Adding three hospitals in areas of large potential demand.

Risks:

 Lack of medical personnel & changes in social security policy

2. Viva Biotech IPO: Just About Supporting the Low-End IPO Price Range

Viva Biotech Holdings (1873 HK) is a leading global contract research organisation (CRO). It has launched its IPO to raise net proceeds of HK$1,232 million ($157 million), at the mid-point of the IPO price range.

Overall, with the caveat that Viva’s valuation is highly dependent on fair value gains (from its portfolio companies), we believe that Viva can just about justify the low-end of IPO price range

3. Hutchison-China Meditech (和黄医药) H-Share Listing: MNC Partnerships Endorsed Its R&D Capabilities

Fruquintinib%20 %20crc

Hutchison-China Meditech, China-based AIM and NASDAQ dual listed pharmaceutical company, is seeking to raise up to USD 500 million via a Hong Kong listing. In this insight, we will discuss the following topics:

  • Company background
  • Progress of clinical trials of its three key drug candidates
  • Key licensing agreements
  • Key takeaways from its financials
  • Shareholders of the company

Get Straight to the Source on Smartkarma

Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.



Brief Healthcare: BCH: Private Chain Hospital with High Sustainable Growth and more

By | Daily Briefs, Healthcare Sector

In this briefing:

  1. BCH: Private Chain Hospital with High Sustainable Growth
  2. Viva Biotech IPO: Just About Supporting the Low-End IPO Price Range
  3. Hutchison-China Meditech (和黄医药) H-Share Listing: MNC Partnerships Endorsed Its R&D Capabilities
  4. So-Young (新氧) IPO Review – Decent Upside from the Low-End

1. BCH: Private Chain Hospital with High Sustainable Growth

Capture2

We initiate coverage on BCH with a BUY rating, based on a target price of Bt21, which is derived from a DCF methodology (WACC 6.8% and terminal growth 0%), implying 43.8xPE’19E, a a 19% premium to the Thai Health Care sector.

The story:

  • Hospital with the most number of Social Security registered against an ageing society theme.
  • Market overreacted to earnings disappointment in 4Q18.
  • New strategies attract foreign patients, boosting flagship hospital
  • IVF Lab to create new growth opportunities
  • Adding three hospitals in areas of large potential demand.

Risks:

 Lack of medical personnel & changes in social security policy

2. Viva Biotech IPO: Just About Supporting the Low-End IPO Price Range

Viva Biotech Holdings (1873 HK) is a leading global contract research organisation (CRO). It has launched its IPO to raise net proceeds of HK$1,232 million ($157 million), at the mid-point of the IPO price range.

Overall, with the caveat that Viva’s valuation is highly dependent on fair value gains (from its portfolio companies), we believe that Viva can just about justify the low-end of IPO price range

3. Hutchison-China Meditech (和黄医药) H-Share Listing: MNC Partnerships Endorsed Its R&D Capabilities

Fruquintinib%20 %20crc

Hutchison-China Meditech, China-based AIM and NASDAQ dual listed pharmaceutical company, is seeking to raise up to USD 500 million via a Hong Kong listing. In this insight, we will discuss the following topics:

  • Company background
  • Progress of clinical trials of its three key drug candidates
  • Key licensing agreements
  • Key takeaways from its financials
  • Shareholders of the company

4. So-Young (新氧) IPO Review – Decent Upside from the Low-End

Net%20margin%20declined%20too

So-Young (SY US) is raising up to US$179m in its upcoming IPO. We have covered most aspects of the IPO in So-Young (新氧) Pre-IPO Review – Au Naturel.

In this insight, we will value the company business segments by parts, look at the deal dynamics, and run the deal through our IPO framework.

Get Straight to the Source on Smartkarma

Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.



Brief Healthcare: Mallinckrodt – The Volatility Continues? and more

By | Daily Briefs, Healthcare Sector

In this briefing:

  1. Mallinckrodt – The Volatility Continues?
  2. Hansoh Pharma (翰森制药) IPO: Thoughts on Valuation
  3. Shimadzu (7701 JP): Weak 4Q Indicates FY Mar-20 Guidance Too High
  4. Hansoh Pharma (翰森制药) IPO: Competitive Landscape of HS-10296, the 3rd Gen EGFR TKI for Lung Cancer
  5. Celltrion H Block Deals Priced at Floor: More Short Entry Points Should Be On the Way

1. Mallinckrodt – The Volatility Continues?

3

Although Mallinckrodt’s bonds are trading at a significant discount to par, we recommend investors remain side-lined given our assessment of the probability of further price volatility.

 Although we acknowledge the equity cushion given a conservative EV/EBITDA valuation of ~6x vs. total debt/EBITDA of ~ 5x, we expect continued price volatility.

Accordingly, we believe a more attractive entry point will present itself over the coming months at a lower price level. Despite this, we think that the business, or its individual segments, will remain a going concern with an eventual spin-off into separate entities as per management’s plan.

However, the issue is timing and we expect further volatility due to legal/regulatory risk which is difficult to quantify

2. Hansoh Pharma (翰森制药) IPO: Thoughts on Valuation

Peer%20valuation%20may%2022nd

Hansoh Pharma has started pre-marketing its IPO to raise USD 1bn in its IPO. In our previous insights, we covered the company’s major products and core drug candidates, its shareholders, the latest financials and the 4+7 centralized procurement, as well as a detailed discussion on its key product, the third generation EGFR TKI HS-10296. 

In this insight, I’ll provide a more detailed analysis of its valuation.


Our previous coverage on Hansoh Pharma

3. Shimadzu (7701 JP): Weak 4Q Indicates FY Mar-20 Guidance Too High

Screen%20shot%202019 05 22%20at%2016.04.22

In FY Mar-19 as a whole, sales and operating profit were both up 3.9%, but sales stopped growing and operating profit was down 2.7% year-on-year in 4Q, which is seasonally the company’s strongest quarter. In 1H, operating profit was up 10.7% year-on-year.

The breakdown of 4Q operating profit shows 30% – 40% year-on-year declines in Medical Systems and Aircraft Equipment and increases of 1% or less in Analytical & Measuring Instruments and Industrial Machinery (the company’s two most profitable divisions). Operating profits on Analytical & Measuring Instruments and Industrial Machinery were up 8.6% and 18.6%, respectively, in 1H.

For FY Mar-20, management is guiding for a 4.8% increase in sales and a 5.7% increase in operating profit. Our estimates are more conservative and given demand trends in the company’s user industries, we see no reason to change them now.

At ¥2,751 (May 22 closing price), the shares are selling at 25x our EPS estimate for FY Mar-20 and 24x our estimate for FY Mar-21. The five-year historical P/E range is 13x – 33x. The shares are not notably expensive, but a positive catalyst is lacking.

4. Hansoh Pharma (翰森制药) IPO: Competitive Landscape of HS-10296, the 3rd Gen EGFR TKI for Lung Cancer

Osimertinib

Hansoh Pharma has started pre-marketing its IPO to raise USD 1bn in its IPO. In our previous insights, we covered the company’s major products and core drug candidates, and its shareholders, the latest financials and the 4+7 centralized procurement. In this insight, we will provide more details on its key drug candidate, HS-10296, which is a third generation EGFR TKI. As the company provides little details on the HS-10296 besides briefly mentioning that the company has submitted NDA for the treatment of NSCLC. We believe that understanding HS-10296 is pivotal to the valuation of the company. 


Our previous coverage on Hansoh Pharma

5. Celltrion H Block Deals Priced at Floor: More Short Entry Points Should Be On the Way

12

This block deal was another nice exit point for Celltrion H short sellers to wrap up short position. Just, 6.5M offering was simply massive, and even more than what these short sellers could absorb. This was partly why it was priced at floor. Would we see another opportunity like this? 90 days lock up is on One Equity’s remaining 10% stake. But it is very possible that Ion will make a similar move. Apparently, many investors are disappointed and concerned about Seo Jung-ju’s bluffing tactic. So, if we can get the timing right, we will easily enjoy a 8~10% gain by shorting and taking deals to close the position.

Get Straight to the Source on Smartkarma

Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.



Brief Healthcare: Viva Biotech IPO: Just About Supporting the Low-End IPO Price Range and more

By | Daily Briefs, Healthcare Sector

In this briefing:

  1. Viva Biotech IPO: Just About Supporting the Low-End IPO Price Range
  2. Hutchison-China Meditech (和黄医药) H-Share Listing: MNC Partnerships Endorsed Its R&D Capabilities
  3. So-Young (新氧) IPO Review – Decent Upside from the Low-End

1. Viva Biotech IPO: Just About Supporting the Low-End IPO Price Range

Viva Biotech Holdings (1873 HK) is a leading global contract research organisation (CRO). It has launched its IPO to raise net proceeds of HK$1,232 million ($157 million), at the mid-point of the IPO price range.

Overall, with the caveat that Viva’s valuation is highly dependent on fair value gains (from its portfolio companies), we believe that Viva can just about justify the low-end of IPO price range

2. Hutchison-China Meditech (和黄医药) H-Share Listing: MNC Partnerships Endorsed Its R&D Capabilities

Fruquintinib%20 %20crc

Hutchison-China Meditech, China-based AIM and NASDAQ dual listed pharmaceutical company, is seeking to raise up to USD 500 million via a Hong Kong listing. In this insight, we will discuss the following topics:

  • Company background
  • Progress of clinical trials of its three key drug candidates
  • Key licensing agreements
  • Key takeaways from its financials
  • Shareholders of the company

3. So-Young (新氧) IPO Review – Decent Upside from the Low-End

Net%20margin%20declined%20too

So-Young (SY US) is raising up to US$179m in its upcoming IPO. We have covered most aspects of the IPO in So-Young (新氧) Pre-IPO Review – Au Naturel.

In this insight, we will value the company business segments by parts, look at the deal dynamics, and run the deal through our IPO framework.

Get Straight to the Source on Smartkarma

Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.



Brief Healthcare: Viva Biotech IPO: Just About Supporting the Low-End IPO Price Range and more

By | Daily Briefs, Healthcare Sector

In this briefing:

  1. Viva Biotech IPO: Just About Supporting the Low-End IPO Price Range
  2. Hutchison-China Meditech (和黄医药) H-Share Listing: MNC Partnerships Endorsed Its R&D Capabilities
  3. So-Young (新氧) IPO Review – Decent Upside from the Low-End
  4. Viva Biotech (维亚生物) IPO: Valuation Rich Even at Low End

1. Viva Biotech IPO: Just About Supporting the Low-End IPO Price Range

Viva Biotech Holdings (1873 HK) is a leading global contract research organisation (CRO). It has launched its IPO to raise net proceeds of HK$1,232 million ($157 million), at the mid-point of the IPO price range.

Overall, with the caveat that Viva’s valuation is highly dependent on fair value gains (from its portfolio companies), we believe that Viva can just about justify the low-end of IPO price range

2. Hutchison-China Meditech (和黄医药) H-Share Listing: MNC Partnerships Endorsed Its R&D Capabilities

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Hutchison-China Meditech, China-based AIM and NASDAQ dual listed pharmaceutical company, is seeking to raise up to USD 500 million via a Hong Kong listing. In this insight, we will discuss the following topics:

  • Company background
  • Progress of clinical trials of its three key drug candidates
  • Key licensing agreements
  • Key takeaways from its financials
  • Shareholders of the company

3. So-Young (新氧) IPO Review – Decent Upside from the Low-End

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So-Young (SY US) is raising up to US$179m in its upcoming IPO. We have covered most aspects of the IPO in So-Young (新氧) Pre-IPO Review – Au Naturel.

In this insight, we will value the company business segments by parts, look at the deal dynamics, and run the deal through our IPO framework.

4. Viva Biotech (维亚生物) IPO: Valuation Rich Even at Low End

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Viva Biotech launched book building today to raise up to USD 194 million via its Hong Kong IPO. In our previous insights, we have discussed the company’s fundamentals. In this insight, we will provide our final thoughts on the deal with scores on our ECM Framework. 


Our Previous Coverage on Viva Biotech

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Brief Healthcare: Hansoh Pharma (翰森制药) IPO: Thoughts on Valuation and more

By | Daily Briefs, Healthcare Sector

In this briefing:

  1. Hansoh Pharma (翰森制药) IPO: Thoughts on Valuation
  2. Shimadzu (7701 JP): Weak 4Q Indicates FY Mar-20 Guidance Too High
  3. Hansoh Pharma (翰森制药) IPO: Competitive Landscape of HS-10296, the 3rd Gen EGFR TKI for Lung Cancer
  4. Celltrion H Block Deals Priced at Floor: More Short Entry Points Should Be On the Way
  5. Fujifilm Continues to Increase Its Focus on Healthcare Sector Through the Acquisition of Medwork

1. Hansoh Pharma (翰森制药) IPO: Thoughts on Valuation

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Hansoh Pharma has started pre-marketing its IPO to raise USD 1bn in its IPO. In our previous insights, we covered the company’s major products and core drug candidates, its shareholders, the latest financials and the 4+7 centralized procurement, as well as a detailed discussion on its key product, the third generation EGFR TKI HS-10296. 

In this insight, I’ll provide a more detailed analysis of its valuation.


Our previous coverage on Hansoh Pharma

2. Shimadzu (7701 JP): Weak 4Q Indicates FY Mar-20 Guidance Too High

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In FY Mar-19 as a whole, sales and operating profit were both up 3.9%, but sales stopped growing and operating profit was down 2.7% year-on-year in 4Q, which is seasonally the company’s strongest quarter. In 1H, operating profit was up 10.7% year-on-year.

The breakdown of 4Q operating profit shows 30% – 40% year-on-year declines in Medical Systems and Aircraft Equipment and increases of 1% or less in Analytical & Measuring Instruments and Industrial Machinery (the company’s two most profitable divisions). Operating profits on Analytical & Measuring Instruments and Industrial Machinery were up 8.6% and 18.6%, respectively, in 1H.

For FY Mar-20, management is guiding for a 4.8% increase in sales and a 5.7% increase in operating profit. Our estimates are more conservative and given demand trends in the company’s user industries, we see no reason to change them now.

At ¥2,751 (May 22 closing price), the shares are selling at 25x our EPS estimate for FY Mar-20 and 24x our estimate for FY Mar-21. The five-year historical P/E range is 13x – 33x. The shares are not notably expensive, but a positive catalyst is lacking.

3. Hansoh Pharma (翰森制药) IPO: Competitive Landscape of HS-10296, the 3rd Gen EGFR TKI for Lung Cancer

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Hansoh Pharma has started pre-marketing its IPO to raise USD 1bn in its IPO. In our previous insights, we covered the company’s major products and core drug candidates, and its shareholders, the latest financials and the 4+7 centralized procurement. In this insight, we will provide more details on its key drug candidate, HS-10296, which is a third generation EGFR TKI. As the company provides little details on the HS-10296 besides briefly mentioning that the company has submitted NDA for the treatment of NSCLC. We believe that understanding HS-10296 is pivotal to the valuation of the company. 


Our previous coverage on Hansoh Pharma

4. Celltrion H Block Deals Priced at Floor: More Short Entry Points Should Be On the Way

12

This block deal was another nice exit point for Celltrion H short sellers to wrap up short position. Just, 6.5M offering was simply massive, and even more than what these short sellers could absorb. This was partly why it was priced at floor. Would we see another opportunity like this? 90 days lock up is on One Equity’s remaining 10% stake. But it is very possible that Ion will make a similar move. Apparently, many investors are disappointed and concerned about Seo Jung-ju’s bluffing tactic. So, if we can get the timing right, we will easily enjoy a 8~10% gain by shorting and taking deals to close the position.

5. Fujifilm Continues to Increase Its Focus on Healthcare Sector Through the Acquisition of Medwork

Forecast

On Thursday (16th May), Fujifilm (4901 JP) announced that it has entered into an agreement to acquire medwork GmbH, headquartered in Bayern, Germany. medwork develops, manufactures and markets instruments for therapeutic and diagnostic endoscopy and following the acquisition, medwork will become a 100%-owned subsidiary of Fujifilm. The company has not provided more details regarding the deal. However, according to sources, Fujifilm will be paying close to JPY8-9bn for medwork. We expect the medwork acquisition to complement Fujifilm’s existing endoscopes business.

This comes as a part of Fujifilm’s focus on rapidly expanding its footprint in the growing healthcare sector. In March 2019, the company also announced the acquisition of Biogen Manufacturing, a manufacturing subsidiary of Biogen (Denmark) which is expected to strengthen Fujifilm’s Bio CDMO business.

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Brief Healthcare: Shimadzu (7701 JP): Weak 4Q Indicates FY Mar-20 Guidance Too High and more

By | Daily Briefs, Healthcare Sector

In this briefing:

  1. Shimadzu (7701 JP): Weak 4Q Indicates FY Mar-20 Guidance Too High
  2. Hansoh Pharma (翰森制药) IPO: Competitive Landscape of HS-10296, the 3rd Gen EGFR TKI for Lung Cancer
  3. Celltrion H Block Deals Priced at Floor: More Short Entry Points Should Be On the Way
  4. Fujifilm Continues to Increase Its Focus on Healthcare Sector Through the Acquisition of Medwork
  5. One Equity Partners Plans to Sell 4.5% Stake of Celltrion Healthcare

1. Shimadzu (7701 JP): Weak 4Q Indicates FY Mar-20 Guidance Too High

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In FY Mar-19 as a whole, sales and operating profit were both up 3.9%, but sales stopped growing and operating profit was down 2.7% year-on-year in 4Q, which is seasonally the company’s strongest quarter. In 1H, operating profit was up 10.7% year-on-year.

The breakdown of 4Q operating profit shows 30% – 40% year-on-year declines in Medical Systems and Aircraft Equipment and increases of 1% or less in Analytical & Measuring Instruments and Industrial Machinery (the company’s two most profitable divisions). Operating profits on Analytical & Measuring Instruments and Industrial Machinery were up 8.6% and 18.6%, respectively, in 1H.

For FY Mar-20, management is guiding for a 4.8% increase in sales and a 5.7% increase in operating profit. Our estimates are more conservative and given demand trends in the company’s user industries, we see no reason to change them now.

At ¥2,751 (May 22 closing price), the shares are selling at 25x our EPS estimate for FY Mar-20 and 24x our estimate for FY Mar-21. The five-year historical P/E range is 13x – 33x. The shares are not notably expensive, but a positive catalyst is lacking.

2. Hansoh Pharma (翰森制药) IPO: Competitive Landscape of HS-10296, the 3rd Gen EGFR TKI for Lung Cancer

Osimertinib

Hansoh Pharma has started pre-marketing its IPO to raise USD 1bn in its IPO. In our previous insights, we covered the company’s major products and core drug candidates, and its shareholders, the latest financials and the 4+7 centralized procurement. In this insight, we will provide more details on its key drug candidate, HS-10296, which is a third generation EGFR TKI. As the company provides little details on the HS-10296 besides briefly mentioning that the company has submitted NDA for the treatment of NSCLC. We believe that understanding HS-10296 is pivotal to the valuation of the company. 


Our previous coverage on Hansoh Pharma

3. Celltrion H Block Deals Priced at Floor: More Short Entry Points Should Be On the Way

11

This block deal was another nice exit point for Celltrion H short sellers to wrap up short position. Just, 6.5M offering was simply massive, and even more than what these short sellers could absorb. This was partly why it was priced at floor. Would we see another opportunity like this? 90 days lock up is on One Equity’s remaining 10% stake. But it is very possible that Ion will make a similar move. Apparently, many investors are disappointed and concerned about Seo Jung-ju’s bluffing tactic. So, if we can get the timing right, we will easily enjoy a 8~10% gain by shorting and taking deals to close the position.

4. Fujifilm Continues to Increase Its Focus on Healthcare Sector Through the Acquisition of Medwork

Forecast

On Thursday (16th May), Fujifilm (4901 JP) announced that it has entered into an agreement to acquire medwork GmbH, headquartered in Bayern, Germany. medwork develops, manufactures and markets instruments for therapeutic and diagnostic endoscopy and following the acquisition, medwork will become a 100%-owned subsidiary of Fujifilm. The company has not provided more details regarding the deal. However, according to sources, Fujifilm will be paying close to JPY8-9bn for medwork. We expect the medwork acquisition to complement Fujifilm’s existing endoscopes business.

This comes as a part of Fujifilm’s focus on rapidly expanding its footprint in the growing healthcare sector. In March 2019, the company also announced the acquisition of Biogen Manufacturing, a manufacturing subsidiary of Biogen (Denmark) which is expected to strengthen Fujifilm’s Bio CDMO business.

5. One Equity Partners Plans to Sell 4.5% Stake of Celltrion Healthcare

  • It was announced after market close today that One Equity Partners plans to sell 6.5 million shares (4.5% of shares outstanding) of Celltrion Healthcare (091990 KS). The expected price is at a 5.1% to 8.0% discount to the closing price of 65,300 won. We would avoid this deal because the 5.1% to 8.0% discount range does not seem to be enough.
  • Since the previous block deal in September 2018, Celltrion Healthcare shares have fallen nearly 29% and the fact that One Equity Partners is continuing to unload their shares means further risk since the market will be further concerned with additional selling of Celltrion Healthcare shares by One Equity Partners at even lower prices.
  • In the past three years, the previous shares support for Celltrion Healthcare was in the 50,000 won to 55,000 won level, which means there could be additional downside risk of nearly 15-23% over the next several weeks. 

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