In today’s briefing:
- Cisarua Mountain Dairy (CMRY IJ) – Fuelled by General Trade and Miss Cimory
- Asia Gaming: Despite Macau Woes, Melco Stock Is Too Cheap to Ignore Now
- China Healthcare Weekly (Nov25)-Wuxi Biologics, Valuation Logic Changed by NRDL, Biotech Model Fails
- Nitori Retreats from the US but Gets Muscular in Japan and Asia
- HEC Pharma (1558 HK): Core Product Saw Volume Recovery in 1H 2022; New Launches to Accelerate Growth
- Shionogi & Co (4507 JP): Oral COVID-19 Drug Got Approval; Files Approval for COVID-19 Vaccine
Cisarua Mountain Dairy (CMRY IJ) – Fuelled by General Trade and Miss Cimory
- Cisarua Mountain Dairy (CMRY IJ) remains one of Indonesia’s most interesting high-quality consumer staples companies, with strong brands in both premium dairy products and premium packaged foods.
- The company grew total sales by 76% YoY for 9M2022, with dairy products growing 51% YoY and packaged foods by 125% YoY driven by increasing capacity to serve burgeoning demand.
- Margins have been impacted by rising raw material prices but powdered milk prices have been falling which should mean margins recover but all the same 9M2022 net profit rose 1.5x.
Asia Gaming: Despite Macau Woes, Melco Stock Is Too Cheap to Ignore Now
- We calculated the intrinsic value of the stocks is ~30% undervalued at US$6.79 a share.
- The strong Manila market recovery and planned on time opening of Cyprus property does not seem to be baked into the price at writing.
- Macau travel bans will keep MLCO dead pooled, but value lies in its assets still at work
China Healthcare Weekly (Nov25)-Wuxi Biologics, Valuation Logic Changed by NRDL, Biotech Model Fails
- NRDL negotiation has completely changed the pricing method/valuation logic of innovative drugs. Even if price reduction could be milder this year, it’s hard to reverse the shrinking market size/slowing growth.
- Wuxi Biologics (2269 HK) has successively acquired several factories/production facilities built by domestic biotech companies at low cost. However, we have several concerns.
- The industry is in the process of understanding and adapting to various changes. The model capital envisioned for biotech to both develop and then commercialize drugs successfully doesn’t work anymore.
Nitori Retreats from the US but Gets Muscular in Japan and Asia
- Nitori is one of few Japanese retailers to brave the US market. The US has beaten Nitori for now and it will instead focus on Japan and Asia.
- Nitori’s ability to leverage its efficient supply chains to lower prices will likely lead it to further dominance at home and allow it to invest in the rest of Asia.
- The company expects pressures on costs to ease in 2023 as the Yen rises but is working on reducing the cost of goods and operations.
HEC Pharma (1558 HK): Core Product Saw Volume Recovery in 1H 2022; New Launches to Accelerate Growth
- During H1 2022, Yichang HEC Changjiang Pharma (1558 HK) recorded revenue of RMB1.3 billion, representing 540% y/y growth, driven by 1,776% y/y revenue growth from its core product Kewei.
- With gradual recovery of patient traffic in medical institutions and increasing number of flu cases, Kewei showed a trend of recovery in its sales volume leveraging on its market leadership.
- HEC Pharma has a comprehensive insulin portfolio, which covers both second and third generations of insulin. With 116 million diabetes patients, China has significant market opportunity for insulin.
Shionogi & Co (4507 JP): Oral COVID-19 Drug Got Approval; Files Approval for COVID-19 Vaccine
- On November 22, Shionogi & Co (4507 JP) received emergency regulatory approval for Xocova in Japan for COVID-19. It is Japan’s first homegrown oral antiviral for SARS-CoV-2 infection.
- On November 24, Shionogi has filed for manufacturing and sales approval of S-268019, a recombinant protein-based preventive vaccine, for use in priming and booster (third) doses, against COVID-19.
- Although Shionogi continues to expect ¥110 billion revenue from COVID-19-related products in FY23, the company has raised overall revenue guidance to ¥410 billion from ¥400 billion.
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