In today’s briefing:
- HSCEI Index Rebalance Preview: Deletions Fairly Certain; Uncertainty Among the Adds
- (Mostly) Asia M&A, June 2023: DDH1, Dali Foods, NWS Holdings, JSR Corp, Lutronic, Chindata
- Healthway Medical (HMED SP): OUE Healthcare’s Delisting Offer
- Takara Bio (4974 JP): Corona Cliff Set to Jeopardize FY24 Financial; Formulated FY26 Management Plan
- Pre-IPO Wuhan YZY Biopharma – Both R&D and Commercialization Capabilities Have yet to Be Proven
HSCEI Index Rebalance Preview: Deletions Fairly Certain; Uncertainty Among the Adds
- Country Garden Services Holdings (6098 HK) and Zhongsheng Group (881 HK) are high probability deletions in September, while Trip.com (9961 HK) is a high probability inclusion.
- The second add could be BeiGene Ltd (6160 HK) if it passes the velocity test. If not, Chow Tai Fook Jewellery (1929 HK) will be added.
- With the exception of Zhongsheng Group (881 HK), short interest has been rising on all the other stocks and could affect how the stocks trade close to implementation date.
(Mostly) Asia M&A, June 2023: DDH1, Dali Foods, NWS Holdings, JSR Corp, Lutronic, Chindata
- For the month of June, 13 new deals (firm and non-binding) were discussed on Smartkarma with an overall announced deal size of ~US$9bn.
- The average premium for the new deals announced (or first discussed) in June was 42%.
- This compares to the average premium for all deals in 2022 (106 deals), 2021 (165 deals), 2020 (158 deals), and 2019 (145 deals) of 41%, 33%, 31%, and 31% respectively.
Healthway Medical (HMED SP): OUE Healthcare’s Delisting Offer
- Healthway Medical Corp (HMED SP) received a delisting proposal from OUE Lippo Healthcare (IHC SP) at S$0.048 per share, a 45.5% premium to the undisturbed price (28 June).
- The key conditions are HMED shareholder approval and the offeror and concert parties representing >50% of voting rights (satisfied due to irrevocables).
- The offer price is attractive. The EGM is likely to be held in late September. The current price of S$0.046 implies a gross spread of 4.3%.
Takara Bio (4974 JP): Corona Cliff Set to Jeopardize FY24 Financial; Formulated FY26 Management Plan
- Takara Bio Inc (4974 JP) is anticipating 32% YoY decline in revenue to ¥53B in FY24. Both operating and net profits are expected to decline more than 60% YoY in FY24.
- The company has formulated the medium-term management plan 2026 for the three-year period ending in FY26, with the final-year quantitative targets being operating profit of ¥15 billion and ROE 8%.
- Considering Takara Bio’s FY24 operating profit guidance of ¥8B, FY26 target seems to be aggressive and difficult to achieve.
Pre-IPO Wuhan YZY Biopharma – Both R&D and Commercialization Capabilities Have yet to Be Proven
- YZY is a company that is serious about drug development However, there is actually high R&D risk of its pipeline candidates. So, YZY’s R&D capability has yet to be proven.
- There are still many unanswered questions in the whole direction of bispecific antibody. If YZY’s candidates fail to prove better marginal clinical benefits, they won’t have good commercialization performance.
- YZY has a long way to go based on its pipeline situation. Considering Wuhan YZY Biopharma (YZY HK) has no product in commercialization stage, its valuation may not be high.
💡 Before it’s here, it’s on Smartkarma
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