In today’s briefing:
- Merger Arb Mondays (19 Aug) – China TCM, Henlius, Canvest, CPMC, JTower, Fuji Soft PropertyGuru
- China Healthcare Weekly (Aug.18)- COVID Is Here, BIOSECURE Act Update, Livzon Deserves More Patience
- Classys (214150 KS): Solid 2Q24 Result Fuelled by Strong Demand for Aesthetic Medical Devices
- Sino Biopharmaceutical (1177.HK) 24H1 – The Concerns Behind the Performance Turnaround
Merger Arb Mondays (19 Aug) – China TCM, Henlius, Canvest, CPMC, JTower, Fuji Soft PropertyGuru
- We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads: Yichang HEC Changjiang Pharma (1558 HK), JTower (4485 JP), China Traditional Chinese Medicine (570 HK), Canvest Environmental Protection Group (1381 HK), Capitol Health (CAJ AU).
- Lowest spreads: Fuji Soft Inc (9749 JP), Descente Ltd (8114 JP), Second Chance Properties (SCE SP), C.I. TAKIRON Corporation (4215 JP), Fancl Corp (4921 JP), Alps Logistics (9055 JP).
China Healthcare Weekly (Aug.18)- COVID Is Here, BIOSECURE Act Update, Livzon Deserves More Patience
- With rising COVID-19 cases, a pandemic outbreak in late 2024 is likely. Investors should focus on related sectors and stocks again.
- Due to BIOSECURE Act, US companies are leaving Chinese partners.If Trump is elected, his sanctions on China’s supply chain may intensify. So, there should be “valuation discount” for China CXOs.
- Livzon may have negative YoY revenue growth in 24H1, but full-year revenue may have positive low single-digit YoY growth. Due to good dividend/repurchase policy, Livzon deserves more patience from investors.
Classys (214150 KS): Solid 2Q24 Result Fuelled by Strong Demand for Aesthetic Medical Devices
- Classys (214150 KS) posted strong 2Q24 result, with quarterly revenue and operating profit reaching record highs, mainly driven by the growth in sales of aesthetic medical equipment.
- Revenue from Classys medical devices increased 36% YoY and 44% QoQ to KRW30B (51% of revenue) as demand for core platforms has increased significantly in major global countries.
- If 1H24 momentum continues (which seems to be quite possible), the company will handily beat 2024 sales guidance of KRW225B, driven by both devices and consumables.
Sino Biopharmaceutical (1177.HK) 24H1 – The Concerns Behind the Performance Turnaround
- After performance headwinds in 2022 and 2023, we have seen a turnaround of Sino Biopharma in 24H1. The Company is gradually getting rid of the negative influence of VBP.
- Even if the performance improves in 2024, there is still great uncertainty about whether the performance target for 2030 (revenue to reach HK$100 billion) can be achieved as scheduled.
- The innovative drug pipeline actually lacks competitiveness. Current valuation is not cheap. Deficiencies in corporate governance are one reason why the market is reluctant to offer Sino Biopharm high valuation.
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