In today’s briefing:
- Entero Healthcare Solutions Pre-IPO Tearsheet
- Celltrion (068270 KP): Improving Base Business Is Being Overlooked by Mr. Market Amid Merger Noises
- Sipai Health Technology (314.HK) – Valuation Has Collapsed, but a Reversal Is Not yet in Sight
- Need to Increase Human Capital Investment as Soon as Possible to Move to High Value-Added Businesses
- UMP Healthcare 722 HK: Weak Q4 Lead to A Disappointing FY23, Worst Behind Us
Entero Healthcare Solutions Pre-IPO Tearsheet
- Entero Healthcare Solutions Limited (2294842D IN) is looking to raise US$200m in its upcoming India IPO. The bookrunners on the deal are ICICI Securities, DAM Capital, Jefferies, JM Financial, SBI Capital.
- Entero Healthcare Solutions (Entero) is a healthcare products distributor in India.
- As per the CRISIL report in the DRHP, Entero is amongst the top three healthcare products distributors in India in terms of FY22 revenue.
Celltrion (068270 KP): Improving Base Business Is Being Overlooked by Mr. Market Amid Merger Noises
- As Celltrion (068270 KP) approaches merger clarity, focus will shift to its base business, which remains solid. In Q2 2023, biosimilar, the flagship business, reported a 10% YoY growth.
- Operating profit margin expanded 440bps YoY to 34.9%. Margins are expected to improve further through increasing contribution from high-margin products such as Yuflyma (Humira biosimilar) and Remsima SC.
- Celltrion expects to receive approval for Remsima SC in the U.S. by end of October, which should act as a major catalyst. By 2030, merged entity targets revenue of KRW12T.
Sipai Health Technology (314.HK) – Valuation Has Collapsed, but a Reversal Is Not yet in Sight
- The reason why there are many doubts about Sipai is that its Specialty Pharmacy Business accounts for dominant proportion of total revenue but is almost difficult to make a profit.
- Sipai’s SMO business revenue will be difficult to grow at scale due to industry characteristics and the Health Insurance Services business is too small to bring substantial changes to performance.
- Sipai’s revenue structure/business model is difficult to improve in the short term. So it’s not surprising if Sipai suffers long-term losses. Its valuation should be lower than that of ClouDr.
Need to Increase Human Capital Investment as Soon as Possible to Move to High Value-Added Businesses
- The question is whether companies can achieve results by increasing investment to secure and train human resources who can contribute to transitioning to a business that produces high value-added products.
- Regarding the disclosure of human capital, many issues remain, such as the lack of unified definition of the required items and the inability to use this data as comparable data.
- Percentage of women in managerial positions is more serious. The lack of on-the-job training for women is an on-going issue that makes the path to future managerial positions more difficult.
UMP Healthcare 722 HK: Weak Q4 Lead to A Disappointing FY23, Worst Behind Us
- UMP Healthcare (722 HK) reported FY23 profits down 26% YoY at 55 mn HKD, impacted by preoperating expenses and an impairment cumulatively of 40 mn HKD.
- A slow Q4 FY23 didn’t help either; revenues came in flat HoH instead of up 10% as our expectations and costs increased resulting in margin compression.
- We believe the worst is behind us. The stock trades at 5.9x FY24 PE, with ~50% of the market cap in cash and an FY24 dividend yield of 8.5%.
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