Daily Brief Health Care: GUPPY's Inc, Genetron Holdings Ltd, China Resources Pharmaceutical and more

In today’s briefing:

GUPPY’s (5127 JP): Medley (4480 JP) Tender Offer at JPY3,250
Genetron (GTH US): Wide Spread Ahead of the 21 February Vote
China Healthcare Weekly (Jan.19) – Bottom Fish A-Share?/“Style” of FDA/Pharma’s Key Benchmark/3320HK

GUPPY’s (5127 JP): Medley (4480 JP) Tender Offer at JPY3,250

GUPPY’s Inc (5127 JP) has recommended Medley (4480 JP)’s tender offer of JPY3,250 per share, an 81.0% premium to the undisturbed price (19 January).
The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The lower limit of the tender offer is set at a 10.19% ownership ratio.
Despite the premium, the offer is light vs the IFA DCF valuation. Based on the irrevocables, the minimum acceptance condition requires a 23.4% minority acceptance rate, which is achievable.

Genetron Holdings Ltd (GTH US) shareholders will vote on the consortium’s US$4.08 per ADS offer on 21 February. The offer is light in comparison to historical trading ranges.
Completion is conditional on shareholder approval, dissenting shareholders representing less than 15% of outstanding shares and regulatory approvals (NDRC, MoC and SAFE).
Despite the light offer, the completion conditions should be met. At the last close price and end of March completion, the gross and annualised spread is 7.7% and 45.5%, respectively.

As more and more China’s drugs successfully obtained FDA approval, we analyzed the “style” of the US FDA, aiming to help investors understand the prospects of domestic companies’ internationalization strategies.
For mature pharmaceutical companies, we analyzed the benchmarks for some key financial indicators in terms of both revenue and cost. On these basis, companies’ profit performance would be decent.
As a top pharmaceutical SOE, China Resources Pharmaceutical (CRP) wouldn’t go bankrupt.This is the bottom line.Together with stable dividends, CRP is a worthwhile investment target to hold in bear market.

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