In today’s briefing:
- TOPIX Inclusions: Who Is Ready (Jan 2025)
- Hygeia Healthcare Group (6078 HK): Growth and Margin Concerns Plague Inherent Valuation
- Pre IPO X.J. Electrics (Hu Bei) – ODM/OEM Model Is Hard to Deliver High Margins and Growth Prospects
- COCP: Phase 2a Trial of CC-42344 Extended
TOPIX Inclusions: Who Is Ready (Jan 2025)
- Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
- Japan Eyewear Holdings (5889 JP) continues to be our top pre-event pick for TOPIX Inclusion.
- Core Concept Technologies Inc (4371 JP) is another potential TOPIX Inclusion candidate but it is quite far away from being satisfy the main Section Transfer requirements.
Hygeia Healthcare Group (6078 HK): Growth and Margin Concerns Plague Inherent Valuation
- In 1H24, Hygeia Healthcare Group (6078 HK) reported revenue growth of 35% YoY to RMB2,382 million, mainly driven by a 37% YoY growth in hospital business.
- Hygeia’s gross profit margin contracted 60bps YoY to 31.8%. Lower government grant led to 230bps operating margin squeeze to 21.6%.
- The share price of Hygeia Healthcare has gone down almost 56% in the last one year. Accelerated organic growth and strengthening of margins are crucial to boost valuation.
Pre IPO X.J. Electrics (Hu Bei) – ODM/OEM Model Is Hard to Deliver High Margins and Growth Prospects
- X.J. ELECTRICS not only relies on export revenue, but also on ODM/OEM models, with a relatively low proportion of independent brands. Such business model would not bring high profit margin.
- X.J. ELECTRICS’ equity is concentrated in PAN YUN/GUANGSHE PAN, but they have plans to reduce holdings.This makes us feel that actual controllers are more inclined to cash out through IPO.
- Valuation of X.J. ELECTRICS should be lower than Carote, as Carote has established branded business and its revenue proportion in different regions is also “healthier” than that of X.J. ELECTRICS.
COCP: Phase 2a Trial of CC-42344 Extended
- On December 31, 2024, Cocrystal Pharma, Inc. (COCP) announced that the Phase 2a clinical trial of its oral PB2 inhibitor CC-42344 will be continued due to an unexpectedly low influenza infection rate in study participants that were challenged with a H3N2 viral strain.
- The results from the study showed that CC-42344 had a favorable safety and tolerability profile, however due to the low infectivity rate the virology results were not interpretable.
- Cocrystal will now work with the clinical research organization to construct an amendment to the trial protocol to extend enrollment in the study and increase the likelihood of a proper infection rate for data evaluation.
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