In today’s briefing:
- S&P/ASX Index Rebalance Preview: Potential Changes, Impact, Shorts & Positioning
- SK Pharmteco Pre-IPO Funding & Impact on SK Inc
- Hutchmed China Ltd (13.HK/HCM.US)- Stronger than Expected and Deserves More Attention from Investors
- Peptidream (4587 JP): 1Q23 Result- Radiopharma Drove Sales; Losses Narrowed; Guidance Reiterated
- IDEXX Laboratories Inc.: Recurring Veterinary Software Revenues Continue to Grow – Key Drivers
- Quick ideas #2
S&P/ASX Index Rebalance Preview: Potential Changes, Impact, Shorts & Positioning
- The review period for the June rebalance of the S&P/ASX family of indices ends tomorrow and we expect two changes for the S&P/ASX 200 (AS51 INDEX).
- Impact of passive trading on the stocks varies between 4.3-11 days of ADV. Short interest on the potential adds is small while there are significant shorts on the potential deletes.
- We expect there is pre-positioning on at least three of the four stocks. In some cases that is small, while it could be a lot larger in other stocks.
SK Pharmteco Pre-IPO Funding & Impact on SK Inc
- SK Pharmteco is currently 100% owned by SK Inc. It is one of the largest CMO players in Korea. SK Pharmteco is trying to raise nearly 600 billion won.
- SK Pharmteco is seeking valuation of about 5 trillion won which is much higher than its book value of 1.65 trillion won.
- Our NAV valuation of SK Inc suggests an implied NAV of 21.2 trillion won or 286,636 won per share, representing 75% upside from current levels.
Hutchmed China Ltd (13.HK/HCM.US)- Stronger than Expected and Deserves More Attention from Investors
- HUTCHMED has been a company that is easily overlooked by investors. However, its BD capabilities have been verified after the deal with Takeda, and its commercialization performance is also commendable.
- Based on our forecast, total oncology/immunology consolidated revenue in 2023 could reach about US$220 million. If product sales growth remains benign, together with good cost control on R&D/SG&A, eventual breakeven is reachable.
- However, based on the current development trend, HUTCHMED could have to remain at the stage of a biotech, and is difficult to become a biopharma. Investors should be aware of this.
Peptidream (4587 JP): 1Q23 Result- Radiopharma Drove Sales; Losses Narrowed; Guidance Reiterated
- In 1Q23, Peptidream Inc (4587 JP) recorded revenue of ¥4,963 million, compared to ¥419 million revenue in year-ago period, driven by radiopharmaceutical business segment, which contributed 80% of total revenue.
- As of March 31, 2023, the company’s pipeline consisted of 127 discovery and development programs (representing a net increase of 1 program from the end of the prior financial year).
- Peptidream reiterated guidance for full-year 2024. Revenue is expected to increase 12% to ¥30B in 2024, while operating and net profits are expected to decline 30% and 64%, respectively.
IDEXX Laboratories Inc.: Recurring Veterinary Software Revenues Continue to Grow – Key Drivers
- IDEXX Laboratories had a strong Q1 2023 performance and delivered an all-around beat.
- The company’s strategic focus on execution, organic growth, and product portfolio expansion resulted in significant new business gains and sustained growth in recurring veterinary software revenues.
- The company’s performance was reflected in its key metrics, such as high first-quarter premium instrument placements, steady new business gains, and continual growth in recurring veterinary software revenues.
Quick ideas #2
- I got two new ideas and will close one.
- The first one is Genomma Lab (LABB) , a Mexican branded OTC pharma and personal care products company.
- The stock trades at a cheap multiple of about 10x earnings. But if you adjust for currency losses, the stock is cheaper.
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