In today’s briefing:
- Henlius (2696 HK): LVC Sits On A Blocking Stake. And Me (Maybe) Eating Humble Pie
- Henlius (2696 HK): Hurtling Towards a Likely Deal Break
- Suven Pharmaceuticals (SUVENPHA IN): M&A to Expand Technical Capabilities and Enhance Scale
- Mani Inc (7730 JP): Dental Loosing Shine In China; Margins Eroding; FY25 Guidance Reiterated
- UMP Healthcare (722 HK): Earnings Preview for H1 FY25
- LNTH: LMI Acquisition and NeuraCeq
- SNGX: Additional Positive Outcomes in Investigator-Initiated Study of HyBryte in CTCL
- Pre-IPO Jiangsu Hengrui Medicine – High Valuation Cannot Be Justified
Henlius (2696 HK): LVC Sits On A Blocking Stake. And Me (Maybe) Eating Humble Pie
- I was wrong. Loyal Valley Capital (LVC) have stopped buying Shanghai Henlius (2696 HK) – or have not bought since reaching a blocking stake of 7.8295% on the 9th January.
- LVC could either use that stake as leverage to negotiate with the Offeror on the scrip terms. Or blow up the deal and pick up shares after the deal breaks
- OR perhaps, as per my initial impression, LVC tenders. And they may still do that. It should be this straightforward; but the fact that it is not raises questions.
Henlius (2696 HK): Hurtling Towards a Likely Deal Break
- The vote on Fosun Pharma’s HK$24.60 offer for Shanghai Henlius Biotech (2696 HK) is on 22 January. The gross spread has ballooned to 21.8%, which suggests a deal break.
- I previously stated that LVC’s trading behaviour over the coming days will indicate its voting intentions. Unfortunately, this behaviour suggests a high likelihood of blocking the vote.
- Fosun Pharma has two potential options to secure LVC’s backing: increase the share alternative cap or introduce a rollover option. Both have challenges and are, therefore, not viable options.
Suven Pharmaceuticals (SUVENPHA IN): M&A to Expand Technical Capabilities and Enhance Scale
- Suven Pharmaceuticals (SUVENPHA IN) is acquiring56% equity share capital of ADC/XDC-focused CRDMO, NJ Bio for $64M, strengthening position in a high growth market.
- In June 2024, Suven announced the acquisition of a majority stake in an oligonucleotide focused CDMO player, Sapala Organics, thereby adding another high-growth complex technology to its CDMO business.
- Recently, shareholders have approved Suven’s merger with Cohance Lifesciences. Cohance has global leadership in select low-mid volume molecules as well as unique capabilities in the form of its ADC platform.
Mani Inc (7730 JP): Dental Loosing Shine In China; Margins Eroding; FY25 Guidance Reiterated
- Mani Inc (7730 JP) Q1FY25 revenue rose 8% YoY, mainly driven by surgical and eyeless needles segments, and favorable foreign exchange. However, profitability declined year-over-year.
- Despite the underperformance of dental segment, management reiterated FY25 guidance. Dental segment contributes more than 30% of total revenue.
- Mani shares plunged 20% since it published its Q1 results. Investors should avoid Mani due to its uncertain revenue outlook and deteriorating profitability in short-term.
UMP Healthcare (722 HK): Earnings Preview for H1 FY25
- UMP Healthcare (722 HK) will report its results in late February. We estimate low single-digit revenue growth of 3% YoY, in line with the past two semiannuals.
- We flagged cost-cutting initiatives in UMP Healthcare (722 HK): Postcard From Hong Kong and Webinar Updates, which would result in 25% YoY profit growth.
- Trading at 6.4x FY25e PE, with a 10% dividend yield and 85% of the market capitalization in net cash and investments, the stock has the potential to double.
LNTH: LMI Acquisition and NeuraCeq
- Zacks Small-Cap Research Note for Lantheus Holdings, Inc. (LNTH)
SNGX: Additional Positive Outcomes in Investigator-Initiated Study of HyBryte in CTCL
- On January 14, 2025, Soligenix, Inc. (SNGX) announced additional interim data from the open-label, investigator-initiated study (IIS) testing HyBryte treatment in patients with cutaneous T cell lymphoma (CTCL) for up to 12 months.
- Thus far, nine patients have been enrolled and treated with HyBryte for up to 54 weeks.
- Over 80% (5/6 that have completed at least 18 weeks of therapy) have already achieved treatment success, which is defined in the study protocol as a =50% improvement in the cumulative mCAILS.
Pre-IPO Jiangsu Hengrui Medicine – High Valuation Cannot Be Justified
- Hengrui plans to IPO in Hong Kong, but it hasn’t yet completed the business transformation from generic drugs to innovative drugs, and is still facing the negative impact of VBP.
- The key point is whether the innovative drug business has sustained high enough growth rate to offset the decline in generic drug business so as to support the high valuation.
- Hengrui is overvalued in A-Share. We think Hengrui’s valuation should be lower than that of BeiGene (6160 HK) and Hansoh Pharmaceutical Group (3692 HK) in Hong Kong stock market.
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