In today’s briefing:
- Too Many Portfolio Companies Is One of the Reasons for Not Enough Engagement
- Daiichi Sankyo (4568 JP): Strong Start of FY24; Partnered Oncology Drug Candidate Hits First Goal
- High Conviction Update: Sonoscape (300633.CH) – Stock Price to Rebound After Temporary Headwinds
Too Many Portfolio Companies Is One of the Reasons for Not Enough Engagement
- The problem of agenda setting in engagement with investment firms is due to the mismatch that is occurring in each of the listed companies and investors.
- Meetings without top management present disappoint investors who have prepared thorough analyses of the issues facing the portfolio company. Top management should also avoid listening to template questions at meetings.
- It’s unrealistic to ask passive funds that cannot devote resources not to ask template questions. Active funds of Japanese investment managers may have too many portfolio companies to engage adequately.
Daiichi Sankyo (4568 JP): Strong Start of FY24; Partnered Oncology Drug Candidate Hits First Goal
- Daiichi Sankyo (4568 JP) reported a 25% YoY revenue growth in Q1FY24, mainly driven by oncology drug Enhertu. The company reiterated FY24 guidance, with revenue and operating profit growing double-digit.
- Daiichi Sankyo’s drug candidate datopotamab deruxtecan demonstrated statistically significant and clinically meaningful progression-free survival benefit in certain types of breast cancer patients in pivotal phase 3 trial.
- Enhertu is well-positioned for geography and indication expansion as well as market share gain. Strengthening oncology portfolio and rich late-stage pipeline entail significant growth opportunity for the company.
High Conviction Update: Sonoscape (300633.CH) – Stock Price to Rebound After Temporary Headwinds
- Sonoscape maintained strong growth momentum in 23H1. Profit margin further improved. The Company has entered a stage where scale effect has emerged. However, declining contract liability balance raised our concern.
- Japanese companies setting up factories in China would shake competitive landscape of the domestic market. The anti-corruption campaign could lead to “unexpected impact” on performance in 23H2.
- We lowered 2023 revenue forecast to RMB2 billion. After negative factors are fully priced in, share price would rebound.
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