In today’s briefing:
- WuXi XDC IPO: The Bull Case
- WuXi XDC Cayman Pre-IPO – PHIP Updates – Margins Remain Depressed Although Growth Still Strong
- Alfresa Holdings (2784 JP): Better-Than-Expected H1FY24 Performance; FY24 Guidance Raised
- Pre-IPO WuXi XDC (PHIP Updates) – Some Points Worth the Attention
- Fewer TOPIX Remaining Companies Show the Difficulty of Producing Convincing Disclosures
- Intuitive Surgical Inc.: Next-Gen Robotics Might Just Rewrite Medical History! – Major Drivers
- Medtronic plc: Initiation of Coverage – Business Strategy
- Novartis AG: Unraveling the Potential of Kesimpta
- Avantor Inc.: Initiation of Coverage – Business Strategy
- Align Technology Inc: Initiation of Coverage – Business Strategy
WuXi XDC IPO: The Bull Case
- WuXi XDC Cayman Inc (1877628D HK), a leading contract research, development and manufacturing organization (CRDMO), is pre-marketing an HKEx IPO to raise US$500 million, according to press reports.
- WuXi XDC ranked No. 2 globally and No. 1 in China among CRDMO for antibody-drug conjugates and other bioconjugates in terms of revenue in 2022, according to Frost & Sullivan.
- The bull case rests on large addressable markets, market share gains, fast-paced revenue growth, strong revenue visibility, a solid balance sheet and ambitious capacity expansion plans.
WuXi XDC Cayman Pre-IPO – PHIP Updates – Margins Remain Depressed Although Growth Still Strong
- WuXi XDC Cayman Inc (1877628D HK) is looking to raise around US$500m in its upcoming Hong Kong IPO.
- WuXi XDC Cayman (WXDC) is a CRDMO focused on the global antibody drug conjugates (ADC) and broader bioconjugate market providing integrated and end-to-end services.
- In our previous notes we looked at the company’s past performance, peer comparison, and shared our thoughts on valuations. In this note, we discuss WXDC’s PHIP updates.
Alfresa Holdings (2784 JP): Better-Than-Expected H1FY24 Performance; FY24 Guidance Raised
- Alfresa Holdings (2784 JP)‘s H1FY24 revenue, operating profit, and net profit are expected to exceed the previous expectations due to greater-than-expected growth in the ethical pharmaceuticals business.
- Encouraged by the growth in the pharmaceutical market and better-than-expected H1FY24 performance, the company has raised FY24 revenue, operating profit, and net profit guidance by 4%, 30%, and 36%, respectively.
- New FY24 guidance implies, H2FY24 revenue run-rate will be similar to H1F24, while H2FY24 operating profit will accelerate to ¥20.1 billion from ¥15.9 billion in H1FY24.
Pre-IPO WuXi XDC (PHIP Updates) – Some Points Worth the Attention
- We’ve seen increasing global cooperation for ADC pipelines. However, licensing deals alone cannot be used as the only basis for judgment. We still need to wait for solid clinical evidence.
- ADCs are far less “general and popularized” than PD-1. If compare ADC with GLP-1s, the difference is more obvious.How big the real market is for ADC is a question mark.
- WuXi XDC’s share price could perform well after IPO due to positive sentiments towards ADC, but whether its long-term valuation would be higher than peers remains to be seen.
Fewer TOPIX Remaining Companies Show the Difficulty of Producing Convincing Disclosures
- 439 companies that will be excluded from TOPIX aren’t expected to face further selling pressure, but 43 companies that remain in TOPIX may have a positive impact in the future.
- Only 43 companies (8.9%) succeeded in exceeding 10 billion yen in tradable market capitalization; compared to 22.3% rise in TOPIX, the stock performance of the TOPIX exclusion candidates were lackluster.
- These companies with small market capitalizations represent a challenge that has made it difficult for them to attract investor attention and to come up with convincing disclosures.
Intuitive Surgical Inc.: Next-Gen Robotics Might Just Rewrite Medical History! – Major Drivers
- Intuitive Surgical, Inc. delivered mixed results for the previous quarter, with revenues below the analyst consensus.
- Procedure growth for da Vinci saw a remarkable 19% increase during the quarter.
- System utilization growth remained strong at 6%, down from 9% in the previous quarter but still exceeding historical growth rates.
Medtronic plc: Initiation of Coverage – Business Strategy
- This is our first report on medtech giant, Medtronic plc.
- In the Cranial & Spinal Technologies division, Medtronic achieved impressive global growth, with an even more impressive 8% growth in the US.
- In the Surgical Innovations segment, a 7% growth was realized, facilitated by supply improvements and strong performance in Advanced Surgical Technologies.
Novartis AG: Unraveling the Potential of Kesimpta
- Novartis AG delivered a mixed set of results in the quarter, with revenues falling short of Wall Street expectations but above-par earnings.
- The last quarter for Novartis AG was marked by significant achievements, including strong sales growth and margin expansion, leading to a guidance raise for the third time in the year.
- Kesimpta also showed impressive results and other products like Pluvicto and Lutathera demonstrated their potential in earlier disease settings.
Avantor Inc.: Initiation of Coverage – Business Strategy
- This is our first report on Avantor, Inc, a well-known provider of mission-critical products to the healthcare industry as well as other domains.
- The company delivered a disappointing set of results as the company was unable to meet the revenue and earnings expectations of Wall Street.
- Market trends weakened sequentially, particularly in biopharma, where larger pharmaceutical customers moderated their spending, and small biotech companies faced ongoing funding constraints.
Align Technology Inc: Initiation of Coverage – Business Strategy
- This is our first report on health-tech player, Align Technology Inc. exceeded analyst expectations in terms of revenue as well as earnings.
- Notably, 195,000 teens and kids commenced Invisalign clear aligner treatment in Q2, marking a 7% sequential increase and a significant 10% year-over-year growth.
- Total Clear Aligner revenues for Q2 amounted to $832.7 million, reflecting a 5.4% sequential and 4.3% year-over-year increase.
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