Healthcare equity analyst - emerging & dev mkts, daaimon

Avien Pillay

Healthcare equity analyst - emerging & dev mkts

daaimon

daaimon is an independent research company focusing on healthcare and consumer sectors across developed and emerging markets. We produce insightful research which challenges conventional thinking. In particular, we look for new ideas by testing consensus forecasts and markets expectations.

Equity Bottom-Up

The United Laboratories International Holdings Limited / Equity Bottom-Up

The United Laboratories International Holdings Limited produces and distributes pharmaceutical products. The Company's products include finished products, APIs, intermediates, and capsules.

The United Laboratories International Holdings Limited (3933 HK)

The United Laboratories International Holdings Limited

<ul>
<li>At a 4.6 FPE, you would expect to find some real concerns, however there are no gremlins anywhere?  </li>
<li>What you are buying is an antibiotic developer and distributor who is performing better than expected, given that the antibiotic market is thriving.</li>
<li>The extensive pipeline including GLP-1 drugs is still at an early stage/midway through development, however at this valuation, you are probably not paying for it!</li>
</ul>


At a 4.6 FPE, you would expect to find some real concerns, however there are no gremlins anywhere?  
What you are buying is an antibiotic developer and distributor who is performing better than expected, given that the antibiotic market is thriving.
The extensive pipeline including GLP-1 drugs is still at an early stage/midway through development, however at this valuation, you are probably not paying for it!


The United Laboratories Company Ltd (3933 HK) - A Sub Five PE Bargain!

Takeda Pharmaceutical   / Equity Bottom-Up

Takeda Pharmaceutical Company Limited is engaged in research and development, manufacturing, sales and marketing, and import and export of pharmaceutical drugs. The Company focuses on the core therapeutic areas of oncology, gastrointestinal, and central nervous system disease.

<ul>
<li>Production problems of Vyvanse generics seem to be largely resolved with nine of the ten suppliers back in stock.</li>
<li>Safety concerns with Takeda’s approved psoriasis competitor does raise further concerns as they are both TYK-2 inhibitors.</li>
<li>The company’s $900 m big restructure and cited areas for margin improvement are not “convincing” and lack detail.   </li>
</ul>


Production problems of Vyvanse generics seem to be largely resolved with nine of the ten suppliers back in stock.
Safety concerns with Takeda’s approved psoriasis competitor does raise further concerns as they are both TYK-2 inhibitors.
The company’s $900 m big restructure and cited areas for margin improvement are not “convincing” and lack detail.   


Additional Points Add to Our Recent Bearish View on Takeda.

Takeda Pharmaceutical Co Ltd focuses on the Research & Development, Manufacturing, Sales and Marketing and Import/Export of Pharmaceutical Drugs. The Company focuses on the following core therapeutic areas: Cardiovascular & Metabolic, Oncology, Central Nervous System, Respiratory & Immunology, General Medicine (Gastrointestinal & Genitourinary) and Vaccine.

<ul>
<li>Given the high number of pipeline dropouts, and the potentially disappointing $6 bn psoriasis drug acquisition, we question Takeda’s recent investment track record.</li>
<li>A big restructuring, high expectations from new/recently launched drug portfolio, and punchy company guidance reduces the probability of upside surprises.</li>
<li>Unless you are limited from investing outside Japan and you want exposure to an innovative pharma company, we believe that there are better and cheaper options elsewhere.</li>
</ul>


Given the high number of pipeline dropouts, and the potentially disappointing $6 bn psoriasis drug acquisition, we question Takeda’s recent investment track record.
A big restructuring, high expectations from new/recently launched drug portfolio, and punchy company guidance reduces the probability of upside surprises.
Unless you are limited from investing outside Japan and you want exposure to an innovative pharma company, we believe that there are better and cheaper options elsewhere.


China Medical System Holdings Limited manufactures pharmaceutical and medical products primarily in China.

<ul>
<li>A high disease burden, high demand for chronic treatment, and an ageing population makes China an excellent opportunity for an established pharma company.</li>
<li>With 1/3 of the market cap in cash, a healthy payout ratio, and a FPE of under 8, CMS is one of the bargain beneficiaries in the Chinese healthcare space.</li>
<li>The founder/CEO recently purchased 8m shares. He last bought shares in 2020-2021. The share price almost tripled afterwards.</li>
</ul>


A high disease burden, high demand for chronic treatment, and an ageing population makes China an excellent opportunity for an established pharma company.
With 1/3 of the market cap in cash, a healthy payout ratio, and a FPE of under 8, CMS is one of the bargain beneficiaries in the Chinese healthcare space.
The founder/CEO recently purchased 8m shares. He last bought shares in 2020-2021. The share price almost tripled afterwards.


UPDATE: China Medical System (CMS, 867 HK) – A Cheap Play on China’s Pending Health Care Crisis

<ul>
<li>A high disease burden, high demand for chronic treatment, and an ageing population makes China an excellent opportunity for an established pharma company.</li>
<li>A transition period following the inclusion of four large drugs in the NDRL creates an opportunity following a big de-rating.</li>
<li>With 1/3 of the market cap in cash, a healthy payout ratio, and a FPE of under 8, CMS is one of the bargain beneficiaries in the Chinese healthcare space.</li>
</ul>


A high disease burden, high demand for chronic treatment, and an ageing population makes China an excellent opportunity for an established pharma company.
A transition period following the inclusion of four large drugs in the NDRL creates an opportunity following a big de-rating.
With 1/3 of the market cap in cash, a healthy payout ratio, and a FPE of under 8, CMS is one of the bargain beneficiaries in the Chinese healthcare space.


China Medical System (CMS, 867 HK) – A Cheap Play on China’s Pending Health Care Crisis