Founder

Kemp Dolliver, CFA

Cherrystone Hill Research

Equity Capital Markets

India-based Laurus Labs has filed for a listing on the BSE and NSE, and reportedly plans to raise up to Rs300 crore for debt repayment and general corporate purposes. The company manufactures active pharmaceutical ingredients (APIs) for medications used to treat HIV, Hepatitis C, and cancer. The primary customers are the world’s largest generic pharmaceutical manufacturers. This Insight will provide an overview of the company, and we will follow up with a view of the offering after the announcement of the offering’s terms.

India-based Laurus Labs has filed for a listing on the BSE and NSE, and reportedly plans to raise up to Rs300 crore for debt repayment and general corporate purposes. The company manufactures active pharmaceutical ingredients (APIs) for medications used to treat HIV, Hepatitis C, and cancer. The primary customers are the world’s largest generic pharmaceutical manufacturers. This Insight will provide an overview of the company, and we will follow up with a view of the offering after the announcement of the offering’s terms.

SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Asia’s leading multi-asset exchange

Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

Thematic (Sector/Industry)

The first 10 months of 2016 brought its fair share of macroeconomic challenges to the region. During the 10 months, the Straits Times Index (STI) generated a 1% total return, which was not far behind that of the MSCI AC Asia Pacific Index. However, the 1% gain is hardly the full story for the 30 STI stocks in the year thus far.  All five Global Industry Classification Standards (GICS®) Sectors without STI representation also generated gains over the first 10 months. These Sectors are also at junctures of opportunity and challenge, with Sector-wide themes such as technology disruptors, population longevity &amp; growth and asymmetric trends in commodity prices. The five Sectors have also become increasingly important for investors who seek portfolio diversification in times of increased economic uncertainty.

The first 10 months of 2016 brought its fair share of macroeconomic challenges to the region. During the 10 months, the Straits Times Index (STI) generated a 1% total return, which was not far behind that of the MSCI AC Asia Pacific Index. However, the 1% gain is hardly the full story for the 30 STI stocks in the year thus far.  All five Global Industry Classification Standards (GICS®) Sectors without STI representation also generated gains over the first 10 months. These Sectors are also at junctures of opportunity and challenge, with Sector-wide themes such as technology disruptors, population longevity &amp; growth and asymmetric trends in commodity prices. The five Sectors have also become increasingly important for investors who seek portfolio diversification in times of increased economic uncertainty. 

Buoyant Returns Beyond the Benchmark in 2016 YTD

Pharma/ Biotechnology Investments Specialist, Vasuda Capital Management

Dr. Bhavneesh Sharma, MD, MBA

Pharma/ Biotechnology Investments Specialist

Vasuda Capital Management

Equity Bottom-Up

Zydus Lifesciences Ltd / Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/12914" target="_blank" data-smartkarma-citation="entities:12914:1">Cadila Healthcare Ltd (CDH IN)</a> is the 4th largest pharmaceutical company in India and 9th largest generic drug company in the U.S. At FY 2018 P/E ratio of 25x, the share price could be worth INR 479.55 (at FY 2018 sell-side consensus EPS estimate of INR 19.182, excluding extraordinary items), representing about 31% potential upside. The company also pays 0.86% dividend. Consensus sell-side analyst estimate for the stock price is INR 398.63 (35 analysts). The common stock also appears undervalued at the current price using the reverse DCF approach.

Cadila Healthcare Ltd (CDH IN) is the 4th largest pharmaceutical company in India and 9th largest generic drug company in the U.S. At FY 2018 P/E ratio of 25x, the share price could be worth INR 479.55 (at FY 2018 sell-side consensus EPS estimate of INR 19.182, excluding extraordinary items), representing about 31% potential upside. The company also pays 0.86% dividend. Consensus sell-side analyst estimate for the stock price is INR 398.63 (35 analysts). The common stock also appears undervalued at the current price using the reverse DCF approach.

Cadila Healthcare: Potential More than 30% Upside.

The common stock could be worth Rs. 1874 at 25x FY2018 consensus EPS estimate (33% potential upside). Using both forward EV/EBITDA and forward P/E estimates, the common stock appears undervalued. Shares trade close to the lower end of the 5-year range for EV/EBITDA and P/E ratios. We expect investor capital inflow after Trump's election victory (with the rest of the sector).Operating margin% (24.52% TTM) has expanded over past 5 years, while the ROIC (19.3%) exceeds the cost of capital calculated by us (11.4%). On a reverse DCF basis, the market is pricing in EPS growth rate of 10.35%. This is much below the past five year EPS growth of 21.02%.We consider Lupin's common stock as undervalued at the current price level.

The common stock could be worth Rs. 1874 at 25x FY2018 consensus EPS estimate (33% potential upside). Using both forward EV/EBITDA and forward P/E estimates, the common stock appears undervalued. Shares trade close to the lower end of the 5-year range for EV/EBITDA and P/E ratios. We expect investor capital inflow after Trump's election victory (with the rest of the sector).Operating margin% (24.52% TTM) has expanded over past 5 years, while the ROIC (19.3%) exceeds the cost of capital calculated by us (11.4%). On a reverse DCF basis, the market is pricing in EPS growth rate of 10.35%. This is much below the past five year EPS growth of 21.02%.We consider Lupin's common stock as undervalued at the current price level.

Lupin Ltd.: Another Undervalued Generic Drugs Powerhouse

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/016/178/original/download%20%281%29.jpg?1478808170" class="editor-image img-responsive" data-smartkarma-image-id="16178"></figure><div class="content-caption">(I thought it was a reality show till I was shown the Oval Office today!)</div>Now that the initial shock period is over, we return to finding out how President Trump could affect the U.S. (and with it the global) healthcare and pharmaceutical sector. Broadly, Trump's policy on healthcare has focused on two issues: allowing Medicare to negotiate drug prices directly with the drug companies and repealing Obamacare.<div class="content-highlight">Drug Pricing and Trump:</div>Allowing Medicare and similar U.S. government programs to…

(I thought it was a reality show till I was shown the Oval Office today!)Now that the initial shock period is over, we return to finding out how President Trump could affect the U.S. (and with it the global) healthcare and pharmaceutical sector. Broadly, Trump's policy on healthcare has focused on two issues: allowing Medicare to negotiate drug prices directly with the drug companies and repealing Obamacare.Drug Pricing and Trump:Allowing Medicare and similar U.S. government programs to…

President Trump and Healthcare (And Pharma) Sector: What's Next?

India

Lupin Limited manufactures bulk actives and formulations. The principal bulk actives manufactured by it include Rifampicin, Pyrazinamide, Ethambutol (anti-TB), Cephalosporins (anti-infectives) and cardiovasculars. The company also possesses competencies in phytomedicines, in which medicines are made out of plant and herbal resources supported by the discipline of modern medicine.

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Lupin Ltd (LPC IN)

Laurus Labs IPO Overview

India-based Laurus Labs has filed for a listing on the BSE and NSE, and reportedly plans to raise up to Rs300 crore for debt repayment and general...

Kemp Dolliver, CFA

Buoyant Returns Beyond the Benchmark in 2016 YTD

The first 10 months of 2016 brought its fair share of macroeconomic challenges to the region. During the 10 months, the Straits Times Index (STI)...

Singapore Exchange Ltd (SGX)

Cadila Healthcare: Potential More than 30% Upside.

Cadila Healthcare Ltd (CDH IN) is the 4th largest pharmaceutical company in India and 9th largest generic drug company in the U.S. At FY 2018 P/E...

Dr. Bhavneesh Sharma, MD, MBA

Lupin Ltd.: Another Undervalued Generic Drugs Powerhouse

The common stock could be worth Rs. 1874 at 25x FY2018 consensus EPS estimate (33% potential upside). Using both forward EV/EBITDA and forward P/E...

Dr. Bhavneesh Sharma, MD, MBA

President Trump and Healthcare (And Pharma) Sector: What's Next?

Now that the initial shock period is over, we return to finding out how President Trump could affect the U.S. (and with it the global) healthcare...

Dr. Bhavneesh Sharma, MD, MBA

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