Smartkarma Daily Briefs

• What disappoints investors is that privatization progress is slower-than-expected. Since approval is in “advanced stage”, August update is eye-catching. Investors may need more patience with this type of SOE deal. 
• The key to the success of this privatization lies in whether CNPGC is willing to abide by its commitments. If yes, CNPGC will take all measures to solve the problems.
• According to our valuation calculation, even without this privatization, HK$3.5/share is fair for China TCM. Reasonable share price is above HK$5/share. Don’t forget, the privatization is still on the agenda.

• Akums Drugs and Pharmaceuticals (0200361D IN) raised around US$222m in its India IPO, after pricing the deal at the top end of the range at INR679/share.
• Akums Drugs and Pharmaceuticals (ADP) is a pharmaceutical contract development and manufacturing organization (CDMO) offering a comprehensive range of pharmaceutical products and services in India and overseas.
• We have looked at various aspects of the deal in our previous notes. In this note, we talk about demand and trading dynamics.

• Q1 FY3/25 results were ahead of our expectations, with Shofu’s solid execution overseas, with overseas sales growth of 20.2% YoY, and making up 60.5% of the total.
• Its competitive and high-margin Chemical products (CAD/CAM resin materials and restorative filling materials) grew 27.9% YoY and made up 32.6% of total sales (29.1% in Q1 FY3/24).
• This combination of overseas growth and sales mix improvement resulted in a record-high quarterly OPM of 16.4%. 

• Saint Bella, a premium postpartum care service provider, filed to go public in Hong Kong. UBS and CITIC Securities are leading the offering.
• Saint Bella operates ultra-premium postpartum centers in Asia, which are located at luxury hotels and detached villas. The company opened its first postpartum center in Hangzhou in 2017.
• With strong multi-brand strategy and asset-light business model, Saint Bella is uniquely positioned in premium segment under Saint Bella, Bella Isla and Baby Bella brands.

• AstraZeneca’s recent financial performance has shown substantial growth, signaling robust underlying demand for its diverse product range across multiple therapy areas and geographies, as reflected in its first half of the year 2024 results.
• The company reported a significant 18% growth in total revenue, driven primarily by its core therapeutic areas including Oncology, Biopharmaceuticals, and Rare Diseases.
• This revenue increase translated to a core operating profit of $8.4 billion and a core EPS increase of 5% to $4.03.

• Quest Diagnostics delivered a mixed yet overall positive performance in its recent financial results.
• The company reported a 2.5% increase in total revenues, with base business revenues growing by nearly 4%.
• This growth is attributed to the expansion of new physician and hospital customers and an improved test mix, with advanced diagnostics seeing greater adoption and healthcare utilization remaining strong.

• DexCom, Inc. recently reported its second quarter earnings for 2024, presenting a mix of achievements and challenges that provide a nuanced view of the company’s current state and future outlook.
• DexCom, known for its continuous glucose monitoring (CGM) systems, has demonstrated continuous growth in the diabetes management market, yet faced several short-term hurdles that have impacted its performance this quarter.
• Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

SIGA Technologies had another strong quarter in Q224, driven by intravenous TPOXX (IVT) deliveries to the Strategic National Stockpile (SNS) and incremental international orders for oral TPOXX. Product revenues of $20.7m (not including the $1.1m R&D income) improved materially from $1.3m in Q223 and comprised $17.6m from IVT sales and $3.1m from international deliveries (including $2.7m under the ASEAN deal). BARDA exercising the remaining $112.5m oral TPOXX option means that top-line momentum will continue into H224. SIGA’s cash position is healthy (post-dividend net cash $107m, no debt) and we expect it to improve further with the upcoming BARDA deliveries (from Q424). We tweak our estimates slightly to reflect the possible timing differences in deliveries and our valuation adjusts from $16.01/share to $15.89/share.

• Revenue: JPY43.7bn (+18.0% YoY), Operating profit: JPY10.6bn (+125.8% YoY), Recurring profit: JPY14.1bn (+135.7% YoY), Net Income: JPY11.2bn (+158.1% YoY).
• Domestic business revenue: JPY40.1bn (+21.7% YoY), China business revenue: JPY3.6bn (-12.1% YoY), Prescription Kampo formulations revenue: JPY38.8bn (+21.9% YoY).
• Cost of revenue ratio decreased by 7.2pp to 47.7%, SG&A expense ratio decreased by 4.3pp to 28.1%, driven by higher sales.

• West Pharmaceuticals experienced a challenging second quarter in 2024, with lower-than-expected performance due to ongoing customer destocking activities.
• Despite these conditions, the company remains confident in a recovery, expecting improvements in the latter half of the year with a focus on their Proprietary Products segment, particularly within biologics.
• This optimism for recovery is further supported by enhanced capabilities and expansions in manufacturing aimed at meeting the surging demand in biologics, high-value products (HVP), and regulatory-facing solutions.