Healthcare

• In 2023, Bumrungrad Hospital Pub Co (BH TB) reported 23% YoY revenue growth to THB25.6B, driven by 32%, 17%, and 11% YoY growth in international, expat, and Thai patients, respectively.
• Driven by high margin international patients, increasing inpatient revenue, and continued cost management, gross profit, EBITDA, and net profit margin expanded in 2023.
• Unrest in Middle-East remained an overhang on BH’s shares. However, revenue from Middle-East patients increased at 23.3% in H2 2023 compared to H1 2023.

• 160 Health collaborates with medical institutions and then get access to high-caliber medical professionals, which helps to attract patients/other business parties. So, its business model is B2B2C, similar to ClouDr.
• However, ClouDr has much better performance than 160 Health, because ClouDr has established moat/barriers to more effectively monetize medical resources, while 160 Health is clearly lagging behind in this regard.
• 160 Health’s revenue mainly comes from sales of pharmaceutical and healthcare products, whose gross margin is very low. As the competition intensifies, the C-end customer acquisition cost would also increase.  

• This is our first report on life science research and clinical diagnostic products manufacturer, Bio- Rad Laboratories.
• The company’s results exhibit resilience with substantial room for improvements and growth in the coming years.
• Bio-Rad’s FY 2023 net sales of $2.671 billion reflect a decrease by 4.7% on a reported basis as compared to 2022.

Key points

• Enhabit Inc., the Home Health & Hospice unit spun off from Encompass Health, is undergoing a strategic review that could result in a potential sale of the company.
• Analysts estimate that if the company is sold, it could fetch a price 50-100% higher than its current value, with a potential equity value of $1.0bn or $20 per share.
• The opportunity for a sale exists due to the company’s undervaluation compared to its parent company, Encompass Health, as well as negative surprises in CMS rates and missed guidance, leading to activist pressure and a strategic review.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• QuantumPharm (QUP HK) (Xtalpi) is looking to raise US$200m in its upcoming Hong Kong IPO.
• QuantumPharm is a R&D platform, utilizing quantum physics-based first-principles calculation, advanced AI, high-performance cloud computing, and scalable and standardized robotic automation to provide drug and material science R&D solutions.
• In this note, we will talk about the not so positive aspects of the deal.

• Royalty Pharma reported a strong year of results in 2023, which demonstrated significant enhancements of its portfolio.
• The company reported 9% growth in portfolio receipts and an increase in royalty receipts by 8%.
• A total of $2.2 billion was deployed in cash for transactions while $4 billion in transactions was announced, making it a remarkable year for capital allocation.

• There are 10 changes for the STAR100 Index in March. We correctly forecast all 10 deletes and got 8 of the 10 adds right.
• Estimated one-way turnover is 6.8% and that results in a one-way trade of CNY 1.79bn. Nearly all constituent changes have more than 1 day of ADV to trade.
• The adds have started to outperform the deletes and the index over the last couple of weeks and there could be more outperformance in the next two weeks.

• We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
• Highest spreads  Probiotec Ltd (PBP AU), JSR Corp (4185 JP), Shinko Electric Industries (6967 JP), CSR Ltd (CSR AU), China Traditional Chinese Medicine (570 HK), Lithium Power International (LPI AU). 
• Lowest spreads – Tietto Minerals Ltd (TIE AU), Orecorp Ltd (ORR AU), Pact Group Holdings (PGH AU), CPMC Holdings (906 HK), T&K Toka Co Ltd (4636 JP), Snow Peak.    

• Akums Drugs and Pharmaceuticals (0200361D IN) is looking to raise >US$100m in its upcoming India IPO. The deal will be run by ICICI Securities, Axis Capital, Citigroup and Ambit.
• 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. 
• As a CDMO, it produces a range of dosage forms including tablets, capsules, liquid orals, vials, ampoules, blow-filled seals, topical preparations, eye drops, dry powder injections, and gummies, among others. 

• QuantumPharm (QUP HK) (Xtalpi) is looking to raise US$200m in its upcoming Hong Kong IPO.
• QuantumPharm is a R&D platform, utilizing quantum physics-based first-principles calculation, advanced AI, high-performance cloud computing, and scalable and standardized robotic automation to provide drug and material science R&D solutions.
• In this note, we will talk about the positive aspects of the deal.

• I tally 53 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
• Five new deals discussed this week on Smartkarma! Boral Ltd (BLD AU), CSR Ltd (CSR AU), Ansarada Group Ltd (AND AU),TCM (570 HK), and Snow Peak Inc (7816 JP).
• Key updates took place on Azure Minerals (AZS AU),  CIMC Vehicle Group Co Ltd (1839 HK), Outsourcing Inc (2427 JP), and Genetron Holdings Ltd (GTH US).

• Alnylam Pharmaceuticals reported solid progress across all business areas in 2023, delivering robust product growth for its four wholly-owned commercial medicines, and reaching a milestone of over 5,000 patients now on an Alnylam commercial RNAi therapeutic.
• The company recorded $1.24 billion in global net product revenues.
• Alnylam also extended its leadership in RNAi therapeutics, including pioneering delivery of RNAi therapeutics to adipose and muscle tissues.

• Thanks to the continuous support of policies, the TCM industry has ushered in a harvest period. So, TCM remains to be a relatively certain field for investment in China healthcare. 
• Biotech companies must meet several conditions in order to have good long-term development, such as sufficient financial support, at least one blockbuster product and high moral standard of the management.
• Reasonable valuation of Sichuan Kelun-Biotech Biopharm (6990 HK) is about RMB15 billion. So, we think it is now overvalued. Meanwhile, restricted shares will be lifted 12 months after the IPO.

• Avantor delivered fourth quarter business results at the high end of their guidance across key financial metrics, including a core organic revenue decline of 4.8%, adjusted EBITDA margin of 17.5% and adjusted EPS of $0.25.
• They demonstrated robust cash flow management and considerable debt reduction, exceeding their guidance range.
• The company experienced industry wide headwinds due to inventory destocking and cautious customer spending.

• Alteogen Inc (196170 KS) has modified the existing license agreement with Merck. Revised terms of the agreement grant Merck exclusive global right to ALT-B4 for a specific product group, pembrolizumab.
• Under the terms of the revised agreement, Alteogen will receive an upfront payment of $20M from Merck. Alteogen will also receive additional milestone payment of up to $432M.
• Approval of Alteogen’s first proprietary product, Tergase (expected in early 2024) will be the next major catalyst for the company.  

• DaVita, a healthcare company specializing in kidney care and dialysis services, highlights its successful performance for the financial year of 2023 due to strengthening investment on the company’s platform.
• Notably, despite external challenges, the company experienced significant growth with a 20% year-over-year rise in adjusted operating income, a 28% increase in adjusted EPS, and a return of the leverage ratio back to the target range.
• The company outperformed its annual profitability targets for integrated kidney care and anticipates reaching break-even or better performance by 2026.

• Incyte Corporation’s 2023 earnings have been marked by the firm’s strong performance following a 14% increase in product and royalty revenues compared to 2022, reaching $3.7 billion.
• A significant milestone was achieved in the fourth quarter when total product and royalty revenue reached $1 billion for the first time.
• This growth has primarily been driven by the continued growth of Jakafi and the successful launch of Opzelura.

• IQVIA displayed a strong performance in the fourth quarter of 2023.
• CEO Ari Bousbib highlighted that net new bookings for the quarter exceeded $2.8 billion, marking the second largest quarter in the company’s history.
• The business booked $10.7 billion of net new business in the year, including record-high service bookings of $8.4 billion.

• The Samsung KODEX Fn Top10 Equal Weight ETF (395170 KS) tracks the FnGuide Top 10 Equal Weight Index and has an AUM of US$241m.
• We expect Celltrion Inc (068270 KS) will replace Samsung SDI (006400 KS) in the index at the March rebalance.
• There will be 0.26x ADV to buy in Celltrion Inc (068270 KS) while passives will need to sell 0.17x ADV of Samsung SDI (006400 KS). 

• Bangkok Dusit Medical Services (BDMS TB) reported double-digit top and bottomline growth in 4Q23. Growth was attributable to international and Thai non-COVID patient revenues growth.
• In 2023, total revenue was THB102B, up 10% YoY, matching the higher end of the guidance range of 9–10%. EBITDA margin of 24.2% remained higher than guidance of 24.0%.
• In 2024, BDMS expects healthcare business to grow continuously on the back of secular tailwinds in the healthcare sector in Thailand.

• Biogen concluded its Fourth Quarter and Full Year 2023, announcing several positive strides and addressing potential drawback in its prospects moving forward with its outlook for 2024.
• Biogen emphasized its objective of returning to sustainable growth.
• Chris Viehbacher, Biogen’s President and Chief Executive Officer, reported positive earnings per share guidance, a notable element for consideration.

• Zoetis, a leading company in animal health, reported strong results for the full year with an operational revenue growth of 7% which was driven by the success of their diverse portfolio, innovation and the commitment of their colleagues.
• Their products designed for pain relief in osteoarthritis contributed towards a 6% growth in the U.S. sector and 9% operational growth internationally.
• The companion animal portfolio showed an operational growth increasing by 8%, while the livestock portfolio also witnessed improvements, growing by 6%.

• China Traditional Chinese Medicine (570 HK) announced a privatisation offer from the Sinopharm-led consortium at HK$4.60 per share, a 47.4% premium to the undisturbed price.
• The pre-condition relates to various Chinese regulatory approvals. As SOE entities own the offeror, regulatory approvals will be a formality. The offer price is final. 
• Ping An Insurance (H) (2318 HK), which holds a blocking stake, will be supportive. The offer is fair when the previously (higher) rumoured offers are adjusted for the market downturn. 

• $4.60/Share. That’s the number – by way of a Scheme – that only matters. Below the recently rumoured $6/share, and $5.10/share a little over three years ago. Terms are final.
• As widely expected, the Offeror is SASAC-managed China National Pharmaceutical Group Corporation (CNPGC), indirectly owning 32.46% in China Traditional Chinese Medicine (570 HK) (TCM) via Sinopharm Group Hongkong,
• Optically, the Offer price appears light. But this should still get up. TCM is trading rich to peers. No other competing bidder will emerge. Expect regulatory pre-cons to be fast-tracked.

Key points

• Analysts believe R1 (RCM) presents a compelling investment opportunity despite recent challenges
• Predictions suggest profitability improvements and potential doubling of stock value over the next few years
• Long-term outlook remains strong due to industry-leading position and growth potential in healthcare IT sector

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• In spite of last week’s hotter-than-expected inflation reports, the Russell 2000 (IWM) outperformed relative to the SPX and QQQ, and ended the week at YTD weekly closing highs.
• The fact that small- and mid-caps outperformed during a week with two hot inflation reports is a sign we could see more outperformance in the weeks/months ahead.
• Adding to the risk-on theme, the DXY displays a false breakout at $104.60-$104.70. Our bullish outlook that we have had since early November 2023 remains intact. 

Key points

• DocGo revolutionizing ambulance industry through technology and non-emergency ambulatory services
• Went public in 2021 raising $158M, expanded services to include COVID testing, vaccinations, and patient monitoring
• Revenue sources mostly low-quality, non-recurring, and government-contract dependent, struggling to maintain profitability outside of COVID-related services

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Takara Bio Inc (4974 JP) reported massive decline of 50%, 98%, and 99%, YoY, in revenue, operating profit, and net profit, respectively during the first nine months of FY24.
• Reagents revenue decline 56% YoY to ¥23 billion, due to decrease of sales of COVID-19 test-related reagents. Japan, which contributed 23% of reagents revenue, reported revenue decline of 83% YoY.
• Takara Bio anticipates a sluggish life science R&D market globally. FY24 revenue, operating profit, and net profit are expected to decline 42%, 85%, and 88%, YoY, respectively.

• Numans values light asset model, which helps reduce cost/expenditures, and thereby increase profits. However, such business model has flaws – no R&D/production, only terminal sales/brand operation, no control over upstream.
• Revenue growth of core business Algal oil DHA products declined.Numans attempts to change its monotonous product line and enter milk powder industry, but the results weren’t ideal. Numans suffered losses. 
• If Numans only plays the role of a “porter” of finished products from abroad and lacks core competitiveness/technological content, it will face multiple challenges to achieve sustained high performance growth.

FY23 was another strong year for Basilea, marked by successive guidance beats and meaningful progress in fortifying its product pipeline. Revenues of CHF157.6m were ahead of guidance, driven by c 23% y-o-y growth in Cresemba- and Zevtera-related revenues to CHF150.3m. Top-line growth, combined with operational prudence (despite investments in growing its portfolio), supported Basilea in achieving a second successive year of net profitability (CHF10.5m, c 2x the guided figure). FY24 will be an important period, with the FDA decision on Zevtera (April 2024) and launch of fosmanogepix Phase III trials. As we update our estimates to reflect the latest sales trend, the outlook for the commercial assets and pipeline potential, we increase our valuation to CHF968.0m or CHF80.7/share.

• Since China TCM doesn’t deny the rumors so far after the trading halt, privatization is becoming likely this time.Rumor said formal negotiations may not begin until after the Lantern Festival.
• CNPGC may not want to pay high prices on privatization.Weak sentiment/share price may help with the negotiations.But the key is to obtain the consent of other shareholders, especially Ping An.
• There’s underlying logic for Taiji Group to drive this privatization. A price of higher than HKD5.1 is possible. If the price could reach HKD6 (or higher), it has exceeded expectations.

• Otsuka Holdings (4578 JP) ended 2023 on a mixed note. Both revenue and business profit were ahead of guidance. However, operating and net profits missed guidance, dragged by impairment loss.
• Four global pharmaceutical products as well as the nutraceuticals business led the business performance. Even after excluding the impact of foreign exchange, the business remained above plan.
• The company has guided for 6% YoY growth in 2024 revenue and business profit to ¥2,140B and ¥330B, respectively. 2024 net profit is expected to jump 106% YoY to ¥250B.

Recce Pharmaceuticals has announced several positive developments in recent weeks relating to its therapeutic programmes, particularly for lead anti-infective candidate RECCE® 327 (R327). It entered a strategic collaboration with an Indonesian biomedical company, PT Etana Biotechnologies (Etana), which may support the engagement of relatively lower-cost clinical trial sites with potentially deep patient pools in South-East Asia (SEA). The company also recently disclosed positive efficacy results among five patients treated in its Phase I/II study of topical R327 in patients with diabetic foot infections (DFI), and it now plans to expand this programme to additional domestic and global sites. We have raised our valuation to reflect the rolling forward of our estimates and reductions in our R&D and SG&A cost projections, following the most recent quarterly cash flow update. We now obtain a risk-adjusted net present value (rNPV) of A$652.6m (or A$3.20/share), versus A$551.1m previously.

• HUTCHMED’s 2023 results are relatively certain. Fruquintinib had a strong start after obtaining approval in the US, with sales of about US$13-15 million in just more than a month.
• Oncology/Immunology consolidated revenue would be in line with management’s performance guidance (US$450 to US$550 million) in 2023. There are promising data readout/NDA submission this year, which would be potential catalysts.
• HUTCHMED has sufficient cashflow and does not require external financing. From 2024 to 2026, it will enter a period of accelerated growth in product revenue. Breakeven is achievable in 2025.

AFT Pharmaceuticals has announced the first sale of its intravenous pain relief medicine, Maxigesic IV, through its US licensing partner, Hikma Pharmaceuticals, a material milestone for AFT’s portfolio expansion and geographic diversification. The NZ$6m milestone payment triggered a bump in FY24 operating profit guidance to NZ$23–25m (from NZ$22–24m previously). The upside was partially offset by slower than anticipated sales traction in Australasia. We adjust our FY24 and FY25 estimates to reflect the update and revised guidance, including the earlier than anticipated milestone payment (pulled forward to FY24 from FY25) and increased anticipated expenses (SG&A and R&D) to align with management’s portfolio and geographic growth aspirations. Our valuation resets to NZ$698m or NZ$6.65/share (from NZ$723m or NZ$6.90/share).

• Hugel Inc (145020 KS) reported 4% YoY increase in revenue to KRW89B, while operating profit grew 22% YoY to KRW37B in 4Q23. Revenue was mainly driven by strong demand filler.
• In domestic market, Hugel’s Botulax maintained the largest market share for the eight consecutive years thanks to the long-standing safety and quality track records as well as holistic value-adding services.
• Hugel has resubmitted biologics license application in the U.S. for BTX. In the coming year, Hugel plans to solidify its position in both the domestic and international BTX markets.

• Since Imbruvica’s sales continued to decline and Calquence hadn’t shown much growth in US since 23Q2, either Zanubrutinib gained more market share or the entire BTK inhibitors market is shrinking. 
• BeiGene’s recent sluggish share price could be related to geopolitical conflicts/weak market sentiment.However, innovative drugs don’t involve supply chain security issues. There’s no need for US to sanction China’s biotech.
• We are relatively optimistic about BeiGene’s 23Q4 sales growth. In our view, BeiGene’s reasonable market value is at least about US$18 billion. BeiGene (6160 HK) is undervalued.   

• Kyowa Kirin Co Ltd (4151 JP) has announced partnership with Bridgebio Pharma Inc (BBIO US) for an exclusive license on infigratinib for achondroplasia, hypochondroplasia, and other skeletal dysplasias in Japan.
• This month, Kyowa Kirin has enrolled first patient in a Phase 2 clinical trial evaluating tivozanib eye drops (KHK4951) in patients with diabetic macular edema (DME).
• The company’s top selling drug Crysvita is growing steadily since launch. Crysvita led to better-than-expected result in 2023. However, higher R&D expenses will negatively impact 2024 operating profit.

• Due to the US Draft Bill against CXOs, stock prices of the entire pharmaceutical industry plummeted. But in reality, there’s no impact on innovative drugs, which is just “emotional suppression”.
• The future BTK inhibitors market pattern predicted by GlobalData is very close to our estimate. This actually indirectly verifies the peak sales level that BeiGene may reach in the future.
• Setbacks on KRAS/SHP2 projects discourage investors’ confidence on Jacobio. We wouldn’t recommend projecting too high expectations on BET inhibitor just yet. Share price performance could continue to be under pressure.

• DexCom Inc., a medical device company focused on the design, development and delivery, presented its recorded Fourth quarter and Fiscal year 2023 earnings call.
• According to the call, the organization’s robust growth momentum has pivoted it towards notable accomplishments.
• The company reported that total revenue grew by 24% on an organic basis, implying a boon of over $700 million of organic revenue compared to the preceding year.

• Asahi Intecc (7747 JP) announced better-than-expected result in H1FY24, with double-digit growth across all major parameters. Growth was driven by favorable Fx, recovery and expansion of cases, and strong demand.
• Revenue from medical division increased 22% YoY to ¥48B. Operating income of the medical division increased 52% YoY to ¥13B, representing 540bps YoY margin expansion to 27.3%.
• Asahi Intecc has not revised FY24 guidance as it is difficult to forecast currency movements and revenue from distributors in medical division due to volatility of quarterly transactions.

• The fourth quarter 2023 results posted by Mettler-Toledo, a Swiss precision instruments company, were significantly impacted by a transition to a new external European logistics service provider.
• The company confides in making up for the majority of the lost revenue in Q1 2024.
• 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.

• In terms of positive outcomes, Waters Corporation reported another transformative year, demonstrating its resilience and ability to adapt effectively amidst a backdrop of dynamic market conditions.
• Various innovative products were launched throughout the year, such as the Alliance is next-generation LC platform, building on the successful top line growth delivered in previous years.
• The integration of Wyatt Technology into its portfolio represents a strategic move, bringing with it a new avenue for value creation for shareholders and opening up access to high growth markets.

• Zimmer Biomet, a leading player in the medical devices industry, presented its fourth quarter 2023 earnings with a buoyant attitude, displaying solid evidence of robust financial performance and operational progress.
• Impressively, the firm underscored the notable growth in its constant currency revenue, which appreciated 7.5%, with adjusted earnings per share (EPS) escalating almost 9.5% over the year.
• Also noteworthy was the almost $1 billion in free cash flow generated during the period, even amid fluctuations in inventory management.

• McKesson Corporation, a diversified health care services company, reported robust fiscal third-quarter earnings during their recent earnings call.
• The business continues to show momentum with total revenues of $80.9 billion and adjusted earnings per diluted share of $7.74 exhibiting a double-digit growth year over year.
• This strong financial performance has been the result of a focused execution against the company’s long-term priorities.