Healthcare

This is our first report on Organicell and we look to provide a detailed account of the various drivers that will be responsible for the company’s growth in the coming years.
Organicell’s drug candidates’ utilization of extracellular vesicles and perinatal-derived nanoparticles, represent the technological revolution of regenerative biologic drug treatments.
Overall, we believe that Organicell has phenomenal growth prospects and is an excellent investment prospect.

Sharps Technology – Investment Thesis, Key Drivers, Financial & Price Forecasts, DCF Valuation 11/22

This is our first report on Sharps Technology and we look to provide a detailed account of the various drivers that will be responsible for the company’s growth in the coming years.
As the company starts reporting revenues in 2023, Sharps is expected to see its stock fly.
With the Nephron transaction and income generation from the Hungarian facility, this is anticipated to start reporting a positive top-line starting in Q1 2023.

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Nov 22

Daily Brief Health Care: Medley, Ascentage Pharma Group Corp and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

Medley (4480) – Move to Prime Means TOPIX Inclusion Next Month
Ascentage Pharma (6855.HK) – May Not Survive “This Winter”

Medley (4480) – Move to Prime Means TOPIX Inclusion Next Month

By Travis Lundy

A year ago, TSE Growth-listed Medley (4480 JP) said they would “make preparations” for a listing on TSE Prime. Last month, Janaghan Jeyakumar, CFA had it at “Almost Ready.”
Today they announced they would list on TSE Prime on 28 November which means a TOPIX Inclusion at end-December.
Shareholder structure and stock bias matter a lot in this case. It’s very much worth looking at the details.

Ascentage Pharma (6855.HK) – May Not Survive “This Winter”

The R&D direction and field of Ascentage Pharma Group Corp (6855 HK) distinguish it from other domestic biotech companies. The Company has proved its R&D capability after the successful launch of olverembatinib.
The uncertainties of commercialization performance and R&D risks would make it difficult for Ascentage to achieve break-even. Due to increasing cash flow pressure, Ascentage must first solve the survival problem.
Considering the Risk return trade-off, we think Ascentage has short-term investment value only when it’s “extremely undervalued”.We suggest that it could be sold in a timely manner to secure gains.

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Nov 21

Daily Brief Health Care: Alfresa Holdings, Zhangzhou Pientzehuang Pharmaceutical Co., Ltd. and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

Alfresa Holdings (2784 JP): H1FY23 Review- Better-Than-Expected Performance; Outlook Is Positive
Zhangzhou Pientzehuang Pharmaceutical (600436.CH) – Disappointing Performance Is Just the Beginning

Alfresa Holdings (2784 JP): H1FY23 Review- Better-Than-Expected Performance; Outlook Is Positive

Alfresa Holdings (2784 JP) reported better-than-expected H1FY23 results, with sales growth of 3% to ¥1,332 billion, 2% ahead of guidance of ¥1,304 billion, mainly driven by pharmaceutical wholesaling business.
With a revenue growth of 4.3% y/y, pharmaceutical wholesaling business outpaced the broad market growth of 2.7% and improved its market share to 23.3% at the end of H1FY23.
The company has announced an interim dividend of ¥28 per share. Despite reporting encouraging H1FY23 performance, Alfresa has reiterated its FY23 guidance, implying accelerated growth in H2FY23.

Zhangzhou Pientzehuang Pharmaceutical (600436.CH) – Disappointing Performance Is Just the Beginning

Zhangzhou Pientzehuang Pharmaceutical Co., Ltd. (600436 CH)’s 22Q3 performance was disappointing because its strategy of “stabilizing” performance growth by raising prices has been ineffective.
Endogenous growth problem would finally be reflected in the decline of company’s valuation. We recommend to think about long-term logic from a broader perspective,not simply tracking performance of individual companies.
Pien Tze Huang’s valuation still has a lot of downward space. When the bubble bursts or its valuation is lower than Kweichow Moutai, it’s time to go long again.

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Nov 19

Daily Brief Health Care: Lotus Pharmaceutical, Wuxi Biologics, Takeda Pharmaceutical and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

Lotus Pharmaceutical (1795 TT): 3Q22 Review- Best-Ever Quarter, Aided by Oncology Drug Launch in US
Shanghai/Shenzhen Southbound Connect: Weekly Moves (18 November 2022)
Takeda Pharma ADR: Initiation of Coverage – Recent Drug Updates & Key Drivers

Lotus Pharmaceutical (1795 TT): 3Q22 Review- Best-Ever Quarter, Aided by Oncology Drug Launch in US

Lotus Pharmaceutical (1795 TT) reported record high quarterly revenue in 3Q22, majorly driven by the successful launch of oncology drug Lenalidomide in the US, which is its biggest ever launch.
Gross margin expanded to 67.9% in Q3 2022 from 45.3% in Q3 2021 and 47.4% Q2 2022, driven by increasing contribution from high-margin export business.
Exceeding the expectation, the company reported historic high third quarter EPS of NT$7.97 for Q3 2022, versus NT$1.34 in Q3 2021.

Shanghai/Shenzhen Southbound Connect: Weekly Moves (18 November 2022)

By David Blennerhassett

Inside is a recap of movements in the last week relating to the Shanghai and Shenzhen-Hong Kong Stock Connect facilities, broken down by company and industry.
Overall, the net outflow over the past week was ~HK$0.14bn, split (-HK$0.47bn) for Shanghai and (+HK$0.32bn) for Shenzhen.
The largest inflows were in Tencent (700 HK) and Hang Seng H Share (2828 HK). The largest outflows were inMeituan (3690 HK) and Tracker Fund of HK (2800 HK).

Takeda Pharma ADR: Initiation of Coverage – Recent Drug Updates & Key Drivers

This is our first report on Japanese pharma major, Takeda Pharma.
A significant pipeline milestone was achieved by the company when TAK-003, the dengue vaccine candidate of the company, received approval.
Dr.

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Nov 18

Daily Brief Health Care: Bio Techne Corp, Boston Scientific, China Resources Pharmaceutical, Stryker Corp and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

Bio-Techne Corp: Advanced Cell Diagnostics RNAscope System Developments & Other Drivers
Boston Scientific: The Lux-Dx ICM Launch & Other Drivers
China Resources Pharmaceutical (3320.HK) – Here Are the Concerns
Stryker Corporation: The Monterey AL Launch & Other Drivers

Bio-Techne Corp: Advanced Cell Diagnostics RNAscope System Developments & Other Drivers

Bio-Techne has been going through a tough 2022 and witnessed a slow summer especially in the European markets as well as Covid-related shutdowns in China.
The company did manage to achieve some organic revenue growth but failed to meet Wall Street expectations in terms of revenues as well as earnings.
The company recently announced the release of the automated codetection assays for the company’s Advanced Cell Diagnostics RNAscope system for in-situ hybridization.

Boston Scientific: The Lux-Dx ICM Launch & Other Drivers

Boston Scientific reported a mixed set of results as it surpassed Wall Street expectations on the revenue front but delivered an earnings miss in light of the ongoing supply chain and macroeconomic headwinds.
Overall, company operational sales grew, and organic sales also grew.
Six of the eight business units of the company have grown organically in the double-digits.

China Resources Pharmaceutical (3320.HK) – Here Are the Concerns

The distribution business is stable, but it’s difficult to achieve high growth/profits due to industry trend. Therefore, the valuation of this business is hard to increase.
The performance of pharmaceutical manufacturing business is important, which largely determines the overall profit margin. But it actually depends on what the subsidiaries can contribute, who are facing different challenges.
China Resources Pharmaceutical may need to improve its vision of asset selection and its ability to judge and grasp the long-term trend of the industry. The current valuation isn’t attractive.

Stryker Corporation: The Monterey AL Launch & Other Drivers

Stryker delivered a mixed set of results for the quarter and managed to surpass Wall Street expectations on the revenue front.
The demand for the company’s capital products stayed quite strong in this quarter, as viewed by the growth of double-digit of its medical division.
Also, the Instruments business experienced challenges in the supply chain mainly related to the company’s capital products.

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Nov 17

Daily Brief Health Care: Haw Par Corp, Grifols SA, Kaken Pharmaceutical, HealthCare Global Enterprises and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

2023 High Conviction: Haw Par Is Cheap
Liquid Universe of European Ordinary and Preferred Shares: November ‘22 Report
Kaken Pharmaceutical (4521 JP): H1FY23 Review- Key Drugs Continued to Fall; Guidance Reiterated
HCG: All Set for a Stellar FY24

2023 High Conviction: Haw Par Is Cheap

By David Blennerhassett

Haw Par Corp (HPAR SP) is trading around multi-year trough levels on an implied stub valuation, and on an HPAR/UOL Group (UOL SP) ratio.
Preceding my comments on HPAR are the current setup/unwind tables for Asia-Pacific Holdcos.
These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

Liquid Universe of European Ordinary and Preferred Shares: November ‘22 Report

By Jesus Rodriguez Aguilar

Since mid-September, spreads have shown a mixed performance across our liquid universe with a slight bias towards widening (10 have widened, 8 tightened, 1 at same level).
Trade recommendations long ords / short prefs: Fuchs Petrolub, Ericsson, Handelsbanken, SSAB Svenska Stal.
Trade recommendations long prefs / short ords: Sixt, VW, MFE-Media for Europe, Grifols, Atlas Copco.

Kaken Pharmaceutical (4521 JP): H1FY23 Review- Key Drugs Continued to Fall; Guidance Reiterated

In H1FY23, Kaken Pharmaceutical (4521 JP) reported 2% revenue decline to ¥36.8 billion, as the company’s key branded drugs, including Clenafin, Artz, and Seprafilm are recording decelerating sales.
Newer drugs, including Ecclock, Regroth, and Hernicore reported revenue growth of 47.8%, 4.1%, and 4.1%, y/y, respectively. However, these three drugs contributed just 4% of total revenue.
Lower revenue and higher operating expenses (+2% y/y) pulled down operating profit by 9% y/y to ¥8.2 billion. Operating margin decreased 170bps to 22.3%.

HCG: All Set for a Stellar FY24

By Ankit Agrawal, CFA

HCG posted decent revenue growth in Q2FY23. Its new centers also saw improved profitability with scale.
HCG has been rolling out price increase across its network which alone should help it to expand margins by 100-150bp in FY24.
With new centers maturing, HCG is gearing up for a stellar FY24 and FY25. As per our estimates, HCG is on track to post FY25 PAT of INR 170cr+.

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Nov 16

Daily Brief Health Care: Olympus Corp, Suzuken Co Ltd, Yunkang Group, Apollo Hospitals Enterprise, Micro-Tech Nanjing Co Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

Olympus Placement – Had Been Doing Well, till Recently
Suzuken Buyback (9987 JP) – The Best News In Years
Yungkang Group Lock-Up – Shares Benefited from a Protracted Lockdown. Shareholders Could Monetise
Apollo Hospitals Enterprise (APHS IN): Mixed 2QFY23 Result; Outlook Is Positive
Micro-Tech Nanjing (688029.CH)-Worth a Spot on the Watch List Due to Possibility of Dilemma Reversal

Olympus Placement – Had Been Doing Well, till Recently

By Sumeet Singh

MUFG aims to raise around US$255m via selling around 1% of Olympus Corp (7733 JP).
The stock has been doing well recently and MUFG has sold before. Although, the recent earnings updates didn’t go down too well.
In this note, we will run the deal through our ECM framework and comment on other deal dynamics.

Suzuken Buyback (9987 JP) – The Best News In Years

By Travis Lundy

Suzuken Co Ltd (9987 JP) last Friday announced earnings which beat expectations and raised forecasts well above consensus. But Implied H2 did not change, suggesting full-year is lowballed.
The company announced a buyback over 5 months, but today (Tuesday) announced a ToSTNeT-3 buyback for the full size (6% or so) that morning.
It looks like insider selling, which in addition to being accretive would be bullish on a governance basis.

Yungkang Group Lock-Up – Shares Benefited from a Protracted Lockdown. Shareholders Could Monetise

By Clarence Chu

Yunkang Group (2325 HK) was listed on 18th May 2022, with its six month lockup expiring on 17th November 2022.
Yunkang Group is a medical operation service provider in China and as per F&S, had a market share of 3.7% in China’s medical operation service market as per 2020 revenue.
Coming up for six-month lockup expiry are the controlling shareholders and cornerstones. With protracted lockdowns underway in China, this stock has continued to benefit, currently trading 86.3% above IPO price.

Apollo Hospitals Enterprise (APHS IN): Mixed 2QFY23 Result; Outlook Is Positive

Apollo Hospitals Enterprise (APHS IN) recorded 14% y/y growth in revenue in Q2FY23. Occupancy in both the mature as well as new hospitals improved in Q2FY23 compared to prior quarter.
Q2FY23 reported EBITDA declined 8% y/y to INR5.65 billion due to impact of 24/7 operating costs, which stood at INR1.74 billion (vs INR475 million in Q2FY22).
In October, Apollo Hospitals entered into a definitive agreement to acquire 60% stake in Kerala First Health Services Limited, which offers Ayurveda medical services under the “AyurVAID Hospitals” brand.

Micro-Tech Nanjing (688029.CH)-Worth a Spot on the Watch List Due to Possibility of Dilemma Reversal

Micro-Tech Nanjing Co Ltd (688029 CH) would face lower-than-expected performance growth in 2022, but the logic of import substitution and increasing demand for endoscopy consumables would help drive future growth.
Centralized procurement is a problem, but Micro-Tech’s leading position of endoscopy consumables in China is stable, which wouldn’t be easily affected by centralized procurement when compared with other domestic companies.
The valuation of Micro-Tech should be lower than Mindray and Sonoscape, since these two companies have much better performance (both growth and profitability), product competitiveness, business layout and outlook.

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Nov 15

Daily Brief Health Care: Bionote, Pharmaessentia Corp, Hutchison China MediTech Ltd, Amgen Inc, Global Health (Medanta) and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

Bionote IPO – Delayed Timeline & Updated Valuation Analysis
Pharmaessentia Corp (6446 TT): Riding High Aided by Continued Strong Uptake of Besremi in US
Hutchison China MediTech (HCM.US/13.HK) – The Pain Points Become More Pronounced
Amgen Inc: Major Drivers
Global Health IPO Trading – Relatively Cheap and Good

Bionote IPO – Delayed Timeline & Updated Valuation Analysis

By Douglas Kim

Bionote has delayed its IPO timeline. Now, the company expects to complete its IPO in late December. The book building for the institutional investors will now start on 8 December.
Our updated base case valuation is target price of 16,966 won per share, which is 6% lower than the low end of the IPO price range.
Given the downside risk relative to the IPO price range, we have a Negative View of the BioNote IPO.

Pharmaessentia Corp (6446 TT): Riding High Aided by Continued Strong Uptake of Besremi in US

Pharmaessentia Corp (6446 TT) reported revenue of NT$275 million for October, representing a massive 548% y/y growth. The year-to-date consolidated revenue totaled NT$2.3 billion, an increase of 628% y/y.
The company will be presenting new data on Besremi during the 64th American Society of Hematology (ASH) Annual Meeting to be held on December 10–13, 2022.
Pharmaessentia has been added to MSCI Taiwan Indexes. The company also gained the biggest weighting increase of 0.37 percentage points in the MSCI Taiwan Index.

Hutchison China MediTech (HCM.US/13.HK) – The Pain Points Become More Pronounced

Hutchison China MediTech Ltd (HCM US) (Hutchmed) didn’t perform well. Its cash holdings could last about two and a half years considering the cash burn rate.
Hutchmed’s three major commercialized products would all face different challenges. Feedbacks from FDA/MAA cast a shadow on the Company’s internationalization prospects.
According to the current speed of pharmaceutical innovation, Hutchmed’s R&D efficiency/productivity is not satisfactory. The current pipeline does not have core competitiveness. Bearish on outlook.

Amgen Inc: Major Drivers