Healthcare

• Raffles Medical (RFMD SP) reported 27% y/y revenue growth to S$723.8 million and net profit increase of 30% y/y to S$83.7 million in 2021.
• Following full border reopening by Singapore beginning April, medical tourism is set to revive. As a leading hospital operator in Singapore, Raffles is well-positioned to grab the opportunity. 
• Regular share buyback and recent stake increase by a major investor further enhance conviction on the company’s growth potential.

• Raffles Medical (RFMD SP) is a private medical provider in Singapore. The company owns and operates a network of medical clinics and hospitals.
• The company’s earnings saw a boost in 2021 driven by demand for Covid-19 related services such as PCR tests, vaccine administration and operation of Cov-19 treatment facilities.
• With Singapore reopening borders post Covid, we expect foreign patient volume to see a recovery, however, lower revenue from Covid related services would negatively impact earnings in 2022.

• Zydus Lifesciences Ltd (ZYDUSLIF IN) earns more than 40% revenue from the U.S. This business is under continued pricing pressure, which is squeezing the gross profit margin of the company.
• The company has received approval for COVID-19 vaccine in India, which seems to have limited visibility and revenue potential, amid competition and uncertain COVID-19 outlook.  
• Zydus has launched one new drug and received approval for another in India. However, its innovation portfolio has to go a long way to become a significant growth contributor.

• For the first quarter of 2022, Aristotle Atlantic’s Core Equity Composite posted a total return of -6.79% gross of fees.
• The outlook for the U.S.
• large cap equity market for the balance of 2022 will be impacted by the pace and size of tightening by the Federal Reserve.

• For the first quarter of 2022, Aristotle Atlantic’s Large Cap Growth Composite posted a total return of -9.61% gross of fees.
• We have also entered a period of increased geopolitical risks that will add to market volatility, according to Aristotle Atlantic’s Large Cap growth Composite.

• For the first quarter of 2022, the Aristotle Small/Mid Cap Equity Composite generated a total return of -4.38% gross of fees.
• We remain optimistic about the prospects for small/mid cap equities going forward, according to the company.
• The Aristotle Small and Mid Cap Equity composite generated atotal return of 4.

• For the first quarter of 2022, Aristotle Atlantic’s Focus Growth Composite posted a total return of -9.30% gross of fees.
• In the near term, a recession seems unlikely with key economic indicators like the ISM Manufacturing Index pointing to an expanding economy.
• The ISM manufacturing Index points to an growing economy.

• For Q1 2022, the Aristotle Small Cap Equity Composite generated a total return of -5.77% gross of fees.
• While near-term price movements and volatility continue to be driven by macroeconomic and geopolitical issues in the short term, we believe business fundamentals will ultimately determine equity values in the long run.

• Rainbow Children’s Hospital (RCH) raised around US$200m via issuing a mix of primary and secondary shares in its India IPO.
• RCH is a multi-specialty pediatric and obstetrics and gynecology hospital chain in India, operating 14 hospitals and three clinics in six cities, with a total bed capacity of 1,500 beds.
• In this note, we will talk about our the trading updates.

• For the first quarter of 2022, Aristotle Capital’s Global Equity Composite posted a total U.S.
• dollar return of -9.19% gross of fees (-9.28% net of fees) The company is an independent/employee-owned investment management organization that specializes in equity and fixed income portfolio management.

• The aortic product line would bring strong growth in 1-2 years. From 3 years or longer term, Endovascular’s peripheral vascular interventional devices would be the main driver for high growth.
• We don’t think the centralized procurement would be a concern for the time being. As many products are or will apply for CE Mark, the progress of internationalization is promising.
• The current valuation is very attractive. Due to the pandemic/lockdown in China and many external uncertainties, share price could go lower, but it’s still a good company to invest in.

• Reiterate HOLD rating with a TP of B3.90, derived from 15xPE’22E, which is close to -2SD of 10-years trading mean. Although 22E earnings on a downhill path
• We estimate 1Q22E earnings to be the peak quarter at Bt1.3bn (+418%YoY,-28%QoQ) underpin by YoY growth in COVID-revenue, but QoQ fall from weaker EBIT margin.
• We believe earnings momentum to slow down in 2Q22, pressured by lower COVID-19 contribution, as a result of lower infection patients and stopped RT-PCR requirement.

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

• JHBP (Genor) (6998 HK) received approval in China for its first commercial drug, GB242, a biosimilar to Remicade (infliximab). Approved indications have an addressable patient population of 10 million.
• The company is also expected to obtain marketing approval for its drug candidate for the treatment of relapsed and refractory peripheral T-cell lymphoma (PTCL) in China this year.
• In-Licensed GB491 (lerociclib) has entered in two phase 3 clinical trials for first and second-line treatments of breast cancer. NDA for GB491 is expected to be filed in 2023.

• We update our forecast on CanSino’s performance in 2022, which could be much lower than that in 2021 due to the concerns on commercialization outlook of COVID-19 vaccine and MCV2/MCV4.
• However, due to strong R&D and technology platforms, the value of CanSino’s pipeline is higher and its products could become the ceiling of pricing power for other homogeneous competing products.
• We still think CanSino has investment value in long term despite the headwinds in short term.The market value by May 6 of HK$18.1 billion (PE/TTM at 7.22) is also attractive.

• Yunkang Group (2325 HK) is looking to raise US$139m in its Hong Kong IPO.
• Yunkang Group has grown its on-site diagnostics centers and has grand plans to add new centers with the IPO proceeds.
• However, its business performance had been largely impacted by COVID, where COVID-related tests amounted to 83.6% of total tests performed in FY21, while contributing 58.1% to total revenue.

• CapVest has a concurrent Scheme for Virtus Health (VRT AU) at $8.15/share and an off-market Takeover bid at $8.10/share (conditional on, among other things, the Scheme not proceeding).
• The Transaction Booklet is now out. The Scheme Meeting will be held on the 6 June. If not approved, the Takeover closes on the 5 July – unless extended.
• The Virtus Directors unanimously recommend shareholders vote in favour of the Scheme; and accept the CapVest Takeover should the Scheme not be approved.

• Yunkang Group (2325 HK) is a medical operation service provider in China and offers a full suite of diagnostic testing services.
• The company’s IPO application has been approved and plans to raise about US$139m. In this  insight, we have highlighted some of the key new data points from PHIP filing.
• Revenue grew 8.8% YoY in 2021 excl. Cov-19 tests (vs 80.2% from Cov-19 tests) and we are yet to see major improvements excluding the positive impact on margins from COVID.

• Reiterate HOLD rating with a TP of B21.00 derived from 14.36xPE’22E, which is close to -2SD of 3-years trailing average.Despite significant drop in 2022E earnings, we recommend a trading approach 
• We estimate 1Q22E earnings to be the peak quarter at Bt2.3bn (+613%YoY,-7%QoQ), supported by YoY rise in COVID-revenue, but QoQ decline by margin erosion.
• We foresee earnings momentum to weaken in 2Q22, underscored by lower COVID-19 contribution, resulting from falling infection patients and stopped RT-PCR requirement.

• Vertex Pharmaceuticals (VRTX US) reported Q1 revenue of $2.10 billion, a 22% y/y increase, reflecting continued growth in the number of cystic fibrosis (CF) patients treated globally.
• Vertex reiterated full year 2022 product revenue guidance of $8.4–8.6 billion. However, the company raised 2022 adjusted R&D and SG&A expenses by 5% at mid-point.
• The company has a broad pipeline beyond CF and the pipeline progress calls for continued investment for R&D and SG&A. This may pressurize near-term profitability of the company.

• Moderna Inc (MRNA US) reported strong Q1 results, with revenue and EPS beating consensus by 33% and 65%, respectively. The company reiterated 2022 Covid vaccine sales guidance of $21 billion.
• With the pandemic likely to evolve into and endemic phase with a more seasonal sales pattern, Moderna is advancing its vaccine and therapeutic pipeline beyond COVID.
• Beginning in the fall of 2022, Moderna could see three respiratory commercial launches over the next two to three years. Moderna is looking for potential M&A opportunities across the globe.

• Pharmaessentia Corp (6446 TT) is advancing global commercialization of its flagship drug, Besremi, the first FDA-approved medication for polycythemia vera that patients can take regardless of their treatment history.
• Thus far, Besremi has been commercialized for polycythemia vera in 23 countries. Launch preparation is underway in four geographies including Japan, China, Singapore, and Hong Kong. 
• The company is conducting clinical trials for Besremi for other indications, including COVID-19. Pharmaessentia also has a rich pipeline of clinical-stage drug candidates. 

• The CapVest scheme meeting is scheduled for 6 June and the CapVest takeover offer runs from 6 May to 5 July. The BGH takeover is open and ends 20 May.
• The independent expert has concluded that both CapVest and BGH’s proposals are fair and reasonable. Virtus Health (VRT AU) shares currently trade above both proposals. 
• With BGH unwilling to concede to CapVest, it is likely that BGH increases its 20.02% stake at a higher price than its takeover offer, resulting in a higher offer price.  

• Yunkang Group (YK HK) is looking to raise US$139m in its Hong Kong IPO.
• 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.
• Yunkang saw its full-year FY21 performance pulled up in the later half of the year. Number of tests administered had also surged 3.45x YoY in FY21.

• Bausch Health Companies (BHC US)‘s share price reversal over the past year has eliminated the substantial  gains achieved after it announced plans for a major corporate overhaul in August 2020.
• No substantive change to BHC’s current holding company structure and leverage ratio will result from the imminent execution of the Bausch & Lomb IPO which is less transformational than expected.
• The potential for a more value-creating overhaul remains, but timing is uncertain. Until the relevant catalysts come into play, we expect the BHC share price to tread water at best.

• Takara Bio Inc (4974 JP) reported 55% y/y growth in revenue during the first nine months of FY22, mainly driven by 129% y/y surge in COVID-19 PCR test reagent revenue.
• Although Takara Bio is likely to beat its FY22 guidance, uncertainty is prevailing for revenue earning potential beyond FY22, when the COVID-19 test demand will fade away.  
• We would stay away from this idea for now and wait on the sideline for a clarity of growth potential and recovery in the base business in FY23 and beyond. 

• The MWA market that Betters belongs to has showed rapid growth and large potential. Obviously, Betters would benefit from it based on its existing products and leading market position.
• However, the medical device industry in China is subject to strict policy supervision. It cannot rule out the possibility that the Company’s products would be included in the centralized procurement.
• In terms of valuation, Micro-Tech Nanjing Co Ltd (688029 CH) could be a comparable company,  but Betters’ valuation should be lower than it.

• In its Target Statement, Virtus Health (VRT AU)‘s board unanimously determined BGH’s Offer is inferior to CapVest’s and recommends shareholders to not accept BGH’s Offer.
• Separately, Virtus is seeking interim orders from the Takeovers Panel, such that BGH amends its bidder’s statement and also provides withdrawal rights. 
• A Supreme Court of New South Wales hearing will be held on 4 May 2022 to convene the Scheme meeting in relation to the CapVest Transaction.

• The 2021 report is the worst ever annual report of Hengrui, with double drop in both revenue and net profit.2021Q4 and 2022Q1 are also the worst two quarters so far.
• Although Hengrui has invested heavily in R&D and internationalization, it’s still trying to follow an established model with better security.Essentially, Hengrui is still the same Hengrui. Nothing has changed fundamentally. 
• For now, Hengrui hasn’t released any signal for “a reversal”. If going bottom fishing, investors may have to take a long, uncertain journey with Hengrui. Can you afford to wait?

• Yungjin Pharmaceutical Co (003520 KS) earns 15% of total revenue from exports. The company mainly exports antibiotic product cephalosporins to Japan.
• Yungjin’s export income declined 47% y/y in 2021 due to COVID. With Japan’s policy of reducing the usage of antibiotics, we are not upbeat on the recovery of this business.  
• Yungjin’s outlicensed new drug candidate completed only phase 1 trial. If the candidate successfully completes later stages of trials, it is expected to be marketed only in 2024.

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

• In 2021/22Q1, Mindray’s 20%+ growth rate is not easy in this difficult/complicated environment, but the market hopes to see stronger data and a fresh logic of growth to restore confidence.
• After China’s “new infrastructure”  projects finish, how to maintain its 20%+ growth could be a challenge in the long term if Mindray couldn’t make breakthrough in internationalization or innovation.
• However, Mindray is still a “safe play”. Its current PE/TTM is also more reasonable, but definitely not undervalued. It would be much better to long Mindray at a lower valuation.

• The review period for the June rebalance ended on Friday. The changes will be announced in around 3 weeks and will be effective after the close on 9 June.
• We see 7 changes for the index with most of them being high probability. The potential adds have outperformed the potential deletions, but have given up some gains in April.
• Short interest on some of the potential deletions has risen sharply over the last month and now almost equals the estimated passive selling.

• As one of the few CXOs in the industry that has layout of the whole industry chain, Pharmaron carries many expectations. But it cannot compete with WuXi AppTec so far.
• If Pharmaron could make breakthrough either in its CMC services (improving gross profit margin and scale) or the CGT services, the Company’s outlook and valuation logic would improve greatly.
• The valuation of Pharmaron should be lower than WuXi AppTec and WuXi Biologics, but higher than Asymchem, Tigermed and Joinn. Considering the macro uncertainties, short-term trades are advised.