Healthcare

• Currently, Angelalign could not be compared with Align Technology in many aspects, but Angelalign’s PE/TTM indicates it may have already overdrawn the performance of the next few years.
• The growth outlook of Angelalign has uncertainties. Any deceleration in revenues and profits in any given year is likely to lead to a significant valuation correction. 
• High valuation cannot be supported without certainty of growth. Therefore, based on our analysis, our view is that Angelalign could be a short-term trade, but not long-term hold.

• Moderna Inc (MRNA US) , the leading biotechnology company and producer of mRNA-based COVID-19 vaccine Spikevax, reported total revenue of ~$18.5B and net income of $12.2B in CY’21.
• Management announced a new $3B share repurchase plan and fully utilized the previous $1B buyback program as valuations looked attractive. 
• We expect the company will generate ~$22.1B of free cash flows from CY’22 through CY’24, and we would be buyers on any weakness in Moderna. 

• Square Pharmaceuticals (SQUARE BD) has received permission from the Bangladesh Bank to invest overseas, after the government issued new rules for overseas investment.
• Per initial plan, Square Pharmaceuticals will invest $1 million in Philippines, which is the third largest ASEAN region. The company’s Kenya manufacturing facility is expected to start production soon.
• During H1FY22, Square Pharmaceuticals revenue growth of 17% outpaced the industry growth. The company generated higher net margin than its closest competitors.

• Japan Lifeline announced a buyback on Friday after the close.
• The stock saw a huge growth spurt in the first half of the last decade but slowed down post 2018. So the stock has significantly underperformed the sector. 
• The buyback parameters and the stock’s trading history suggest that with the stock near a 5-year low, it is worth looking a little deeper.

• In keeping with tradition, the SSE and CSI have continued to use a 6 month minimum listing history. No one remembers how or why it started, but it carries on.
• There are only 10 trading days to implementation and passive funds will need to trade multiple days of ADV on the inclusions and exclusions.
• The adds, deletes and the SSE STAR50 (STAR50 INDEX) have moved in lockstep since November. The CSI500 Index has outperformed over the period opening up a trading opportunity.

• Yunkang Group (YK HK) is a medical operation service provider in China and offers a full suite of diagnostic testing services.
• The company’s earnings had a boost in 2020 with the pandemic which resulted in huge demand for Covid-19 diagnostic tests.
• Yunkang has filed for an IPO to raise about US$200m. We expect the company’s earnings to gradually decline with pandemic conditions easing off.

• As expected, Apollo Hospitals Enterprise (APHS IN) will replace Indian Oil Corp (IOCL IN) in the NIFTY Index (NIFTY INDEX) after the close of trading on 30 March.
• The index methodology has been changed to make new listings eligible for index inclusion if they complete one month by the review cutoff date, down from three months earlier.
• Estimated one-way turnover is 0.63% and will result in a one-way trade of around INR 14bn. Passive trackers will have a lot to trade on the stocks.

• Kalbe Farma (KLBF IJ) released a reassuring set of results with sales growing +13.6% and net profit by +12.5% in 2021, with growth coming from prescription drugs and distribution
• 2022 should see growth picking up across all of its divisions with recovery for consumer health and nutritionals plus its digital strategies are starting to make a difference. 
• Kalbe Farma trades in 22.8x FY22E PER and 21.0x FY23E PER versus its 5-year average forward PER of 26.3x forward PER, making it look attractive at current levels. 

• Yunkang Group (YK HK) is looking to raise about US$200m in its upcoming 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.
• While it has managed to grow its on-site diagnostics centers, the firm has to prove that it can still thrive post-COVID.

• Shanghai Pulse is a leading player in the FFR assessment in China. The company is looking to raise up to USD 200 m via a Hong Kong listing.
• We look at the company’s key products QFR, OFR and UFR. We also provide our thoughts on the investment thesis.
• We think the company has a decent investor backing and meanwhile we also highlight concerns on its management.

• Based on our analysis, the logic of ClouDr Group’s business model is more solid and feasible than that of Ping An Good Doctor, indicating better outlook.
• If compared with JD Health and Alibaba Health,besides the sales of pharmacy supplies and hospital supplies, ClouDr also provides hospital/pharmacy SaaS services, indicating wider business scope and broader development space.
• In terms of valuation, Neusoft Xikang Holdings (NXH HK) is a good comparable company for ClouDr,but investors need to be aware of the market sentiment to new IPOs at that time.

• This article will discuss about Nikkei’s article about “Torii Pharmaceutical opposes Hong Kong investment firm’s proposal to ban revolving door” which includes several points of discussion.
• If the stock price is undervalued because investors are reluctant to invest on concerns about shareholder structure that doesn’t allow minority shareholders’ opinions to be heard, that is serious problem.
• Many subsidiaries have no incentive to listen to opinions of minority shareholders and enhance governance practices. Lack of growth strategies and communication to investors is also a problem for Torii.

• Ilyang Pharmaceutical Co., (007570 KS) shares have plunged 19% since we published our bearish insight on the company on November 2, 2021.
• We are still bearish on Ilyang Pharmaceutical as both of its key drugs, Noltec and Supect are facing increasing competition from new generation treatments.
• Q4 provisional results indicate sequential deceleration in revenue, operating profit, and net profit. Recently, one institutional shareholder has reduced stake holding in the company.  

• WuXi AppTec Co. Ltd. (2359 HK) released the preliminary financial data for 2021. It is not surprising that the Company could maintain its outstanding performance.
• We listed some interesting points to ponder, such as projected declining performance of WuXi DDSU and related chain reaction, the change in fair value of financial assets, overseas anticipation, etc..
• It’s understandable if investors choose to start making layout at this point due to attractive valuation and longer “reflection arc”,but need to be patient for WuXi AppTec to achieve reversal.

• Mayne Pharma (MYX AU)‘s revenue is decelerating since FY19, which is reflected in its share price performance. From predominantly being into generics, the company is now focusing on specialty pharma.  
• In FY21, Mayne Pharma added 11 dermatology and women’s health products to portfolio targeting $650 million in IQVIA sales. Its U.S. contract service business is on a double-digit growth path.
• Commercialization of new oral contraceptive Nextstellis in the U.S. is the major growth driver of the company. Neststellis peak U.S. sales are projected at $200 million annually.  

• Why: Profits in “Global Products” should decline over the next two years as it emerges from a period of over-earning in 2020 and 2021, resulting in a collapse in earnings and valuation
• When: Should show evidence in 1Q/2Q2022 – once investors see that Global Products profit is shrinking and start applying a low-growth multiple to normalised earnings.
• Factor Exposure: Value, Covid-beneficiary, negative earnings revision

• HCG continues to improve its profitability led by 1) Scaling up of new centers and 2) Improving operational efficiency in its existing centers. 
• HCG reported revenue growth of 1.7% QoQ in Q3FY22, despite Q3 being a seasonally weak quarter and despite fell off of COVID related revenues.
• As per our projections, HCG has potential to generate annual earnings of 170cr+ by FY25, suggesting an IRR potential of 23%+ over the next 3Y.  

• Hikal is predominantly a B2B player that provides intermediates and active ingredients to global pharmaceutical, animal health, crop protection and specialty chemical companies.
• Maintain BUY on account of consistency in offtake for crop protection CDMO, expected recovery in Pharma, Visibility capex.
• That said we continue to monitor developments on recent critical issues- 1) Surat (Gujrat) GIDC incident and 2) MPCB notice for Taloja.

• Driven by favorable policies on TCM and COVID-19 under control, the performance recovery would be a good signal, making the FY2021 performance worthy of expectation.
• The expansion scope of VBP on TCM and the concerns on TCM injection products cast doubts on China Shineway Pharmaceutical (2877 HK)’s outlook.
• Due to the uncertainties, we choose to be conservative about the Company’s outlook at the current stage.

• KOSDAQ 150 will replace Osstem with Caregen at the close on March 16.
• Even if we conservatively assume KOSPI 150’s direct rebalancing trading funds at ₩1.5T, Caregen will likely face a passive inflow of 4.76x ADTV.
• So, it seems appropriate to approach this event as a short-term momentum trading with a small volume on Caregen right before the inclusion effective date.

• Natco has, over the years, developed a knack for manufacturing complex generic products with few competitors, especially for the US market
• India formulations mainly comprise oncology products (+33 launches).
• FY21 revenue break-up – Domestic Business: 19%, International Business: 50% (mainly from the US), APIs: 24%

• Ipca is a fully integrated pharma company manufacturing over 350 formulations and 80 APIs with exports contributing 50% of revenues in FY21
• Major therapeutic segments include pain management, cardiovascular and anti-diabetics, anti-infectives, anti-malarials, which together account for 75% of revenues
• Target Price and Valuation: Valued at Rs 1175 i.e. 24x P/E on FY24E EPS of Rs 48.9

• The impact of dental implants centralized procurement on Modern Dental Group (3600 HK) (MDG) could be limited, and the strategic partnership with Meitu Inc (1357 HK) on “QJ Smile” also brings more possibilities.
• The concerns include doubts on R&D/innovation capability, complex international relations, foreign policy disturbances, unsettling macro environment and immature invisible orthodontic business, bringing uncertainties in terms of future development outlook.
• Although the 2021 full-year performance is worth looking forward to, which could be the short-term catalyst, MDG is more suitable for short term trading than long term holding.

• Below expectations
• 4Q21 dragged by higher fixed costs
• QoQ improvement in Malaysian operational metrics
• BOR recovery to drive FY22/23E earnings growth

4Q21 core earnings of RM15.2m were down 69% YoY on higher operating costs related to SOP compliances and gestation from new hospitals, despite higher revenues. This has led to full-year earnings missing ours and consensus’ forecasts at :til80% of FY21E estimates. We nonetheless expect BOR recovery to drive FY22-23E earnings growth due to economic reopening. We also introduce FY24E earnings. Maintain Hold with a slightly lower DCF-derived TP of RM1.10 (WACC: 7.98%, g: 2.0%). Valuation looks fair at 31.4x FY22E PE.

• The business combination of Hapvida Participacoes E Inve (HAPV3 BZ) and Notre Dame Intermed Par SA (GNDI3 BZ) concluded on Feb 11. GNDI3 shares are no longer trading.
• Since Feb 14, 2022, GNDI has become a wholly-owned subsidiary of Hapvida. The combined business has become Brazil’s largest vertical healthcare operator, with a market share of approximately 18%.
• The combined company estimates operational synergies of BRL1.38 billion during 2022–2024. With a share of 58%, revenue is expected to be the biggest contributor of the synergies.

• Osstem Implant (048260 KS) has been suspended from trading this year following embezzlement that has nearly wiped out its equity capital.
• The stock was named an Administrative Issue on Friday and will be deleted from the KOSDAQ 150 Index (KOSDQ150 INDEX). Caregen Co Ltd (214370 KS) is the replacement.
• Passive funds will need to sell around KRW 60bn of Osstem Implant (048260 KS) if they can, and buy KRW 7bn of Caregen Co Ltd (214370 KS). 

• On 18 February, the KRX announced that the deletion of Osstem Implant (048260 KS) and the inclusion of Caregen Co Ltd (214370 KS) in KOSDAQ150.
• The South Korean Presidential election will be held on 9 March and the KRX is not likely to make sensitive decisions such as the delisting of Osstem Implant in March.
• We continue to like the pair trade (long KOSPI200 and short KOSDAQ150) which has worked out well in the past month and we expect continued gains on this trade.

• Mesoblast Ltd (MSB AU) has developed a range of late-stage product candidates derived from its first and second generation proprietary mesenchymal lineage cell therapy technology platforms.
• BLA resubmission of remestemcel-L and formal BLA submission of rexlemestrocel-L to the FDA are two near-term catalysts for Mesoblast. Latest clinical trial results should support efficacy of both the candidates.
• In November, Mesoblast completed a refinancing of its senior secured debt facility with a new $90 million five-year facility. Current funding is available for an estimated seven quarters.

• Ahluwalia Contracts: Ahluwalia Contracts (AHLU) reported revenue/EBITDA/APAT (miss)/beat of (4)/(1)/7%.
• AHLU is confident of crossing INR 25bn+ in revenue for FY22, backed by order backlog (OB) of INR 67bn and an L1 of INR 7bn.
• 15% of the OB is fixed price contracts and exposed to price volatility.