Healthcare

• Dechra Pharmaceuticals (DPH LN) shares corrected around 25% from its recent peak of GBX5,150 in late December, due to general market apathy toward high multiple stocks.
• Despite the extraordinary levels experienced in the prior year, Dechra maintained its double-digit revenue growth and reported constant currency revenue growth of 15% y/y for H1FY22.
• Long-Term fundamental growth story remains intact for Dechra. The company has also forayed into a new and niche therapy area through acquisition of one drug this year.

• JB Chemicals & Pharmaceuticals’ (JBCPL) Q3FY22 performance was better than our estimates on operational fronts.
• Excluding revenue deferred to Q3FY21 from Q2FY21, consolidated revenue grew 23% YoY to Rs6bn (I-Sec est: 5.8bn).
• EBITDA margin stood at 21.3%, higher than our estimate of 19.8%.

• Negatives largely priced in; U/G to HOLD
• Results in line
• More details on 4Q21 results
• Earnings adjustments; Upgrade to HOLD.

Kossan’s 4Q21 net profit of MYR218.7m (-56% YoY, -59% QoQ) was in line. The QoQ decline in 4Q21 earnings performance was mainly dragged by lower ASP. We lower our FY22-23 earnings forecasts by -41%/-8% to factor in lower ASP and utilisation rate assumptions as well as the Prosperity tax. Our TP is lowered to MYR1.71 (-16 sen; on an unchanged 17.7x CY23 PER or -1SD of historical mean). After the selloff, risk-reward in the stock appears evenly balanced. U/G to HOLD.

• Singapore will apply streamlined COVID-19 rules from 25 February 2022, with a focus on vaccination status instead of an aggressive testing and surveillance regime 
• We previously discussed how Raffles Medical benefits as the primary testing services provider at Changi airport and by facilitating Singapore’s vaccination drive
• Given the latest pivot in border protocols, and taking into account Singapore’s high vaccination rates, we discuss whether our initial investment hypothesis remains intact

• Australian Pharmaceutical Industries (API AU)‘s Scheme Booklet is now out. The Scheme Meeting will be held on the 17 March with possible implementation on the 31 March.  
• The Independent Expert has concluded this US$600mn Offer is fair and reasonable and in the best interest of Senex shareholders.
• The Offer price is full. And trading very tight to terms.

• In-line performance with robust pickup in non-covid business.

• In this insight, we discuss the potential additions and deletions in the upcoming June 2022 KOSPI200 rebalance.
• These top 10potential inclusionsare down on average 4.4% YTD, outperforming KOSPI which is down 10.1% YTD.
• These top 10 potential exclusions are down on average 12.3% YTD, underperforming KOSPI which is down 10.1% YTD.

• Emcure Pharmaceuticals Limited is looking to raise around US$500m in its upcoming India IPO.
• EP is an Indian Pharmaceutical company engaged in the developing, manufacturing and globally marketing a broad range of pharmaceutical products across several major therapeutic areas. 
• In this note, we talk about the various aspects of the deal.

• The candidates in Biocytogen’s pipeline do not have advantages in development progress and also have to face fierce competition, so continuous large R&D investment in the future would be inevitable.
• However, the development model of Biocytogen is very novel and special, which could make it a rare target in the market if it is successfully listed.  
• Therefore, the certainty of Biocytogen’s future growth is expected to improve gradually, and the mid- and long-term investment value would continue to increase due to the high moat.

• Missed estimates, margin contraction with lower realisations.

• Apollo is one of the leading integrated healthcare service provider with avenues like hospitals, pharmacies, primary care & diagnostic clinics
• Apollo reported in line results but it was skewed with hospitals lagging our expectations while pharmacies were a beat on our estimates
• Target Price and Valuation: We value Apollo at Rs 5480 based on SOTP valuation.

• Glenmark Pharmaceuticals for building a global generic, specialty and OTC business in therapy areas of dermatology, respiratory, oncology among others
• Glenmark Life Sciences for manufacturing and marketing API
• Innovation new company (ICHNOS) to focus on discovery and development of novel, firstinclass treatments

• Huadong Medicine (000963 CH)’s traditional core businesses are facing great pressure due to VBP and medical insurance negotiation, which is difficult for Huadong to establish its long-term core competitiveness.
• Despite the fierce competition in medical cosmetology industry, the entry of medical cosmetology equipment field is a wise step, helping Huadong form the most complete layout among competitors.
• In terms of whether Huangdong could achieve business transformation successfully, the future performance of medical cosmetology business is the key breakthrough point.

• This model looks for slowing growth, margin declines, sales and/or earnings disappointments, troubling working capital trends, poor estimate trends or lowered guidance, among other characteristics.
• The key judgement is whether a slowdown is temporary or the beginning of a trend.  These shorts tend to have high valuations and betas.  Multiple compression accelerates the stock’s decline.
• Today we are flagging Quanterix, Insulet, Inari Med,  and MercadoLibre

• Healthcare Global Enterprises (HCG) reported revenue Rs 358 Cr grew by 30.7% YoY which is in line with expectations.
• This growth is primarily led by healthy ARPOB (Rs 38,320) that has shown growth of 15.8% YoY and the number of occupied bed days grew by 17% YoY
• We recommend “BUY” with a target price of Rs 330.

• In terms of the business model,the uniqueness and scarcity of Pien Tze Huang keep the market demand at high level,supporting its strong ability to raise prices and establish high moat.
• The concerns on single product risk, scare raw materials and inadequate production capacity would cast a shadow over the Company’ future development.
• The breakthrough point lies in whether the Company can make use of the unique advantages generated from “Pien Tze Huang” series to cultivate a second strong growth point in time.

• Krishna Institute of Medical Sciences (KIMS IN) shares gained ~18% since we initiated it on October 28, 2021. Investors can add to positions at the current level.
• Regional focus is still paying off and KIMS reported solid Q3 results, with revenue and PAT growing by 10% and 76%, y/y, respectively, driven by higher patient volume and occupancy.
• EBITDA margin of acquired assets has enough headroom to grow to the level of mature assets. The company is on track to add 1,650–1,800 beds in next three years.

• Lepu Biopharma is a biotech spin-off of A-share listed Lepu Medical. The company launched book building to raise up to USD 120m via a Hong Kong listing.
• In our previous note, we look at the company’s core products, including HX008, LP002, MRG003 and MRG002. The products have their own differentiating factors to tackle the intense competition.
• In this note, we provide an update for the book building. We will run the deal through our ECM framework and provide an update on the deal.

• Upgrade to BUY with a TP of Bt3.9, based on 30xPE’22E,which is its pre-COVID bottom level.The 27% drop in share price from Jul 21 peak priced in concern over 3Q21
• Expect 4Q21 earnings at Bt854m (+234%YoY,-45%QoQ), decline due to weak revenue growth, and narrow margin.
• Foresee momentum in 1Q22 arising from the Omicron variant,given the amount of infection patients grew roughly to 7-13k cases per day.Along with vaccines rollout, which should be realize in 1Q22

• Hogy Medical’s founder passed and there was a re-arranging of deckchairs among the Hoki family ownership in 2021.
• Earnings are not growing yet, but the mix is improving on a forward basis and consensus is decidedly more bullish than trend would suggest.
• Now the company is buying back a LOT of stock from the Hoki family. This changes things.

• Lepu Biopharma (LBP HK) is a biopharmaceutical company focusing on oncology therapeutics. The company has filed for an IPO to list on the Hong Kong Stock Exchange.
• Lepu has the leading ADC candidate pipeline in China, in terms of number of clinical-stage ADC drug candidates. In our previous insight, we discussed the company’s business, products and outlook.
• In this follow-up insight, we have highlighted and discussed some of the key new data points from the company’s Post Hearing Information Pack (PHIP).

• 4QFY22 to be hit by lower ASP and prosperity tax
• Results impacted by lower ASP and utilisation
• Key highlights from 3QFY22 concall:
• Earnings adjustments

3QFY3/22 net profit of MYR259m (-74% QoQ, -72% YoY) was in line. Hartalega is likely to go into the red in 4QFY22 on lower ASP (-30% QoQ) and Prosperity tax. We lower our FY22/23/24 earnings forecasts by 22-25% after factoring in the prosperity tax and tweaking our ASP and utilisation rate assumptions. Our TP is lowered to MYR3.01 (-99 sen) on an unchanged 19.4x CY23 PER (-1SD of historical mean). Reiterate SELL.

• MicroPort is the largest Chinese neuro-interventional medical device company and has filed for an IPO on the Hong Kong Stock Exchange. Its Portfolio consists of 30 commercialised products and candidates.
• Although struggling with margins, the company has an impressive product portfolio with a majority of them having strong competitive advantages.
• As most of the products are poised for growth, we are largely positive on the company.  

• Recently, MicroPort MedBot’s Toumai laparoscopic surgical robot has obtained a registration certificate for launching by NMPA, indicating the hope of breaking the monopoly of Da Vinci robots in the market.
• The strong policy support as well as the medical insurance coverage offer a viable way for the commercialization of surgical robots in China, which is very important. 
• Although it would take some time to improve the overall market penetration in China, we are still optimistic about the outlook of Shanghai MicroPort MedBot Group (2252 HK).

• Pfizer collectively addresses 15 therapy areas in the domestic formulations with a portfolio of over 150 products that include therapeutics & vaccines
• The company has been continuously restructuring its portfolio in the last few years to improve the productivity of its core brands.
• Target Price and Valuation: Valued at Rs 5350 i.e. 36x P/E on FY24E EPS of Rs 148.6