Daily Brief Equity Bottom-Up: 2023 High Conviction Update: Cipla (CIPLA IN)- Stellar Q1FY24 Performance; Margin Guidance Raised and more

In today’s briefing:

2023 High Conviction Update: Cipla (CIPLA IN)- Stellar Q1FY24 Performance; Margin Guidance Raised
China Healthcare Weekly (Jul.28) – Starting Point of New Prosperity, MNCs Change Strategy, Genscript
SK Hynix. Making HBM While AI Shines

2023 High Conviction Update: Cipla (CIPLA IN)- Stellar Q1FY24 Performance; Margin Guidance Raised

Cipla Ltd (CIPLA IN) reported better-than-expected Q1FY24 result, with revenue growing 18% YoY, driven by India and the U.S., both of which reported record high revenue.
Stellar performance across all markets drove EBITDA to multi-quarter highs. EBITDA margin expanded 230 bps YoY and 310 bps QoQ to 23.6%. Net profit increased 45% YoY to INR10 billion.
Cipla expects the average revenue run rate of $210–215M from its U.S. business in the coming quarters. For FY24, management has raised EBITDA margin guidance to 23% from 22%.

AD (Alzheimer Disease) and RNAi are one of the most valuable breakthroughs in global pharmaceutical industry in recent years. We think they may bring the next round of biopharmaceutical prosperity.
MNCs have begun to adjust their strategic business model in China. Licensing cooperation and equity investments in China biotech companies are expected to become a new trend.
We can’t expect too much from Genscript Biotech (1548 HK) just because Legend Bio’s CAR-T product has good sales performance. Genscript could underperform based on our analysis.

SK Hynix’s Q2’23 revenue increased ~50% QoQ with bit shipment growth of ~35% for DRAM, ~50% for NAND
AI-Driven demand for DDR5 & HBM pushed DRAM QoQ ASP growth into positive territory for the first time in 9 months.
But it’s still stormy weather ahead as mainstream DRAM, along with NAND ASPs continue their downward slide

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