Daily Brief Equity Bottom-Up: China Healthcare Weekly (Mar.1) – Prioritize Big Pharma and more

• In the current challenging environment, investors should prioritize pharmaceutical companies with abundant cash flow and Biotech with diversified funding sources, as their safety margin is much higher.
• After the “clamor of consumer upgrading” fades away, we will eventually realize that the so-called pricing power has never belonged to anyone or any enterprise, but always to consumers.
• Hengrui is overvalued. There’re still around RMB5 billion generic drugs yet to enter VBP scope. So, the assumption that all negative effects of VBP have cleared up is not correct.

• TSMC: +22.9% ADR Premium is Near an All-Time High; Long Taiwan Shares vs. Short the ADR
• UMC: 2.2% Premium; Flipped Positive From a Discount; Likely to Contract
• ASE: +13.3%; Short the Historically High Spread at the Current Level

• Philippine Stock Exchange (PSE PM) reported a slow Q4 2023/FY23, with revenue down 9.5%/8% YoY and profits down 30% YoY for Q4 FY23 but up 4% YoY for FY23. 
• We are excited by the recent passing of a bill to reduce the tax on stock transactions and a proposed law for lowering the tax on dividends for non-residents.
• Trading at 19x FY24e with a 5% dividend yield, EBITDA/PAT margins >55%/40%, and 25% of the market cap in cash with an acquisition angle, this stock is a must-watch

• CIMC Vehicles Group (301039 CH) (CIMCV) is a leading global manufacturer of semi-trailers and various truck bodies that is the mainstay of heavy ground goods transport  
• 9M23 earnings surged by 216% and beat consensus, scope for further earnings upgrade as the business and management outlook statement is very positive   
• Our target price of CNY12.50 (+31% UPSIDE) is based on 2024 PE 15x – a 10% discount against the industry leader Caterpillar 

• In the Q4 earnings, Merck & Co.
• reported a strong financial performance, underpinned by a robust demand for their innovative portfolio, including Keytruda, Welireg, and Gardasil, among others.
• The company has embarked on various collaborations further bolstering its product pipeline with a promising line of innovations.

• This is our first report on e-commerce player, Carvana.
• The company’s Fourth Quarter 2023 Earnings included an optimistic forecast regarding the company’s economic performance.
• The company’s fiscal year GPU (Gross Profit per Unit) augmented by nearly $1,000, setting a fresh record and exceeding their previous best in 2021.

• Altria Group’s recent earnings call has raised important topics worth considering for investors.
• The company, known for its strong position in the tobacco industry, showed a clear intent to diversify into smoke-free product categories, such as heated tobacco, oral tobacco, and e-vapor.
• These steps are seen as a strategic move to cushion the company from declining cigarette volumes and broaden its consumer base, thereby improving its long-term growth prospects.

Key points

• FFB Bancorp is expanding its reach across California by offering remote banking services
• The bank has a niche market in payment processing as an acquiring bank, generating additional income
• CEO Steve Miller, with a diverse background in banking, is leading the company towards a larger market share role in California and beyond

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Insulet Corporation reported strong Q4 2023 results, marking its eighth straight year of 20-plus percent revenue growth.
• The company’s automated insulin delivery system, Omnipod 5, played a significant role in its financial success as it generated $1 billion in revenue in 2023.
• The achievement of approximately 425,000 global customers using the Omnipod platform represented a growth of around 25% from the previous year, including almost 250,000 using the Omnipod 5.

• Cash Converters International (ASX:CCV) is a consumer finance company operating as a service provider, owner and franchisor of second-hand goods and financial services stores in Australia and internationally.
• CCV has delivered a solid H1 FY24 with revenue growth of 34% to $191.5m (in line with RaaS $192.5) and EBITDA growth of 13% to $32.6m (15% ahead of RaaS $28.4) and NPAT of $9.8m (7% ahead of RaaS $9.2m).
• The gross loan book has grown 15% to $294m, which is all the more impressive as the business transitions away from SACC products due to regulatory change, more than offset by growth in all other products, domestically and internationally.