Daily Brief Health Care: China Traditional Chinese Medicine, R1 RCM , Russell 2000 Index, DocGo , Takara Bio Inc, Numans Health Food Holdings, Basilea Pharmaceutica Ag and more

• China Traditional Chinese Medicine (570 HK) announced a privatisation offer from the Sinopharm-led consortium at HK$4.60 per share, a 47.4% premium to the undisturbed price.
• The pre-condition relates to various Chinese regulatory approvals. As SOE entities own the offeror, regulatory approvals will be a formality. The offer price is final. 
• Ping An Insurance (H) (2318 HK), which holds a blocking stake, will be supportive. The offer is fair when the previously (higher) rumoured offers are adjusted for the market downturn. 

• $4.60/Share. That’s the number – by way of a Scheme – that only matters. Below the recently rumoured $6/share, and $5.10/share a little over three years ago. Terms are final.
• As widely expected, the Offeror is SASAC-managed China National Pharmaceutical Group Corporation (CNPGC), indirectly owning 32.46% in China Traditional Chinese Medicine (570 HK) (TCM) via Sinopharm Group Hongkong,
• Optically, the Offer price appears light. But this should still get up. TCM is trading rich to peers. No other competing bidder will emerge. Expect regulatory pre-cons to be fast-tracked.

Key points

• Analysts believe R1 (RCM) presents a compelling investment opportunity despite recent challenges
• Predictions suggest profitability improvements and potential doubling of stock value over the next few years
• Long-term outlook remains strong due to industry-leading position and growth potential in healthcare IT sector

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.

• In spite of last week’s hotter-than-expected inflation reports, the Russell 2000 (IWM) outperformed relative to the SPX and QQQ, and ended the week at YTD weekly closing highs.
• The fact that small- and mid-caps outperformed during a week with two hot inflation reports is a sign we could see more outperformance in the weeks/months ahead.
• Adding to the risk-on theme, the DXY displays a false breakout at $104.60-$104.70. Our bullish outlook that we have had since early November 2023 remains intact. 

Key points

• DocGo revolutionizing ambulance industry through technology and non-emergency ambulatory services
• Went public in 2021 raising $158M, expanded services to include COVID testing, vaccinations, and patient monitoring
• Revenue sources mostly low-quality, non-recurring, and government-contract dependent, struggling to maintain profitability outside of COVID-related services

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.

• Takara Bio Inc (4974 JP) reported massive decline of 50%, 98%, and 99%, YoY, in revenue, operating profit, and net profit, respectively during the first nine months of FY24.
• Reagents revenue decline 56% YoY to ¥23 billion, due to decrease of sales of COVID-19 test-related reagents. Japan, which contributed 23% of reagents revenue, reported revenue decline of 83% YoY.
• Takara Bio anticipates a sluggish life science R&D market globally. FY24 revenue, operating profit, and net profit are expected to decline 42%, 85%, and 88%, YoY, respectively.

• Numans values light asset model, which helps reduce cost/expenditures, and thereby increase profits. However, such business model has flaws – no R&D/production, only terminal sales/brand operation, no control over upstream.
• Revenue growth of core business Algal oil DHA products declined.Numans attempts to change its monotonous product line and enter milk powder industry, but the results weren’t ideal. Numans suffered losses. 
• If Numans only plays the role of a “porter” of finished products from abroad and lacks core competitiveness/technological content, it will face multiple challenges to achieve sustained high performance growth.

FY23 was another strong year for Basilea, marked by successive guidance beats and meaningful progress in fortifying its product pipeline. Revenues of CHF157.6m were ahead of guidance, driven by c 23% y-o-y growth in Cresemba- and Zevtera-related revenues to CHF150.3m. Top-line growth, combined with operational prudence (despite investments in growing its portfolio), supported Basilea in achieving a second successive year of net profitability (CHF10.5m, c 2x the guided figure). FY24 will be an important period, with the FDA decision on Zevtera (April 2024) and launch of fosmanogepix Phase III trials. As we update our estimates to reflect the latest sales trend, the outlook for the commercial assets and pipeline potential, we increase our valuation to CHF968.0m or CHF80.7/share.