In today’s briefing:
- Merger Arb Mondays (04 Sep) – Eoflow, JSR, Seiko PMC, ENM, NWS, Costa, Symbio, Origin
- KOSDAQ150 Index Rebalance Preview: Strong Momentum Leads to Outperformance
- LianBio (LIAN.US) – Some Points Worth the Attention
- Aier Eye Hospital Group (300015.CH) 23H1 – Time to Face the Gap Between Ideal and Reality
Merger Arb Mondays (04 Sep) – Eoflow, JSR, Seiko PMC, ENM, NWS, Costa, Symbio, Origin
- We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads – Seiko Pmc Corp (4963 JP), 111 Inc (YI US), Costa Group Holdings (CGC AU), Symbio Holdings (SYM AU), Eoflow (294090 KS), Orecorp Ltd (ORR AU).
- Lowest spreads – Healius (HLS AU), Toyo Construction (1890 JP), Pacific Current (PAC AU), T&K Toka Co Ltd (4636 JP), Allkem Ltd (AKE AU), Celltrion Healthcare (091990 KS).
KOSDAQ150 Index Rebalance Preview: Strong Momentum Leads to Outperformance
- Over two-thirds of the way through the review period, we see 14 potential changes for the KOSDAQ 150 Index (KOSDQ150 INDEX) at the December rebalance.
- There could be index changes even before the December rebalance if there are delistings and stocks migrate from the KOSDAQ Market to the KOSPI Market.
- Momentum in Korea has been strong. The potential adds have outperformed the potential deletes over the last few months and there could be further outperformance.
LianBio (LIAN.US) – Some Points Worth the Attention
- Mavacamten is expected to be LianBio’s first commercialized product. Due to low diagnostic rate/doctors’ insufficient cognition of HCM, whether it can become a blockbuster drug in China is still uncertain.
- There’s an “insurmountable obstacle” to license-in model, and its “fault-tolerant space” is small. LianBio has to go all the way to the end.Otherwise, the license-in projects will eventually become worthless.
- Due to high cost rate, it’s difficult for LianBio to make profit even with large drug sales. Although pipeline is good, LianBio could still fail to bring investors good returns.
Aier Eye Hospital Group (300015.CH) 23H1 – Time to Face the Gap Between Ideal and Reality
- Aier’s revenue would be up 20%+ YoY in 2023, but one risk is the slowing growth rate of refractive/other consumption upgrading projects in the context of sluggish consumption in 23H2.
- The positive impact of aging on performance would not be able to hedge against the negative impact of declining birth rate, ultimately leading to a decline in overall performance growth.
- When Aier’s external expansion model fails and endogenous growth is lower-than-expectation, we suggest that Aier increase dividends/stock buybacks instead of ineffective expansion. This would make Aier more attractive to investors.
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