Daily Brief Health Care: HLB Inc, TSE Tokyo Price Index TOPIX, Emcure Pharmaceuticals and more

In today’s briefing:

HLB: Approves to Switch Listing from KOSDAQ to KOSPI in an Extraordinary General Meeting
A Market with a Low Average ROE Favors Valuations for Companies with More Reliable Cash Flow
Emcure Pharmaceuticals Pre-IPO: IPO Size Trimmed; Domestic Revenue Growth Decelerated

HLB: Approves to Switch Listing from KOSDAQ to KOSPI in an Extraordinary General Meeting

HLB Inc (028300 KS) announced that it has decided to transfer listing from KOSDAQ exchange to KOSPI exchange.
HLB currently has a market cap of 6.5 trillion won and HLB is likely to be included in KOSPI 200 in 2024.
One of the key reasons why the company has a large market cap is due to its Rivoceranib liver cancer drug which is being reviewed by the U.S. FDA.

Since the ROE has been hovering around the 9% ceiling, the challenge is that few companies could present future outlook convincing enough to raise expectations of sustainable ROE growth.
Since stable BPS has higher correlation with TOPIX than EPS, investors trust a company that accumulates cash flow in shareholders’ equity to sustainably increase profits than to temporarily increase profits.
Since it’s been confirmed that Tobin’s Q of companies with more cash on hand is higher, the stock valuations of companies with higher cash flow margins tend to be higher.

Emcure Pharmaceuticals has re-submitted DRHP to the SEBI for the second time. The IPO consists of a fresh issue of INR8 billion and an offer-for-sale of up to ~14M shares.
In the re-submitted DRHP, the company has trimmed the sizes of both the fresh issue and OFS. Emcure originally planned to launch IPO its in 2022.
Emcure has added latest financial performances in re-filed DRHP. During H1FY24, revenue from India increased only 3% YoY to INR16.4M, due to lower sales of anti-viral HIV products.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network