In today’s briefing:
- Quiddity Leaderboard JPX-Nikkei 400: End-Mar 2023
- Prodia (PRDA IJ) – Back to Core Testing
- Dr Lal PathLabs (DLPL IN): Losing Path Amid Competition; Non-COVID Growth Underwhelming
- [RemeGen (9995 HK) Target Price Change]: Provision for License Out Absence Is Adequate
Quiddity Leaderboard JPX-Nikkei 400: End-Mar 2023
- JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents.
- A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year. We look at the potential forward inclusions and removals every month.
- Below is a look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2023 based on trading data as of end-March 2023.
Prodia (PRDA IJ) – Back to Core Testing
- Prodia (PRDA IJ) FY2022 results saw declines in revenues and profits but from a COVID-high base and the numbers are now well-above 2019, with strong prospects ahead.
- The company is seeing a return to routine testing with tests per visit back to pre-COVID and revenues per visit also rising strongly, with a diverse customer base providing comfort.
- Prodia also has an increasing digital angle with the rising use of its app and a new app that tracks patients’ health just launched. Prodia (PRDA IJ) is too cheap.
Dr Lal PathLabs (DLPL IN): Losing Path Amid Competition; Non-COVID Growth Underwhelming
- Dr Lal PathLabs Ltd (DLPL IN) reported 2% and 8% revenue and net profit decline in Q3FY23, respectively. Q3 results were dragged by an 80% YoY decline in COVID-19 revenue.
- While non-COVID revenue increased 9% YoY to INR4.78 billion, it declined 7% QoQ. In fact, Q3FY23 non-COVID revenue was the lowest over the last three quarters.
- Although diagnostics is a big and attractive market opportunity in India, the sector is overcrowded, leading to heated price competition and declining realization per test.
[RemeGen (9995 HK) Target Price Change]: Provision for License Out Absence Is Adequate
- RemeGen reported C2H22 top line in-line with our estimate but 9.4% below consensus. Gross margin, however, beat our estimate by 21ppt. Net-net, non-IFRS operating income missed our expectation by 15%;
- The result highlighted RemeGen’s investment case hinging on successful license out. Product revenue itself cannot carry the company to profitability;
- With WACC of 17%, we have already provisioned for the license out absence. But we still cut TP by HK$6 to reflect the increasing spending going forward.
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