In today’s briefing:
- Mankind Pharma: IPO Details & Index Inclusion
- KOSDAQ150 Index Rebalance Preview: Adds Starting to Crack (After Huge Outperformance)
- “Sell in May” Another Reason to Be Defensive; Value to Lead?; Buys in Medical Devices, Footwear
- UMP Healthcare: An Undervalued Gem with a Promising Future in Hong Kong’s Healthcare Market
- WuXi AppTec (2359.HK/603259.CH) 2023Q1 – The Signals Behind the Plunge in Stock Price
- Pre-IPO YSB Inc (YSB.HK) – The Business Model Is Facing Challenges
- Esco Lifesciences (1891571D SP) Pre-IPO: A Profitable Revenue Growth Saga
- Johnson & Johnson: Continued MedTech & Pharma Expansion – Key Drivers
Mankind Pharma: IPO Details & Index Inclusion
- Mankind Pharma (6596876Z IN) is looking to raise up to US$526m in its IPO by selling 40.06m shares at a price range of INR 1026 to INR 1080 per share.
- The company has allocated 12.02m shares to anchor investors at INR 1080/share. That list includes marquee names and the lock-up reduces near-term float.
- The IPO opens on 25 April and will close on 27 April. Shares are expected to start trading on 9 May and there are no near-term index inclusions expected.
KOSDAQ150 Index Rebalance Preview: Adds Starting to Crack (After Huge Outperformance)
- With 3 trading days left in the review period for the June rebalance, we see 8 potential changes and 2 close adds for the KOSDAQ 150 Index (KOSDQ150 INDEX).
- There are two potential transfers from the KOSDAQ Market to KOSPI Market that could lead to more changes in May and/or June.
- Nearly all potential deletions are trading near their lows and short interest has been increasing on some of the stocks. That will be covered closer to implementation of the rebalance.
“Sell in May” Another Reason to Be Defensive; Value to Lead?; Buys in Medical Devices, Footwear
- The SPX made a high of 4169 last week, tagging our 4165-4200 resistance range. We still believe 4165-4200 will cap upside in 2023, with a reach to 4300-4325 also possible.
- Considering limited upside in both scenarios, and with the seasonably weaker “sell in May and go away” period approaching, we continue to recommend higher allocations to defensives
- This includes Utilities (XLU, RYU), Consumer Staples (XLP), Health Care (XLV, PPH), and gold miners (GDX).
UMP Healthcare: An Undervalued Gem with a Promising Future in Hong Kong’s Healthcare Market
- UMP Healthcare (“UMP”) is Hong Kong’s leading private medical service network. Its network spans 1100+ service providers, 1mm+ scheme members, 2000+ contract customers, and over 1.13mm+ annual clinic visits.
- Despite the consistent track record, UMP trades at a 61% discount to its IPO price, 6x PE, and 8% yield with 45% of its market cap in net cash.
- We see ingredients in place for a multi-year re-rate, backed by HK’s new Healthcare Policy and the company’s strategic tilt towards higher margin service lines supporting future profit growth.
WuXi AppTec (2359.HK/603259.CH) 2023Q1 – The Signals Behind the Plunge in Stock Price
- Excluding COVID-19 projects, some of WuXi AppTec’s conventional CXO business growth rate has declined significantly. So, the fading of COVID-19 dividend period is not the only reason for the performance decline.
- The supply-side reform of innovative drugs is further deepened, and the effect of industry clearing is obvious. So, the “winner-takes-all” logic will be gradually deduced in the future.
- WuXi AppTec’s controlling shareholders seem to “have foreseen something”- They could continue to reduce holdings on rallies in the future. Together with longer-than-expected industry winter, valuation center could further decline.
Pre-IPO YSB Inc (YSB.HK) – The Business Model Is Facing Challenges
- The margins of pharmaceutical circulation B2B business is low. If there’s not enough incremental space of terminal customers, the simple B2B trading model is difficult to form a leapfrog growth.
- Based on YSB’s business model, if terminal customers choose to use other platforms like JD Health/Alibaba Health, etc., YSB would face the risk of losing upstream and downstream users.
- So far, we haven’t seen that YSB has established core competitiveness or moat to secure the terminal customers pool, casting doubts on its business model, investment logic and outlook.
Esco Lifesciences (1891571D SP) Pre-IPO: A Profitable Revenue Growth Saga
- Esco Lifesciences Group (1891571D SP), a profitable lifesciences tool provider with a global presence, is looking to raise $300M in its upcoming HK IPO.
- The company clocked revenue of S$117M in 2019, which steadily rose to S$155M in 2020 and S$172M in 2021, representing CAGR of 21%, outpacing lifesciences equipment market growth of 10%.
- In May 2021, Esco raised $200M through series-A fund raising with investors holding nearly 24% of the shares. This puts its valuation at around $840M.
Johnson & Johnson: Continued MedTech & Pharma Expansion – Key Drivers
- Johnson & Johnson reported strong operational performance in the quarter, demonstrating the power and adaptability of Johnson & Johnson as well as its dedication to enhancing global health outcomes.
- They also anticipate a number of pipeline advances in 2023 that will boost confidence in their Pharmaceutical and MedTech companies.
- Johnson & Johnson remains confident in its ability to generate near-term success, long-term growth, and shareholder value creation in the future.
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