In today’s briefing:
- Sumitomo/Myovant: Agreed Minorities Takeout at $27
- Giant Biogene IPO: Peer Comparison and Valuation
- Giant Biogene IPO: Valuation Insights
- Incyte Corp: Acquisition of Villaris Therapeutics & Other Drivers
- Shanghai Bio-Heart Biological Technology (2185.HK) – The Bubble Will Eventually Burst
Sumitomo/Myovant: Agreed Minorities Takeout at $27
- Sumitomo has increased its all-cash offer by c. 19% to $27/share, a 50% premium, 4.6x EV/Fwd Revenue and corresponds to an implied equity value of $1.7 billion and EV of $2.9 billion.
- The Board of Myovant recommends the offer, which should close in Q1 2023. The market has bought into the deal: USD turnover on 24 October has been $585 million.
- As a result of the improved offer, I increase my TP to $27 (vs $22.84 formerly). Gross spread is 0.78% and the estimated annual return is 1.83%.
Giant Biogene IPO: Peer Comparison and Valuation
- Giant Biogene Holding (GBH HK) designs, develops and manufactures professional skin treatment products with recombinant collagen as the key bioactive ingredient in China.
- The company’s IPO offering has been downsized and now plans to raise approx. US$80m through issuing 22.6m shares at an indicative IPO price range of HK$24.3-27.7 per share.
- Our analysis shows that Giant Biogene’s IPO is attractively priced compared to domestic and international peers, however, we expect the upside to be limited given the current market volatility.
Giant Biogene IPO: Valuation Insights
- Giant Biogene Holding (GBH HK) has launched its HKEx listing atHK$24.30-27.70 per share to raise up to US$80 million, materially below previous expectations of a US$500 million raise.
- We previously discussed the IPO in Giant Biogene IPO: The Bull Case, Giant Biogene IPO: The Bear Case andGiant Biogene IPO: Valuation First Look.
- The China A Share peers have derated due to the sharp sell-off in the last few days. Nevertheless, Biogene is attractively valued at the IPO price range. We would participate.
Incyte Corp: Acquisition of Villaris Therapeutics & Other Drivers
- Incyte has started appreciating with its financial results being just around the corner.
- In the last quarter, the company’s revenues rose 29% and it managed an all-around beat.
- With an increase in new patient starts across all 3 indications, Jakafi’s net revenues increased 13% to $598 million.
Shanghai Bio-Heart Biological Technology (2185.HK) – The Bubble Will Eventually Burst
- Among innovative medical device companies in HKEX under Chapter 18A, Bio-heart is quite “special”- It is the only company without commercialized products but has higher market value than the peers.
- The competitiveness of Bio-heart’s core products is not high. There are great uncertainties in terms of the commercialization outlook, because Bio-heart doesn’t have obvious advantages in development progress/sales capability.
- Bio-Heart is overvalued. Its efforts to maintain high share price may be to pave the way for listing in A-share,but anything deviates from fundamentals would inevitably return to the origin.
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