In today’s briefing:
- Clarifications About Osstem Implant Tender Event
- NIFTY100 Index Rebalance Preview: Big Impact & Could Increase Due to Capping
- S&P/ASX Index Rebalance Preview: High Impact Changes in March
- 2023 High Conviction Update: Cipla (CIPLA IN)- Strong Traction Continued in Q3; Record High US Sales
- Dr. Reddy’s Laboratories (DRRD IN): Q3FY23 Results- Sequential Improvement Supported by US
- Pre-IPO New Ruipeng Pet Group (RPET.US)- The Industry, the Business and the Concerns
Clarifications About Osstem Implant Tender Event
- The acquirer would cancel the deal unless at least 2.394M shares (15.4% of SO) were tendered. This is the minimum purchase quantity condition that will trigger a cancellation.
- If the minimum purchase volume is exceeded, will there be a pro rata allocation risk? The answer is no. The acquirer will purchase all the tendered shares
- The cancellation risk seems slim as only 15.4% of the SO should be tendered, which doesn’t seem to be a challenging target.
NIFTY100 Index Rebalance Preview: Big Impact & Could Increase Due to Capping
- There are 2 trading days left in the review period. We expect 5 changes at the rebalance that will be announced end-February and implemented at the close on 30 March.
- A lot of the stocks were AMFI migrations and Biocon Ltd (BIOS IN) is a potential deletion from the MSCI India Index at the February QCIR.
- The drop in the Adani Group stocks that are part of the index will result in passive inflows on the non-F&O constituents due to capping at 15% of index weight.
S&P/ASX Index Rebalance Preview: High Impact Changes in March
- We currently see 1 change for the ASX20, 2 for the ASX100, 4 changes for the ASX 200 and 9 adds/ 6 deletes for the ASX300 Index in March.
- Passive trackers will need to trade over 3 days of ADV on 13 stocks, over 5 days of ADV on 9 stocks and over 10x ADV on 4 stocks.
- Shorts have been covering positions on stocks where there are expected to be passive inflows and increasing positions on stocks that are expected to have passive outflows.
2023 High Conviction Update: Cipla (CIPLA IN)- Strong Traction Continued in Q3; Record High US Sales
- Cipla Ltd (CIPLA IN) reported revenue growth of 6% in Q3FY23. Ex-COVID revenue growth was 11%. Despite price erosion and surging R&D investment, EBITDA margin expanded 153bps YoY to 24.2%.
- Ex-COVID India business recorded 11% revenue growth, driven by double-digit traction in core portfolio across therapies and business segments. Branded prescription business reported seventh consecutive quarter of market beating growth.
- US business recorded record high revenue, representing 30% growth in USD terms. Strong traction in respiratory products was further propelled by new launches including peptides. In December, Cipla launched leuprolide.
Dr. Reddy’s Laboratories (DRRD IN): Q3FY23 Results- Sequential Improvement Supported by US
- Dr. Reddy’s Laboratories (DRRD IN) recorded record high revenue, EBITDA, and net profit in Q3FY23, driven by US business. The company generated healthy cash flow of INR20B during the quarter.
- Revenue from North America surged 64% INR30.6B, driven by new products launches, increase in volumes, and a favorable forex movement. gRevlimid contributed ~34% of North America revenue.
- The company plans to launch ~30 products in the U.S. market in FY24. With the pipeline shifting toward complex products, Dr. Reddy is well-positioned to maintain double-digit revenue growth.
Pre-IPO New Ruipeng Pet Group (RPET.US)- The Industry, the Business and the Concerns
- Pet medical industry is the second largest core industry after pet food industry.Pet hospital,with dual attributes of medical treatment and consumption,represents the direction of consumption upgrading and has huge potential.
- New Ruipeng maintained rapid growth these years, but its business is still in the investment period. The Company is hard to generate high profit/returns due to low gross margin level.
- There’re still technical bottlenecks in China.If New Ruipeng can fill these market gaps in time and provide comprehensive pet medical solutions, its development space and moat will be much higher.
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