In today’s briefing:
- Henlius (2696 HK): Fosun Pharma’s HK$24.60 Offer at Around Half the IPO Price
- Henlius Biotech (2696 HK): Fosun Pharma’s “Fair” Offer
- Dong E E Jiao (000423.CH) – Big Dividends and Potential Leap in Valuation Are Highly Anticipated
- Nakanishi Inc (7716 JP): Acquisition and Fx to Nourish Topline; Margin Expansion in Near-Term
Henlius (2696 HK): Fosun Pharma’s HK$24.60 Offer at Around Half the IPO Price
- Shanghai Henlius Biotech (2696 HK) disclosed a pre-conditional privatisation offer by Shanghai Fosun Pharmaceutical (Group) (2196 HK) at HK$24.60, a 36.7% premium to the undisturbed price. The offer price is final.
- The key condition is approval by at least 75% of independent H Shareholders (<10% of all independent H Shareholders rejection). There is no minimum acceptance condition.
- Long term investors will be unimpressed as the offer is half the HK$49.60 IPO price. However, shareholders with blocking stakes should be supportive partly because of the share alternative option.
Henlius Biotech (2696 HK): Fosun Pharma’s “Fair” Offer
- Shanghai Fosun Pharmaceutical (2196 HK) has made a HK$24.60/share Offer (best & final), in cash, for H-shares not held in Shanghai Henlius Biotech (2696 HK). A scrip alternative may be afforded.
- As Henlius is PRC-incorporated, this Offer is structured as a Merger by Absorption, involving a Scheme-like vote for independent H-shareholders. There is no tendering condition.
- Pre-Conditions include NDRC, MoC, and SAFE. The Long Stop date to secure these conditions is 30th April 2025. That’s way too conservative. This should be wrapped up around mid 4Q24.
Dong E E Jiao (000423.CH) – Big Dividends and Potential Leap in Valuation Are Highly Anticipated
- Dong-E-E-Jiao’s performance is exciting. The first-ever equity incentive plan fully demonstrates the new management team’s confidence in the future development of the Company. There’s potential for another leap in valuation.
- Our 2024 forecast is net profit to reach RMB1.4 billion, up 20% YoY. Reasonable valuation is 25-30x P/E.If market value falls below RMB35 billion, this is a great buying opportunity.
- Dong-E-E-Jiao is worth long-term holding due to attractive dividend policy. China Resources may further improve dividend payout, which is in line with the major trend for SOE to increase dividends.
Nakanishi Inc (7716 JP): Acquisition and Fx to Nourish Topline; Margin Expansion in Near-Term
- Nakanishi Inc (7716 JP) guided for 25% revenue growth to ¥74B for 2024, driven by an additional ¥12B revenue contribution from DCI and 6% growth in dental business to ¥47B.
- EBITDA is expected to improve from 2025 due to normalization of the personnel expenses and depreciation. 2026 EBITDA margin (26.8%) will improve significantly over 2024 (23.9%).
- Amid slow global consumption, Nakanishi’s cost-effective products offer strong value proposition. The company is expected to meet 2024 guidance and no negative surprise (downward revision in last year) is expected.
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