In today’s briefing:
- Sigma/Chemist Warehouse Merger: ACCC Has (Many) Issues
- Takeda (4502 JP)– Avoid
- UMP Healthcare (722 HK): Deep Value Turnaround in FY25
- 3 D Matrix Ltd (7777 JP): Q3 FY04/24 flash update
- 3 D Matrix Ltd (7777 JP): Q3 FY04/24 flash update
- 3 D Matrix Ltd (7777 JP): Q3 FY04/24 flash update
- 3 D Matrix Ltd (7777 JP): A second revision to the earnings forecast
- 3 D Matrix Ltd (7777 JP): Q3 FY04/24 flash update
- 3 D Matrix Ltd (7777 JP): Q3 FY04/24 flash update
- 3 D Matrix Ltd (7777 JP): Q3 FY04/24 flash update
Sigma/Chemist Warehouse Merger: ACCC Has (Many) Issues
- Back on the 11th December 2023, pharmacy distributor Sigma Healthcare (SIG AU) announced a “transformational merger” – in effect a reverse takeover – with mega chain Chemist Warehouse (CWG).
- In Sigma Healthcare (SIG AU): Chemist Warehouse’s Reverse Takeover I flagged pushback from ACCC; but on balance thought the merger should still get up.
- Travis Lundy struck a more tentative tone in Sigma Healthcare: ASX200 Inclusion Now, MUCH More Squeezy Fun Later. Maybe… Rightfully so it seems. The ACCC has now raised competition concerns.
Takeda (4502 JP)– Avoid
- Given the high number of pipeline dropouts, and the potentially disappointing $6 bn psoriasis drug acquisition, we question Takeda’s recent investment track record.
- A big restructuring, high expectations from new/recently launched drug portfolio, and punchy company guidance reduces the probability of upside surprises.
- Unless you are limited from investing outside Japan and you want exposure to an innovative pharma company, we believe that there are better and cheaper options elsewhere.
UMP Healthcare (722 HK): Deep Value Turnaround in FY25
- We preview UMP Healthcare (722 HK) earnings for FY24 (June-end), which will be declared in September, and our outlook for FY25.
- The company has more than 300 mn HKD of net cash (almost 75% of its market cap), and even assuming a 20% dividend cut, it has an ~8% dividend yield.
- On core earnings for FY24, we estimate that the stock trades at 12x PE( ex-cash 2.8x PE), with low-hanging fruit from streamlining the business in FY25.
3 D Matrix Ltd (7777 JP): Q3 FY04/24 flash update
- Operating revenue grew 91.5% YoY to JPY3.0bn, driven by significant sales increases in the US and Japan.
- The company revised its full-year FY04/24 earnings forecast, increasing operating revenue to JPY4.1bn and net loss to JPY1.0bn.
- R&D expenses rose 20.6% YoY to JPY364mn, and SG&A expenses increased 11.3% YoY to JPY3.2bn.
3 D Matrix Ltd (7777 JP): Q3 FY04/24 flash update
- Operating revenue grew 91.5% YoY to JPY3.0bn, driven by significant sales increases in the US and Japan.
- Revised full-year FY04/24 forecast: Operating revenue JPY4.1bn, operating loss JPY1.9bn, recurring loss JPY743mn, net loss JPY1.0bn.
- Cost of sales increased 44.2% YoY to JPY1.0bn, with R&D expenses up 20.6% YoY to JPY364mn.
3 D Matrix Ltd (7777 JP): Q3 FY04/24 flash update
- Operating revenue grew 91.5% YoY to JPY3.0bn, driven by significant sales increases in the US and Japan.
- Operating loss narrowed by JPY720mn YoY to JPY1.6bn, with recurring loss at JPY336mn and net loss at JPY700mn.
- Revised FY04/24 forecast: Operating revenue JPY4.1bn, operating loss JPY1.9bn, recurring loss JPY743mn, net loss JPY1.0bn.
3 D Matrix Ltd (7777 JP): A second revision to the earnings forecast
- In full-year FY04/23, the company reported consolidated operating revenue of JPY2.3bn (+53.6% YoY), an operating loss of JPY3.2bn (versus loss of JPY2.7bn in FY04/22), a recurring loss of JPY2.4bn (versus loss of JPY1.8bn in FY04/22), and a net loss attributable to owners of the parent of JPY2.4bn (versus net loss of JPY1.9bn in FY04/22).
- Operating revenue grew on sales expansion of mainstay products in Japan and overseas.
- However, the operating loss expanded, because overseas sales were not enough to offset upfront investment in establishing a direct sales structure. The company’s full-year FY04/24 forecast (revised in June 2024 for the second time) calls for operating revenue of JPY4.6bn (previous forecast: JPY4.1bn), an operating loss of JPY2.1bn (previous forecast: a JPY1.9bn loss), a recurring profit of JPY140mn (previous forecast: a JPY743mn loss), and a net loss attributable to owners of the parent of JPY255mn (previous forecast: a JPY1.0bn loss). While revenue, mainly in the US, exceeded the previous estimates, costs on a foreign currency basis increased and profitability declined in Europe and Australia, due to the yen’s depreciation.
3 D Matrix Ltd (7777 JP): Q3 FY04/24 flash update
- Operating revenue grew 91.5% YoY to JPY3.0bn, driven by significant sales increases in the US and Japan.
- The company revised its full-year FY04/24 forecast: operating revenue to JPY4.1bn, operating loss to JPY1.9bn.
- Foreign exchange gains of JPY1.3bn and an extraordinary loss of JPY199mn due to remittance fraud were recorded.
3 D Matrix Ltd (7777 JP): Q3 FY04/24 flash update
- Operating revenue grew 91.5% YoY to JPY3.0bn, driven by significant sales increases in the US and Japan.
- The company revised its full-year FY04/24 forecast, increasing operating revenue to JPY4.1bn and recurring loss to JPY743mn.
- Foreign exchange gains and extraordinary loss due to remittance fraud impacted financial results, narrowing recurring and net losses.
3 D Matrix Ltd (7777 JP): Q3 FY04/24 flash update
- Operating revenue grew 91.5% YoY to JPY3.0bn, with significant sales increases in the US and Japan.
- Operating loss narrowed YoY to JPY1.6bn, driven by increased sales and foreign exchange gains of JPY1.3bn.
- Full-year FY04/24 forecast revised: operating revenue JPY4.1bn, operating loss JPY1.9bn, recurring loss JPY743mn, net loss JPY1.0bn.
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