In today’s briefing:
- Meaningful If “P/B Below 1x” Is a Change of Mindset that Makes Managers Decide to Take an MBO
- Dr. Reddy’s Laboratories (DRRD IN): Highest Ever Sales and Profit in Q2; Good Show in Key Markets
- Mankind Pharma Lock-Up – A US$1.1bn+ Lockup Release
- Shenzhen Mindray Bio-Medical Electronics (300760.CH) 23Q3- Future Performance Slowdown Is Inevitable
- Qyuns Therapeutics (荃信生物) Pre-IPO: Mixed View on Two Core Products
Meaningful If “P/B Below 1x” Is a Change of Mindset that Makes Managers Decide to Take an MBO
- Although it’s important that the quality of companies be maintained and improved through metabolism, the number of listed companies has consistently increased due to the many IPOs and few delistings.
- Many founders used IPOs as a tax-saving measure, and many managers were not thoughtful enough to increase shareholder profits, which is why there were many IPOs and few delistings.
- Delisting through MBO or TOB for parent and subsidiary listed subsidiaries is much more effective than “TSE request” in reducing the number of companies with P/B below 1x.
Dr. Reddy’s Laboratories (DRRD IN): Highest Ever Sales and Profit in Q2; Good Show in Key Markets
- Global generics revenue increased 9% YoY to INR61 billion, mainly driven by double-digit growth in North America and Europe generic businesses, partly offset by muted growth in domestic market.
- Revenue from North America generics increased 13% y/y to INR31.7 billion, driven by growing momentum in core portfolio, Mayne integration, and favorable Fx. Pricing environment remains stable.
- Despite increase in SG&A and R&D expenses, EBITDA grew 13% YoY to INR 21.8 billion. Net profit increased 33% YoY to INR14.8 billion. Both EBITDA and net profit topped estimates.
Mankind Pharma Lock-Up – A US$1.1bn+ Lockup Release
- A group of shareholders raised around US$530m in Mankind Pharma(MP) IPO in May 2023. The pre-IPO shareholders will be released from their lockup soon.
- MP is a pharmaceutical company engaged in developing, manufacturing and marketing a range of pharmaceutical formulations across various acute and chronic therapeutic areas, as well as several consumer healthcare products.
- In this note, we will talk about the lock-up dynamics and recent updates.
Shenzhen Mindray Bio-Medical Electronics (300760.CH) 23Q3- Future Performance Slowdown Is Inevitable
- Mindray’s Q3 revenue growth slowed significantly, dragging down the overall revenue growth. This was related to China’s anti-corruption campaign, the impact of which is expected to linger for some time.
- Our 2023 forecast is revenue up 15-18% YoY. Anti-corruption campaign would lead to declining demand and growth ceiling of domestic medical equipment market, thus negatively affecting Mindray’s future performance growth.
- Investors may need to prepare in advance for Mindray’s future revenue growth to fall to 15%.Based on this, PE TTM of around 30 is reasonable valuation for Mindray, not undervalued.
Qyuns Therapeutics (荃信生物) Pre-IPO: Mixed View on Two Core Products
- Qyuns Therapeutics, a China-based clinical-stage biotechnology company, plans to raise up to US$ 100m via a Hong Kong listing.
- In this note, we examine the company’s core products, namely QX002N, an IL-17A antibody, and QX005N, an IL-4Rα antibody. We also look at the company’s management and pre-IPO investors.
- We are of mixed views for its two core products. We also think the management and pre-IPO investors are of mediocre quality.
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