In today’s briefing:
- HRTech Sector Series: Market Continues to Evolve While Post Covid Growth Begins to Slow Down
- Santen Pharmaceutical (4536 JP): Profit to Improve This Year; China Reopening, New Products Hold Key
- Shouldn’t Shareholders Raise Voice for a Company that Is Building up Cash While Its ROE Is Sluggish?
HRTech Sector Series: Market Continues to Evolve While Post Covid Growth Begins to Slow Down
- This is the Fourth and Final of the HRTech Sector series and we will be discussing Ceridian, ADP, Recruit and Visional performance over the last quarter.
- The remarkable growth spurt experienced post-Covid seems to be slowing down and margins and revenues have mostly returned to pre-COVID levels.
- With digitisation of workplace, the market is expected to see further advancement in categories such as employee experience, talent intelligence, contract workforce management, etc.
Santen Pharmaceutical (4536 JP): Profit to Improve This Year; China Reopening, New Products Hold Key
- Santen Pharmaceutical (4536 JP) is not seeing any change in competitive landscape of its key drug, Eylea, which contributes 27% of total revenue. No immediate biosimilar launch is expected.
- Approval of bioidentical authorized generic version of Eylea in Japan, label expansion, and potential launch of high dose of the same drug will enable to combat with upcoming biosimilar competition.
- Santen expects China market to revive in FY24. Additionally new products launch and widening geographic presence to drive mid-to-long-term growth of the company.
Shouldn’t Shareholders Raise Voice for a Company that Is Building up Cash While Its ROE Is Sluggish?
- Even though OP Margin has been stagnant, NP Margin has improved due to the corporate tax rate cut, and the increased free cash flow has been less directed to investments.
- The fact that OP Margin didn’t rise much while personnel and R&D costs were curbed and there wasn’t much investment simply implies a lower gross margin in the core business.
- With ROE growth sluggish and cash accumulating, it’s reasonable that investors demand further shareholder returns. If asset turnover declines while OP Margin slows, there’s little reason to hold cross-held shares.
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