In today’s briefing:
- EOFLOW/Medtronic Tender: Proposed Preliminary Injunction Is a Problem
- Eoflow: Ozempic and Wegovy Reducing Need for Disposable Insulin Injection Devices + Ongoing Lawsuit?
- Exploring the Launch of a Posco Group-Focused ETF: Flow Trading Insights
- Samsung Biologics (207940 KS): Raises 2023 Sales Guidance Second Time This Year; Buy the Dip
- Ecoeye IPO Valuation Analysis
EOFLOW/Medtronic Tender: Proposed Preliminary Injunction Is a Problem
- The US judge has proposed a preliminary injunction which prevents Eoflow (294090 KS) from using Insulet Corp (PODD US)’s trade secrets and disclosing them to any third party.
- Eoflow and other defendants must respond by 5 October. The court hearing is set for 16 October. The potential trial is to be discussed in Spring of 2024.
- Medtronic Plc (MDT US) faces a difficult choice. If the injunction is enforced, Medtronic would acquire a ring-fenced asset exposed to potential court-determined liabilities.
Eoflow: Ozempic and Wegovy Reducing Need for Disposable Insulin Injection Devices + Ongoing Lawsuit?
- Eoflow’s share price has dropped 27% lower than the proposed tender offer price of 30,000 won. Two major factors have negatively impacted Eoflow (294090 KS)’s share price.
- First, in September 2023, there were new data that suggested that popular weight loss drugs including Ozempic and Wegovy could reduce the need for insulin injections with patients with diabetes.
- Second, the ongoing lawsuit by Insulet continues to remain a major headache. Eoflow is not a KISS (“Keep It Simple Stupid”) stock.
Exploring the Launch of a Posco Group-Focused ETF: Flow Trading Insights
- KRX approved the listing of ACE POSCO Group Focus. This fund mirrors the performance of the FnGuide POSCO Group Focus Index. KRX will announce the listing date next week.
- This index encompasses 6 Posco affiliates and 4 non-Posco stocks. The top 3 constituents, each assigned a 25% weight, are POSCO Holdings, Posco International, and Posco Future M.
- We should explore various long-short setups for stocks within the local battery sector (long Posco affiliates and short others), starting with the listing of this ACE POSCO Group Focus ETF.
Samsung Biologics (207940 KS): Raises 2023 Sales Guidance Second Time This Year; Buy the Dip
- Samsung Biologics (207940 KS) expects 2023 revenue to grow by more than 20% YoY compared to 15–20% YoY growth expectations earlier, due to better-than-expected utilization of Plant 4.
- For the first time in the company’s history, Samsung Biologics has won contracts worth nearly KRW3T during the first half of 2023, with eight contracts worth more than KRW100B each.
- Anticipating strong demand, Samsung Biologics is building its fifth manufacturing plant with 180KL capacity, which is expected to be completed by April 2025.
Ecoeye IPO Valuation Analysis
- Our base case valuation of Ecoeye IPO is 45,421 won per share, representing 31% higher than the high end of the IPO price range.
- Given the solid upside, we have a positive view of Ecoeye IPO. The target P/E multiple of 28.8x is based on a 20% premium to the comps’ average valuation multiple.
- We believe this premium valuation multiple is appropriate given higher sales growth rate and operating margin for Ecoeye as compared to the comps.
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