In today’s briefing:
- Fast Retailing Faces a Severe Test from Beijing to Moscow
- China Comm Const (1800 HK): Takeaways from Post-FY21 Result Call
- Innovent Biologics Inc (1801.HK) – Capable of Surviving “this Winter”
- Vertex Pharmaceuticals (VRTX US): No Longer Remains a ‘Cystic Fibrosis Only’ Play
Fast Retailing Faces a Severe Test from Beijing to Moscow
- We estimate that China accounts for almost 40% of Fast Retailing’s earnings. This growth engine is stalling
- The market has yet to discount these risks, despite warnings from H&M
- The stock is down 5% YTD, but trades at an 80% premium to global peers
China Comm Const (1800 HK): Takeaways from Post-FY21 Result Call
- China Communications Construction (1800 HK) targets for at least 6% growth in revenue with slight operating margin expansion for FY22; and these should sustain its stable growth trend.
- It will increase focus on “big city” projects where there are more opportunities. We think its target of at least 11.8% new contract value growth in FY22 is conservative.
- Reduction in losses at concessionary projects, improvement in operating cash flow and lowering of gearing levels all indicate that CCCC is moving in the right direction.
Innovent Biologics Inc (1801.HK) – Capable of Surviving “this Winter”
- The biggest characteristic of Innovent Biologics Inc (1801 HK) is its strong ability of resources integration. Besides, when it comes to execution, clinical efficiency and R&D productivity, Innovent deserves credit.
- If having 10 big commercialized drugs are the threshold for becoming a biopharma, Innovent’s upgrade from biotech to biopharma is almost complete.
- Innovent has enough cash flow over the next few years to support development, and may even turn losses into profits. So, we think that Innovent could get through “this winter”.
Vertex Pharmaceuticals (VRTX US): No Longer Remains a ‘Cystic Fibrosis Only’ Play
- Vertex Pharmaceuticals (VRTX US) is expanding its pipeline beyond its existing forte of cystic fibrosis, which enhances its long-term visibility.
- Gene editing treatment CTX001 for treating sickle cell disease and beta thalassemia is Vertex’s most advanced program outside of CF. With its initial label approval, CTX001 has multi-billion-dollar opportunity.
- A war chest of $7.5 billion and stable revenue flow from cystic fibrosis drugs should enable the company to pursue for the next leg of growth.
Related tickers: Fast Retailing (9983.T), China Communications Construction (1800.HK), Innovent Biologics Inc (1801.HK), Vertex Pharmaceuticals (VRTX.O)
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