In today’s briefing:
- Simcere Pharmaceutical (2096 HK): Double-Digit Topline Growth; Margin Deteriorating Spoils the Party
- Fanuc (6954) – Forget Yaskawa…a Slowdown Is Coming
- Zai Lab Ltd (ZLAB.US/9688.HK) – Will Zai Lab Go into a Vicious Circle?
Simcere Pharmaceutical (2096 HK): Double-Digit Topline Growth; Margin Deteriorating Spoils the Party
- Simcere Pharmaceutical Group (2096 HK) reported an 11% y/y revenue growth to RMB5 billion, mainly driven by 54% y/y revenue growth from innovative pharmaceuticals.
- However, gross margin contracted 160 basis point to 78.4%, reflecting pricing headwind. Heavy R&D and selling and distribution expenses are taking toll on operating profit.
- During 2021, Simcere has added six registered clinical trials for phase 3, two trails for phase 2, three trails for phase 1, and obtained 12 clinical trial approvals for drugs.
Fanuc (6954) – Forget Yaskawa…a Slowdown Is Coming
- We are bearish on Fanuc. Yaskawa’s robotics orders were strong but Fanuc is more correlated with machine tool orders
- Machine Tool orders have already turned south and Fanuc is losing momentum in its order growth
- If we are right on the cycle, we expect Fanuc to trade down to 2.3x book value, 20% downside risk from here
Zai Lab Ltd (ZLAB.US/9688.HK) – Will Zai Lab Go into a Vicious Circle?
- Due to its early involvement in license-in mode, Zai Lab could in-license many high-quality candidates at a low price in the early stage, thus leading to today’s achievements.
- However, the increasingly low cost performance of in-licensed products has made the capital “reconsider”, because it is increasingly difficult to maintain high growth as before based on license-in mode.
- Zai Lab could be a good short-term trade,especially when it reaches licensing deals or launch new products,but doubts about long-term prospects could discourages investors from holding it for long term.
Related tickers: Fanuc Corp (6954.T), Zai Lab Ltd (ZLAB.OQ)
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