In today’s briefing:
- Aurobindo Pharma (ARBP IN): Regulatory Issues Continue to Haunt the Company
- Sihuan Pharmaceutical Hldgs (460.HK)- Privatization Rumor, Upside Potential and Concerns on Business
Aurobindo Pharma (ARBP IN): Regulatory Issues Continue to Haunt the Company
- Aurobindo Pharma (ARBP IN) has been issued six observations for its oral manufacturing unit by the FDA, which will further impact its business. The company closed its New Jersey facility.
- Aurobindo’s recent acquisition of Veritaz Health for INR1.7 billion does not really fit for the company’s high hope for the domestic formulation business.
- Aurobindo shares are trading at a forward P/E of 10.9x, which is cheaper than the peers. However, the company is not expected to see multiple expansion in near future.
Sihuan Pharmaceutical Hldgs (460.HK)- Privatization Rumor, Upside Potential and Concerns on Business
- The reason why Sihuan has received more attention from the market mainly lies in the medical aesthetics segment. However, both hyaluronic acid and botulinum toxin are facing challenges.
- Recently, China Resources is rumored to be in talks to privatize Sihuan Pharmaceutical Hldgs (460 HK), but Sihuan denied it.
- Sihuan is undervalued. The reasonable market value should be over RMB20 billion. We recommend investors to follow closely with Sihuan, either for decent upside potential or privatization possibility.
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