In today’s briefing:
- BGH Stonewalls As Virtus Rejects Offer
- Jiangsu Hengrui Medicine (600276.CH) 2021/2022Q1 Results – Can You Afford to Wait?
- Yungjin Pharm (003520 KS): Antibiotic Business on a Jeopardy; Long Way to Go Before New Drug Launch
- Biocon – Strong Growth in Generics Business and Research Services
- Laurus Labs – Earnings in Line; Synthesis Business on a Strong Footing
- Result Update – Solara Active Pharma Sciences Ltd
BGH Stonewalls As Virtus Rejects Offer
- In its Target Statement, Virtus Health (VRT AU)‘s board unanimously determined BGH’s Offer is inferior to CapVest’s and recommends shareholders to not accept BGH’s Offer.
- Separately, Virtus is seeking interim orders from the Takeovers Panel, such that BGH amends its bidder’s statement and also provides withdrawal rights.
- A Supreme Court of New South Wales hearing will be held on 4 May 2022 to convene the Scheme meeting in relation to the CapVest Transaction.
Jiangsu Hengrui Medicine (600276.CH) 2021/2022Q1 Results – Can You Afford to Wait?
- The 2021 report is the worst ever annual report of Hengrui, with double drop in both revenue and net profit.2021Q4 and 2022Q1 are also the worst two quarters so far.
- Although Hengrui has invested heavily in R&D and internationalization, it’s still trying to follow an established model with better security.Essentially, Hengrui is still the same Hengrui. Nothing has changed fundamentally.
- For now, Hengrui hasn’t released any signal for “a reversal”. If going bottom fishing, investors may have to take a long, uncertain journey with Hengrui. Can you afford to wait?
Yungjin Pharm (003520 KS): Antibiotic Business on a Jeopardy; Long Way to Go Before New Drug Launch
- Yungjin Pharmaceutical Co (003520 KS) earns 15% of total revenue from exports. The company mainly exports antibiotic product cephalosporins to Japan.
- Yungjin’s export income declined 47% y/y in 2021 due to COVID. With Japan’s policy of reducing the usage of antibiotics, we are not upbeat on the recovery of this business.
- Yungjin’s outlicensed new drug candidate completed only phase 1 trial. If the candidate successfully completes later stages of trials, it is expected to be marketed only in 2024.
Biocon – Strong Growth in Generics Business and Research Services
- Biocon reported revenue of Rs24,088mn, up 31% YoY and 10.8% QoQ. EBITDA stood at Rs5,919mn, up 35.8% YoY and 21.2% QoQ
- Biosimilars: Biosimilar business reported revenue of Rs9,823mn, up 48% YoY and 0.1% QoQ.
- Generics: Generics revenue stood at Rs7,172mn, up 24.2% YoY and 18.1% QoQ.
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Laurus Labs – Earnings in Line; Synthesis Business on a Strong Footing
- Lower ARV prices – a drag on overall profitability – LAURUS delivered an in line 4QFY22. Sales revived across API/Formulations (FDF) after a subdued 3QFY22.
- Growth by Synthesis/FDF was offset by a decline in the API business
- Highlights from the management commentary – The management remains confident of achieving USD1b in revenue in FY23 (from ~USD660m in FY22). T
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Result Update – Solara Active Pharma Sciences Ltd
- Merger with Aurore has been cancelled – The company’s board has decided not to go ahead with the proposed merger with Aurore and instead intends to continue focusing on its core competency and organic growth.
- Debt levels rise due to working capital loans – The company’s Net Debt to EBITDA ratio stands at ~10x in FY22. It increased to Rs 9,27 Cr in FY22 from Rs 4,08 Cr in FY21, primarily due to 1.) Fresh Term loan to support Capex across the locations 2.) Increased inventory build-up planned for Covid-19 related business 3.) Increase in KSMs and raw material inventories to offset the current market volatility.
- However, the company is taking actions to structurally optimize inventory and right-size the working capital underway.
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