In today’s briefing:
- Virtus Health & BGH: Truth in Takeovers
- Yunkang Group IPO Trading – Subdued Subscription Rates Combined with Uncertain Future Profitability
- Aier Eye Hospital Group (300015.CH) 2021/2022Q1 Results – Overvaluation and a Risky Outlook
- Chugai Pharmaceutical (4519 JP) 1Q22: Sales Growth Outshined by Weaker Margin; Guidance Unchanged
- Eris Lifesciences – Niche Launches to Aid Growth over the Medium Term
- GSK Pharma – Muted 4QFY22; Focus Remains on Key Brands to Revitalize Growth
Virtus Health & BGH: Truth in Takeovers
- With under three weeks until Virtus Health (VRT AU) shareholders vote on CapVest’s Offer, BGH continues to gradually push out the tendering period for its own Offer.
- The outcome of the Scheme Meeting is all but a foregone conclusion assuming BGH sticks to its guns and is not supportive; which then potentially rekindles this competitive bidding situation.
- This insight discusses the constraints BGH needs to adhere to in “truth in takeover” statements. There are still a handful of moving parts to unfold in this transaction.
Yunkang Group IPO Trading – Subdued Subscription Rates Combined with Uncertain Future Profitability
- Yunkang Group (2325 HK) raised around US$139m in its Hong Kong IPO.
- On its bookbuild, subscription rates were lackluster and market sentiment hasn’t been the greatest.
- Similar recent deals with weak subscription rates had seen subdued listing performances by the end of their respective first weeks.
Aier Eye Hospital Group (300015.CH) 2021/2022Q1 Results – Overvaluation and a Risky Outlook
- Aier’s private placement was approved by the Shenzhen Stock Exchange, but we don’t think it signals a complete policy shift that private medical institutions are welcomed by capital markets.
- The high goodwill impairment risk and medical disputes are great concerns. However, if Aier changes its development mode, its performance growth would probably slow down or becomes uncertain.
- Aier’s Q2 performance could be affected by pandemic/lockdown. Even after continuous corrections, Aier is still overvalued based on current valuation, which has not priced in all the concerns and risks.
Chugai Pharmaceutical (4519 JP) 1Q22: Sales Growth Outshined by Weaker Margin; Guidance Unchanged
- Chugai Pharmaceutical (4519 JP) shares declined 5% since I published initial bearish note on the company in December. I remain bearish on the name.
- Despite a 60% y/y jump in revenue in Q1 2022, the company is still guiding for just 15% y/y revenue growth in 2022. Operating margin has deteriorated in Q1.
- Chugai’s significant dependency on COVID-19 drugs amid declining new infections and hospitalizations globally, remain the major overhang on the growth prospects of the company.
Eris Lifesciences – Niche Launches to Aid Growth over the Medium Term
- Promising start for Drolute and Xsulin – The Dydrogesterone market is at an interesting phase, with an improvement in demand due to better access, affordability, and technical superiority over Progesterone.
- Favorable demand-supply and marketing efforts to drive ‘Drolute’ sales for ERIS
- Well-positioned to gain market share in the Insulin market – ERIS has expanded its Anti-Diabetic offering, with the recent launch of human/premix Insulin
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GSK Pharma – Muted 4QFY22; Focus Remains on Key Brands to Revitalize Growth
- Slower offtake witnessed in the Vaccine segment – GLXO delivered a lower-than-expected performance in 4QFY22. Subdued YoY growth in sales and higher raw material cost affected profitability.
- One-off tax provision leads to a quarterly loss – Revenue was up 9% YoY to INR8.1b (est. of INR9.2b).
- Key takeaways – Secondary sales data from AIOCD indicates that Pain therapy/Anti-Infective/ Dermatology (~12%/~25%/~28% of overall sales) saw a growth of ~39%/ 21%/5% YoY in 4QFY22, driving the outperformance against IPM.
Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.
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