In today’s briefing:
- WuXi AppTec (2359.HK/603259.CH)- Interesting Points to Ponder Behind 2021 Preliminary Financial Data
- Mayne Pharma (MYX AU): Shifting Focus to Specialty Products to Return to Sustainable Growth Path
- Owens & Minor (OMI): Short
- HCG: Sustained Improvement In Growth and Profitability
- Hikal Ltd: Crop Protection Drives Growth; Tracking Compliance
WuXi AppTec (2359.HK/603259.CH)- Interesting Points to Ponder Behind 2021 Preliminary Financial Data
- WuXi AppTec Co. Ltd. (2359 HK) released the preliminary financial data for 2021. It is not surprising that the Company could maintain its outstanding performance.
- We listed some interesting points to ponder, such as projected declining performance of WuXi DDSU and related chain reaction, the change in fair value of financial assets, overseas anticipation, etc..
- It’s understandable if investors choose to start making layout at this point due to attractive valuation and longer “reflection arc”,but need to be patient for WuXi AppTec to achieve reversal.
Mayne Pharma (MYX AU): Shifting Focus to Specialty Products to Return to Sustainable Growth Path
- Mayne Pharma (MYX AU)‘s revenue is decelerating since FY19, which is reflected in its share price performance. From predominantly being into generics, the company is now focusing on specialty pharma.
- In FY21, Mayne Pharma added 11 dermatology and women’s health products to portfolio targeting $650 million in IQVIA sales. Its U.S. contract service business is on a double-digit growth path.
- Commercialization of new oral contraceptive Nextstellis in the U.S. is the major growth driver of the company. Neststellis peak U.S. sales are projected at $200 million annually.
Owens & Minor (OMI): Short
- Why: Profits in “Global Products” should decline over the next two years as it emerges from a period of over-earning in 2020 and 2021, resulting in a collapse in earnings and valuation
- When: Should show evidence in 1Q/2Q2022 – once investors see that Global Products profit is shrinking and start applying a low-growth multiple to normalised earnings.
- Factor Exposure: Value, Covid-beneficiary, negative earnings revision
HCG: Sustained Improvement In Growth and Profitability
- HCG continues to improve its profitability led by 1) Scaling up of new centers and 2) Improving operational efficiency in its existing centers.
- HCG reported revenue growth of 1.7% QoQ in Q3FY22, despite Q3 being a seasonally weak quarter and despite fell off of COVID related revenues.
- As per our projections, HCG has potential to generate annual earnings of 170cr+ by FY25, suggesting an IRR potential of 23%+ over the next 3Y.
Hikal Ltd: Crop Protection Drives Growth; Tracking Compliance
- Hikal is predominantly a B2B player that provides intermediates and active ingredients to global pharmaceutical, animal health, crop protection and specialty chemical companies.
- Maintain BUY on account of consistency in offtake for crop protection CDMO, expected recovery in Pharma, Visibility capex.
- That said we continue to monitor developments on recent critical issues- 1) Surat (Gujrat) GIDC incident and 2) MPCB notice for Taloja.
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