The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
I have bought this morning …there are expectations of 1 or 2 new players entering the bulk annuity market this year…..surely they will look at investing in Just as an entry route rather than set up a new entity and seek regulatory approval……
Just seems to be unloved /mis-trusted/misunderstood.
New business margin in excess of 8.5% would mean NB profit around £350m with £80m invested to support this business which should leave £250m for other purposes (including dividend / capital return / growth in 2024 and beyond)
The only fly in the ointment is £400m of funded reinsurance in 2023, so presumably there may be a small number of £bn in this business where Just retains some liability and is reliant on collateral arrangements to protect from the failure of the reinsurer….the FCA is investigating whether additional capital is required to make these arrangements robust…
Just has a dominant position in the smaller end of the DB transfer business and can move up the scale if it chooses - although margin may be lower on larger deals.
15% growth pa means a doubling of profit in 5-6 years…..
Surely at some point it must move up?
KKR playing hardball…..changing from a court scheme to a take over offer with a lower threshhold….
This increases the likelihood of a deal at the current price….as not too many holders will want to continue to hold illiquid shares in an unlisted company…..not sure that platforms would allow that for PIs.
New offer document expected next Wednesday.
Still possible that could come with a higher offer, but looks unlikely.
Outflows still happening…..-3% of AUM in the quarter the positive market performance means a net increase of 4% across the quarter.
Some continued volatility ahead until the client flows turn positive….in the meantime what will clients do….will they bank the gains in the last quarter or commit more money to chase the markets higher…..
With events with global repercussions still playing out in the Red Sea, China Taiwan tensions and s swathe of elections in major western democracies this year there may be no safe havens.
Q1 had -8% AUM 30% was investment performance and 70% outflows (2.9bn USD).
It will be interesting to see what these numbers look like given the rally in Nov/Dec in markets…and the outlook for interest rates has changed to some reductions later this year…..hopefully the outflows are reducing and performance was stronger….although the best we can probably hope for is a flat AUM.
Searching the www suggests ITP has a prevalence of 9.5 per 100k people…..and it appears to be global rather than concentrated in certain markets…..more importantly, the condition persists for many years with an 80% survival after 5 years…hence the pharma co just needs to get to the patient for a multi year treatment plan.
You would think this would meet criteria to attract a global partner.
Yes some positive news…slightly behind schedule, but priority review will help get this to market in 2024 (approval in June/July?)
They did also promise an NDA for Amdizalisib in 2023….they have not given a trial result for that as yet…..to be confirmed whether that has been a positive result….the P1/2 trial numbers were very small so may not have been that representative of the larger Ph2 registration study….in which case it will be a full ph3 or deprioritised….
It will take a couple of years before we see any meaningful recovery here….
First we need to hear from Fitzpatrick about how he is going to reshape the business….it will likely need some quite heavy re-plumbing to get it working better for customers….which will then take time to flow through into business improvements…..
In the meantime they must be finding it hard to compete for new business….
A hold at best IMO….
Lmds
I have thought some more on this and think the most likely outcome is a sweetened bid….although not by much as that makes KKR and the Board look silly. I have added this morning at 944. If I only get 955 then the deal will more than cover its costs.
So there is a two week delay.
The announcement states no other indications of interest have been received….and the Board wants to progress the deal.
I doubt that KKR will want to go much higher, I would think £10 including the dividend is a likely maximum, so 5% uplift may come forward next week.
If the deal proceeds on current terms, then there is only a marginal gain to be had by getting back in.
If the deal is withdrawn, then a fall should be expected…..it will be a deal delayed and should return within a year.
a pretty poor session for pharma in hk.
hcm only down 3%
innovent -7
beigene -9
a big 6 months for fru*****inib coming up……eu and japan approval. china approval of gastric cancer snda…..and the small matter of the royalties from early us sales.
Lloyds is selling a £6bn BPA business - it is suggested that Royal London is a prime bidder….It is not clear whether Lloyds is just selling its back book or whether bid teams and administration is also up for sale. It will be interesting to see what the disposal profit is relative to CSM/embedded value of the book rather than the pure liability value…..
The £6bn liability is about 3 years new business for Just, so I would not expect Just to be a bidder…but you never know….
It would be interesting if they could form a JV with one of the potential PE entrants.
AZ has signed another Chinese deal with Allorion (operates in China and US, but appears to be unlisted in US). The deal looks similar to that struck with HCM for Savo. A new EGFR drug will be developed by AZ in return for staged milestone payments and future royalties.
I expect Just has sustained its sales volumes (in terms of individuals covered) in H2……annuity rates have been higher and although slightly off their highs still provide better customer value than for many years due to higher interest rates……those same interest rates will have reduced the annuity liabilities being taken on from DB schemes….but the added value to Just should be similar.
My hope is that we see mid 90s following the trading update.