Member Info for Jatw

Dividend cover is better than the bottom line suggests, Cash from operations >2.25 x dividend, an amount = to dividend was paid out in deals they expect to enhance future earnings.

The product approval pipeline and commercialisation of recent progress suggests strong revenue growth supporting EPS growth of 8-14% (yes quite a wide range but they are guiding positively).

Obviously growing a v large company is not easy, but this should be a safe dividend payer and with earnings largely inUSD is not reliant too much on future UK Govt….the could go to US if UK becomes too difficult for them.

CKHH is having a management reshuffle whether it will mean anything for HCM remains to be see. HCM did get a bit more of a mention in the annual results as it is one of the bright spots within the conglomerate. That said, HCM is reported as a financial asset alongside CKHH investment in a Canadian oil producer (it used to hold a larger share of a smaller producer and merged it about 5 years ago). If CKHH needs funds these stakes are most likely for sale, however with gearing of 16% this seems unnecessary at present.

Commentators suggested some asset shuffling within the CK Group might result from the management changes - although there are no new faces at the top table.

Apart from Mr To representing CKHH and Ms Shih as a further director, HCM seems to be structured to operate independently. There are many pharma cos under development in China, consolidation will happen/can be expected to be encouraged by Beijing to create national champions…..HCM needs to be part of that discussion.

Naive treatment does mean no previous treatment - I suspect surgical removal of the tumour would also be acceptable within this definition as it does not involve pharmaceutical treatment.

No indication of priority review (maybe to come?) but we can anticipate approval in mid 2025 and new revenue in H2 25. The commercialisation would be with AZ under the licensing deal.

Another +ve upgrade…

Momentum is now on our side…for the moment

And will be settled in 14 days, for those thinking of their CGT position it is in this tax year if you accepted on/before it was declared unconditional.

Not sure what happens if you are yet to accept as the settlement will be up to +14 days.

Agree Cheapshares

The dividend yields are excessive on UK financials at present and they are locked into paying the same level of dividends going forward as they will likely be punished by cutting the dividend (unless they commit to BBs in lieu). They should hold the dividend roughly where it is for the foreseeable and either invest in the business, reduce debt or execute regular BBs - they just need to explain the balance to the market .

Update today is a 10% increase in acceptances…the RNS referenced below refers to 17% interest being assigned to the bid…..so clearly not all acceptances are registered (unless a lot have gone the other way this week).

I expect this will be declared unconditional v soon.

Amones, from what I can tell AZN has been acquiring in areas that are novel but adjacent to their existing businesses.

They get new capabilities and can then explore combinations with their other therapies. HCM may be producing better/ safer compounds but if you already own similar assets the incremental value may not be there to justify the 5/6bn CKHH would want to sell up. However a share based merger when you can then take forward the better products and deprioritise parts of the research programmes would add value to the combined entity.

Spikey

I too was rather bemused by the market reaction today as the results and the continuation into 2024 seemed to be quite good and positive.

There is always something + and something - across the markets Pru operates….Vietnam seemed to be the downer this year, but that is not disastrous and demonstrates the reliance through diversity as other markets performed well, including most of the larger ones.

There is a slide in the presentation deck showing operating free surplus through to 2027 which is rather back loaded…..2024/25 are largely flat over 2023 and wonder if that is cause for some of the fall today.

They do need to look at their Shareholder rewards, their gearing is low at 20%, so they have scope to increase the divi or a buy back by increasing the gearing….The business seems to be capable of growing at 12-15% so at some point the compounding returns will allow the dividend to rise…but they need to find a way to double it or the shareprice may adjust to make it so.

If the UK market does not like Pru, then it should make its primary listing in HK where there may be better knowledge of its business.

Much more + than AIA….

NBP+45% a slightly better result too.

The book values are USD16.46 (Embedded value) and USD 13.56 (IFRS basis) so trading at a 25-40% discount depending on the metric.

A short term rise is on the cards based on these results and then it will be back to macro economics in Asia to see if there will be a sustained rise…..but we are reaching the bottom of the fall…….the chartists will no doubt confirm at some point.

Https://www.mandg.com/~/media/Files/M/MandG-Plc/documents/investors/2024/mandg-plc-consensus-pdf-february-2024.pdf

Link to a document on the M&G website averaging analyst views….actual results Thursday.

It has been holding steady around 230. Suggesting little excitement, and steady numbers in line with expectations are coming.

Hopefully they are seeing green shoots of recovery in the Asset Manager and can tell a story about Wealth (they will be asked about compensating clients when annual reviews may not have taken place - PFP, Sandringham and Continuum provide the exposure to this risk). MNG probably just make the top 20 that the FCA is seeking data from.

Innovent results are tomorrow….it carries a higher MV and has a larger pipeline but makes larger losses. The company strategies seem to be similar and they are at a similar position of moving towards sustainable profitability. It will be interesting to see how the results are assessed in the market..

I think we know the answer is four letters…….CKHH…..

The assets and the pipeline can be evaluated and a number suggested for a deal, but unless it is a very large number (2.5-3x current) I doubt CKHH would entertain it.

Astra seems to be buying the Company when it wants the lead product…….it has to be that way in rare diseases, and I expect as the treatments extend out into rarer cancer treatments.

The deal with HCM is from a different time in AZ’s history. I suspect that if Savo was being offered up today, they would try to take the whole company.

I see HCMs future being a larger China entity and its drugs licensed for use where it is politically difficult for China based organisations to operate. AZ / Lilly etc may need to split their assets into China / non-China (perhaps US/ RoW) entities at some point with cross licensing arrangements if it becomes operationally difficult to be a player in US and China markets.

I thought the advertising is too generic…..and very millennial….you have to fear for the next generation when Dads have to be there for emotional support…

There are quite a few territories that now accept applications where there is an existing approval in a recognised territory (or two) and do not require local trials….Takeda has the option with China and US approval to start these approvals now where they can deploy effectively or via third parties if needed.

Of course regulatory approval is only part of the battle - getting it adopted within insurance systems and publicly funded bodies is also tough (eg NICE for NHS England).

Recent Pharma/PE deals have included a deferred element….I would not be surprised to see much of the value over the current company value offered as a 2 year warrant payable on certain performance metrics.

Differences in the timing of any takeover payments may be significant as may be the value….

The current mcap is around £40m

What would you take of these options:

£80m upfront?

£60m upfront and 60m deferred?

£40m upfront and 200m deferred?

Silk oil, think you are right for the in force book. The increase in interest rates has made annuities (individual and bulk) more attractive so volumes have gone up - that growing business should result in higher future profits and capital returns. The capital effects of changing market conditions are published within the SFCR….the business will be run to maintain adequate capital across business cycles. We should take some comfort from the fact that insurers largely came through the finance crisis, covid and the recent inflation /war environment without serious damage…although they did have to cut dividends in the GFC and some suspended dividends at the BoE request early in Covid