Member Info for Jatw

Just has a number of potential futures…….

1 it could go to run off, in which case it will have a large store of value to payout gradually or it will be consolidated

2 it continues to be a retirement focused insurance company offering annuities and LTMs to retirees, the NB may be smaller without DB, but it would still be a significant player

3 it expands into other protection products

4 it expands into savings products ( these are low margin high volume so not easy)

5 it transforms into something else (PE house?) by selling its liabilities and then investing its capital differently (the institutional investors would probably want their money out so convert this to a run off/M&A exit.

It will be several years before any of this happens…..so just watch for signs in the small initiatives they launch/promote in their annual results….

The SP seems to have settled around 160p. It will be interesting to see what the results bring…I expect the results will show an addition of 30p or more to the value of the company and strengthening capital position. I expect the same value to be added for the new few years and the SP will advance by 20p and the dividend increased by 15-20% pa (it is from a low base for an annuity company but has considerable scope to grow).

M&G usually pays top$ for its acquisitions….I cant think of one that looks like a bargain in hindsight.

Unlikely to be a distressed seller, more likely a PE fund exiting its stake. Probably a good sign that MNG has not managed to acquire 100% - management must consider they can extract more value in a future buy out that may already be baked into the acquisition.

Not only is there a buy back but Meiji will be buying up to £750m in the market to get its 5% stake.

Plenty of guaranteed buyers = demand and supportive conditions for the proprietary traders.

No RNS (size?) but a press release has M&G purchasing 70% (rest with management) of a Stockholm based private debt organisation that will sit within the M&G Private Markets team.

Sounds a bit like ResponsAbility which was acquired 4 years ago, but Nordic.

These asset management bolt ons can be successful in filling gaps in the M&G offering and can be integrated into the network relatively easily.

This is in contrast to the UK Wealth Acquisitions which have either been a financial failure (platform) or had to remain separate (Continuum, Sandringham) making synergies are hard to come by.

AZ reported today…..Orpathys sales of $46m, 10m in Q4. This was flat or up 2% at Constant Exchange Rates.

The pipeline update did not reference the Savannah study. Savannah, SACHI, Sanovo etc are listed in the clinical trials appendix. While this gives data read out dates it does not indicate the regulatory status (ie NDA accepted for SACHI)

AZ reports 2024 results on Friday. I expect Orpathys sales will be broadly unchanged. There has been chatter about AZ sales being hit by the ongoing Chinese investigations around falsified genetic test results (to gain access to drugs) and the illegal importation of oncology drugs from HK to PRC. Orpathys is a relatively small part of the portfolio and did not appear to be affected at the last reporting. This period is too soon to know any effect from the sNDA. There may be news about the status of the US NDA, it had a breakthrough therapy designation allowing a rolling submission and a relatively early PDUFA date, the company presentation implies that it may get approved in H2 25 (as it is listed as a possible launch before the now delayed Sovleplenib)

Anaemic sales growth. 1% (of which 1.6% comes from the November acquisition) - giving an overall decline before taking account of inflation and price increases.

The numbers look a bit better when the product mix towards VLG brands allowing greater margin is included and that may be the saving grace for VLG.

Continued top line sales growth of VLG brands is what is needed - they have done that this year but they need much much more..

The devil with the tariff will be in the detail…..but I expect that the cost of the tablet imported into the US is a relatively small % of the retail price once the US distribution costs / profits and the charges by Takeda to cover their royalty and development costs are added on.

I would prefer to focus on the Takeda sales announced today….I dont know what the expectation was of how Fruzaqla would penetrate the market, but it does seem to have peaked early in the US…..60 80 75 and now (75-80)m suggests they have a steady flow of patients but are meeting resistance from practitioners or cannot reach beyond their core distributing units. I am a bit disappointed given the Q2 trading of 80m (US only), but I expect that a year ago the analysts would have been impressed by $285-290m sales in year one.

.

There is a practical limit to what Slater can buy up to…..they will not to takeover VLG so 29.9% is the maximum….but the soft shareprice will be hurting their fund performance and they will want to see an uplift before that becomes a problem.

Management might find they have an activist rather than a supporter on their share register.

No HK trading for a few days over the New Year holidays, Think HKSE starts on 4 Feb.

Will lead to low volume / risk averse US and UK trading.

Re take privare

HK take private could only happen with CKHH leading. They tend to let their listed subs struggle on their own. HK does have a strange creeping acquisition arrangement which would allow CKHH to increase its stake without making an offer for the whole. Most likely CKHH eventually needs to monetize some of its stake and pushes HCM into a merger……but no indication this is about to happen…

Other conditions likely include the NEDs deciding it was in the other shareholders interests, there could be voting thresholds which may need to exclude the offering party.

Takeda has reported sales of 13bn JPY in its latest quarterly report, depending on the exchange rate this is 82-85m USD,

It suggested there was a strong launch in JPN and good momentum in Germany with positive reimbursement decisions in ESP and JPN received. This suggests to me that US sales have already stagnated at around a $300m annual run rate.

Clearly Takeda has much global growth to come through the larger European market and similar (to USA in pt size) JPN market with additional opportunities already emerging around RoW. Hopefully we will get some movement on a label expansion or collaboration trial with Takeda in the next year.

The market seems to be liking this more maybe there are views the CMA review may be curtailed.

I suspect the remedies will be local market maximum % and administrative shopping around for medications…..all survivable by the vets who actually need consolidation to improve out of hours service and provision of more specialist services. If you dont support the vets the service becomes annual checkups and death services.

If they want a target pet insurance would be better when the load premiums or discontinue coverage based on minor ailments.

SB/Hawker

I would be disappointed if the company does not make its revenue forecasts……the Executive bonuses are highly geared to it and they will want that nailed on….The point about momentum is well made…..if the Drs using the test have a good experience word of mouth will spread the news of the effectiveness of the test.

I naively thought that getting the test in the treatment guidelines gave them leverage in the litigious US environment but I dont know how strong that guideline is…my guess is that the test is an option rather than a should or a must consider….

1% penetration in 3-4 years does not sound very ambitious to me…..that will mean 99% of patients are not getting the benefit (if there is one)…and Drs are very resistant to change.

As long as new funding remains limited I can foresee a worthwhile recovery taking place here, but it is likely to be a slow burn then a strong uptick….requiring patience….

WTW reporting the DB market in 2025 could hit £70bn, on positive funding positions,

Reeves could make it easier to use surpluses, which may make deals wanted by sponsors who can then use the surplus.

Both appear good news for insurers.

Running a little race in my holdings between Just and QLT…..different sectors of financial services but both have doubled over the last 12-18m and both stand in the 160s. Which will get to 200 first? My bet is on Just.

A rate cut is needed to offset the coming fiscal tightening….but it will lead to a fall in £ and increased inflation on imports….given Pru (like several of the larger FT100) is now a $ company that should lift the UK shareprice if not the SP in $ terms.

Labour proving excellent in incentivising people to plan their wealth management.

SP has nearly doubled from its lows…..and the business has been reshaped for the fee based advice and asset management. This should be a more predictable business and is being rewarded with a higher SP.

It’s the fight in the dog that matters……but what type of dog is the Pru?

Seems to me more of a retriever type rather than a greyhound or XL bully that have specific qualities and attract particular owners.