Member Info for Jatw

AZ has reported Q1 Orpathys sales up 43% (48% at CER).

This continues and extends the increases reported by HCM.

Can only be good news….(Takeda reports 2024 sales in its Q4 results on 9 May)…..HCM should consider a quarter 1 sales update.

Sorry the reference to HCM should be FRUSICA-1

gsk has submitted a supplementary biologics application to be assessed by 24/08/24 by fda, this seems to cover a similar population to the endometrial cancer submission for fru*****inib + sintilimab.

the gsk study is called ruby, the results of both studies are to be published. as i follow both companies i will update when more is known.

Onwards and upwards to $69.

Ping An Q1 results were out today…..showing strong progress on the sales side over Q1 last year…but profitability slightly down. Suggests CITIC-Pru JV should show improvement in the Q1 update next week. Has the corner been turned?

Beza - the Execs (3) each have 1m shares on option, so dont expect them to buy more…but the NEDs should be…or be paid in shares….

Although a fund may only have one price, the fund manager will calculate two prices based on whether the daily net investment is positive (a higher price) or negative (a lower price). All customers transacting will get the same price. Hence if you can buy when most are selling and sell when most are buying you will get the best value.

The difference between the two prices can be several percentage points….hence if you see a unit price movement that seems unusually large it is caused by switching to the other type of price.

You will need to look at each fund to see if there is a pattern…..but generally for funds that are in pensions these are more predictable as contributions will come in during the first half of the month from employers and withdrawals will tend to be at the very end of a month to have cash for payment on the first….but each fund will have different patterns of customers.

Overall the buy/sell transactions are designed to balance out so should not make much difference to most people, although some will be lucky and others unlucky.

Now $67…..remaining good value.

For a moment, I thought I could discern a change in direction of the SP….but no. Not this week.

I have been a shareholder since 2018…..including taking up rights in the days these traded at 90p.

I was attracted by their strategy of a growth story with newly acquired brands introducing new distributors through which existing products can be sold. The brands they buy are all small, although they may be leaders within their niche.

My comments about them being a small company are factual - they are tiny and would not qualify for even the smallest indices. Small companies are out of favour hence they also experience the undervaluation referred to by the CEO as a reason why they would not issue shares as part of M&A.

Theirs is a very crowded market (just go into a Superdrug and see if you can locate one of their products without staff assistance to see what I mean). What they refer to as power brands are only within a narrow therapeutic area. If they continue going down this route of small brands they will become an increasingly complex business with more small scale sub-businesses.

I dont see a plan to change this and so they will continue to be a small business (even if they double sales, profits and market valuation they will still be tiny.

I do consider them undervalued by the market, so I continue to hold, but sometimes we need to recognise what is holding back that valuation and I think it is the lack of a core product which has significant potential to change the market perception of this company.

As an apparent Chelsea fan, you will be familiar with the problem of having paid for a more valuable asset that the market now values considerably lower. Do you sell at a loss, or hope that new coach will improve the asset. Chances are the asset limps along for a bit until their contract expires and you have to buy a new asset. The VLG squad of brands is a League 2 squad. How to get promoted to League 1?

Might catch up with NY this afternoon, but at present there is a near 20% difference (if there is the ability to trade)

I think the BB rules may be different in HK, I think there is a mandate in the company articles that allows the Board to make a BB and to hold shares in treasury…..they do this to meet share options and other staff awards rather than just issue new shares and this is relatively minor in terms of $ values.

I assume that a major BB program would need to be announced to the market and purchases disclosed regularly…they would also need to buy from CKHH in a connected transaction to maintain the % holding so it would be quite a complex disclosure environment and would not happen quietly….

The Board will need to formulate a dividend / leverage/ capital policy and be prepared to implement it in 2025/26. I think they were asked this by an analyst at the FY results call.

They currently have about USD 800m / £600m/ HKD 6bn in cash / equivalents of which I suspect 50-60% could be considered surplus to current operational needs

A hk$1 dividend (10p) would cost about £85m

A buy back of 5% of shares £125m

M&A includes product in-licensing, they have o/s commitments for Taz in this respect, but have headroom for further deals.

China was encouraging companies to enhance their value…..and not to sit on cash….

I dont expect anything to change this year.

Overall, the CEO and CFO know the detail of their company.

I felt they were open about where they see opportunities and we willing to answer questions (which they mostly answered in full).

Good to hear they dont intend to use shares to fund any M&A due to the company being undervalued (and they have made sure they will gain through any market reassessment)

My confidence in the management team is enhanced…..but they are operating a small company in some small market niches and I dont see anything here to change that even if they do increase sales by low teen % for a few years.

Should have said 9 May for Takeda results. TAK is listed in Japan and US, and no time set out on the Takeda website .

1pencil - US inflation higher is not good news re outlook for US / HK interest rate expectations and USD strength.

With most HCM sales in Yuan they will be down by a few percent when converted to USD - although returns from the $800m cash pile will be higher to partly offset the profit effect..

Odd to add Just to an income portfolio given its low yield.

Even if the dividend is raised by 15% pa (inline with mgmt expectations for trading), then I would expect the yield to stay low as the SP will also rise.

FWIW I think this will be trading at 200p in 5 years and the divi yield will be 3-4%.

They need one blockbuster product (preferably in house created rather than purchased). At the moment they have no “power brands” or if they do they are only powerful in very small market niches.

Extending small brands with product updates and refreshes will still leave you with small brands.

This company has been doing the hard regulatory and clinical yards and is tantalisingly close to embedding its tests and IP into diabetic and CKD treatment plans in the US which is a huge market. The unknowable is whether they can access the market effectively and overcome the hurdles of suddenly needing operational scale. I think they will need a significant capital injection and operational partnerships. The sale process is one way of crystallising these.

The outcome I hope for is a JV with a distribution partner providing a cash boost to RENX today and a stake in the future profits of that JV.

Not very transparent……but I doubt the recent investors expect to lose money so it is either

A) guaranteed profits from a quick sale for the new / participating shareholders

B) significant dilution of existing shareholders through a series of these transactions so that if the business is ultimately successful they take a much larger share of the spoils.

Answer me this, do we think

DB Capital is Smart or Dumb money?

And how much integrity does the Board have to act in the interests of all shareholders?

The funding issue has been apparent for a while…..arguably RENX should have raised significant liquidity (many years of expected outflows) several years ago, but it has almost deliberately existed with minimum liquidity for maximum control by a couple of shareholders who might not mind a low share price to take control.

I expect a knock down sale to the recent investors / management. - 40-50p feels about right so the Board can justify a transaction with a significant premium for other shareholders.

Takeda reports its Q4 sales in about 4 weeks - but they will already know the value achieved in Jan-Mar. They “sold” $15m in the 7 weeks post FDA approval during their Q3. Not sure that all of this will be in active prescription as there is likely an element of stocking up the distribution pipeline. Say 10m was stocking and 5m dispensed, then we could expect those sales to recur each month plus an increase each month (Jan 5+5, Feb 10+5, Mar 15+5) would get to $45m Q4 sales and these would continue to increase. If they are ahead of this they will be doing very well indeed. But lets see.