Member Info for Jatw

Just announced a 500m deal with GKN today…and the shares fell 5% which seems at odds with the news. Just is surely set to have another record year of new business.

Not long to the results now….lets see what they bring…...

In the Q&A Jonny Cheng said they needed to apportion the 400m from an accounting perspective over 2023/24 based on the performance obligations in the contract…..not sure we will ever hear what those are, but presumably the 2024 items relate to approval in US/EU and JPN. Dr Su suggested they expected a high double digit increase in sales……the obvious uplift is Orpathys as it entered NDRL today…..say that doubles? Sulanda has some room for growth, it seems to be a very different treatment option to sandostatin which relieves the diarrhoea symptoms, so maybe they can increase from 18% to 30% market share next year. I suspect that Elunate needs the Gastric Cancer approval to grow much. I reckon that is 70m, 50m and 40m consolidated sales of about 160, plus some milestone/service income and 300 from Takeda?

https://www.smh.com.au/business/banking-and-finance/macquarie-profits-jump-as-it-gains-from-energy-volatility-20230207-p5cifz.html

Macquarie has A$12.5bn excess capital and could deploy that on acquisitions…in fund management.

Quite why an Aussie bank would want a European centred asset manager is unclear…..it has the ring of an early assessment…..240p tomorrow?

Been reading in the press that connection to the grid is an issue for these battery farms…..maybe some scarcity value will prolong decent margins in the short to medium term.

Indeed Jimjam it is a puzzle….volume has been x4/5 usual but still only just over 1% of the shares traded daily…..enough for someone to be building a stake yet to be disclosed to apply some leverage as Aviva has experienced with the activist investor on its books…so maybe something similar will play out later this year.
You are correct in assuming a small rise in the dividend. I think they have said they would expect to pay the same cash value and as they have cancelled nearly 10% of the shares in issue since last year that allows the dividend per share to rise.
They did flag that net cash flows were improved in the institutional side of the asset manager and had stopped outflows on the retail funds so the asset manager results could be better than expected….The with profits returns were better than equivalent unit linked funds and marginally negative but smoothing and excess surplus distributions kept policyholder returns positive….
I would like to hear the new CEO articulate updates to the strategy……that show a focus on fund performance delivering for customers and provide a route to growing revenues. I would not be surprised for management to set a new capital generation /profit target and associated unit cost reduction target.
There may also be bolt on acquisitions and strategic investments (like the MoneyFarm deal), but I don’t expect immediate major M&A activity (eg disposal of the annuity book)…….if others want to do that they need to stump up the cash and that is outside managements influence.

Jxn has always hedged its exposures……more than its competitors….many of them had liquidity and solvency issues in 2008…..
AOP is what management feels the business generates - which is about $2bn….the questions shareholders have to ask is can the short term market movements and hedging results sink the company…the regulatory capital position suggests it is sound and its ability to pay dividends and buybacks supports this view…..a lack of confidence is probably why the mcap is low relative to earnings.

Despite a Q4 loss there is FY Adj Op Profit of $16/shr and full profit of $64/shr.
Dividend up 13% in 2023 and another buy back up to 450m (approx 15% of mcap) with capital return target of 450-550m.
Strong performance in 2022…..undervalued IMO

And for comparison, Beigene booked sales of $1.3bn and made a loss of $2bn
They have a similar 2 years of funding in place…..but they have much greater expenditure to cover…..not sure which is better to hold at this point….seems to me that HCM has bitten the bullet to move to profitability whereas Beigene may have some way to go….their point of difference is that they are selling well outside China in higher value markets.

Not sure why they are being coy about booking the $400m…..they should have stated guidance 5for sales +Takeda payment to show the growth expected…..I am not expecting much more from Elunate as it has more than 40% of th emarket….Orpathys could double with NDRL inclusion and Sulanda should grow its market share…..the main competitor sounds like a statin drug which could be quite cheap so it is the others that it may need to squeeze, if it can get to 30% next year that is another 66% uplift.
Interestingly they described Surufatinib as PhIII ready, so presumably they are looking for a partner, my hunch is it could be a second for Takeda if the bridging study for JPN goes down well and if it fits their product range….the price then depends on how much the global study costs and how that is shared / factored into milestone payments.
They listed I think three international programmes as de-prioritised….but I could not see how much they were saving/deferring but they did describe 2022 as peak cash burn… I wonder how much was spent on Fresco2? That could be a proxy for the reduction in spend going forward….if they can get to cash flow positive in 2025 that will be an excellent outcome.

Initial reaction appears positive.
They will likely burn $300m for the next two years and at end 2024 will need to be covering cash flow or raising more money.
Global partners for candidates are needed to share the dev costs and accelerate cash flows. Will partners be willing to step forward before significant progress? I hope so.

Oddly there was no profit warning despite eps halving…..however that is after some one off costs associated with the acquisitions……time will tell if this is a bout of M&A induced indigestion or something more serious.

As bad results go, a drop of 10% is nothing unusual and probably better than deserved…..the saving grace was an increased dividend, the analysts will be working out whether that is sustainable but on a low yield it should be.

US leading on upwards…..buy price 160p equivalent….the trend has turned to favourable.

The 1b results were CR:36%, ORR 82%, CBR 91% on a small number of patients so a wide confidence interval is needed when considering what is likely to come from the Phase 2 on 108 patients, to get about 100 evaluable cases…..a much lower result (say half these rates) would still be a good patient outcome……they should be reasonably confident of success..

Trouble is MNG is not easy to digest…and a better proposition may be for MNG to merge in all share deals to build its individual business units into stronger entities. There are plenty of candidates to improve Wealth, Annuities, Asset Management…..A break up bid will need a consortium to take the constituent parts….which will be difficult to put together.

SpikeyJ
Sorry I have no specific insights into this movement that started around 10am today. It is really company rather than sector specific.
Top hat posted a link to a recent consensus forecast…….Jupiter has bounced today, but MNG is not really the same story. The consensus is for a strong capital position, so maybe news of a new buy back is in the air?
Maybe there will be some gossip in the weekend papers…….with a new CEO installed and presumably some choice announcements on direction ready for next week a bidder has probably missed their best opportunity and will have to pay more than 6 months ago.
maybe MNG is about to buy something? (Sandringham, Moneyfarm, ResponsAbility were all announced in the run up to results).
It will probably be something more prosaic like a SWF mentioned in the posts below buying in the market.
It all adds to the fun of owning individual shares.

So Operating profit approx double last year and after other assumption changes profits will not be lower than last year and could be up to 20% improved.
The Op profit is the pointer to future results improving…..hopefully some recovery back towards 75-80p will set in during the year….

It is a somewhat surprising market reaction…..but the AUM and net cash flows were already known so I suspect this is more about the CEO statement about simplifying the business - sales of parts that may make the whole digestible?
Asset Managers still make good margins….and are highly geared to markets it is all about volume of assets and if the markets are looking up then the outlook is sunnier.

New CEO ahead of results…..i did think we would see Fitzpatrick delivering the results in a couple of weeks…..but it is good to get the new broom in place a little earlier than expected. Although I am not sure there will be much of a change in strategy…..but he can sell down Jackson at a better price now….

Cant see a dividend for another 3 years…..the investment case is about value creation and growth before payback…..
The model has changed from regularly raising new money for an expanding pipeline to one focused on shorter term objectives without new shareholder cash.... but they are still committed to a lot of ph3 trials to bring them additional revenues from 2024/25, my guess is that they were running close to $400m pa in R&D spend and they will trim this to $250-300m. I think they said they had preferential financing on the factory, so the next source of cash which they could return to SH would be the proceeds of divesting the non-core JV. If they did get $1bn, they could distribute up to $1US per share. But it would need to be a capital return as I am not sure they have distributable reserves to allow a dividend….
They need more indications to generate more sales….Elunate has a large market share and must be getting close to peak in its current indication in China, Sulanda will start to peak in the next couple of years too.
In licensing where trials are required are still a 3 year path to revenue…M&A is the way to rapidly change prospects.

Why sell the JV if cash is not needed?
JV does not seem to need a cash injection and it seems better to let it grow organically and then transact in the future if and only if a strong price can be obtained. China re-opening can only be good for it.

Route to profitability and cash flow positive is key for 2023….the cash reserves will be topped up by the Takeda deal and no action is required for atleast 12m, but I expect to see some reduction in the run rate of expenditure during H2 and in 2023 (if only through Takeda taking up the Fruquintinib costs). It is getting on for a year since the FDA knocked back Surufatinib, some news on a global trial / partner is overdue….the major short term benefit being cost sharing.