Member Info for Jatw

I remember my parents saying that shares and property were the way to preserve wealth during the 70s……inflation will take its toll on those companies that rely on discretionary spending and do not have pricing power.
Financials generally lack pricing power, but behave collectively so we may see an end to reductions in fund charges for a while…..their costs will be squeezed higher as exchanges and regulators will raise their prices and govts increase transaction levies…so margins may continue to fall….staff costs will come under a lot of pressure…so watch this year’s bonuses for indicators of cost disciplines they may well be significantly lower.
As for dividends, we can expect companies to allow them to fall in real terms but they may maintain / increase them slowly…..for MNG the changes to Solvency II requirements will be supportive, I think they will also look for bolt on acquisitions driving higher AUM and cost reductions. There are still way too many asset managers in UK and other markets…..the weaker ones will succumb, possibly quite meekly to larger players.

Well 2022 has been a disappointing year, -50%to -60% depending on which currency you hold.
Surufatinib FDA CRL because of a change in US approach to the shortcut of a bridging study…..disappointing there has been no news on how to resurrect the global ambition for Suru.
Elsewhere the portfolio has advanced significantly.
Savolitinib now nearing the end of development with AZ only 2-3 a years before ex-China revenues start flowing.
Fruquintinib FDA submission started….hopeful for 2023/early 2024 approval and revenues in 2024.
.
PCAOB and the HFCAA has undoubtedly affected US investor sentiment negatively.

Prospects should firm up during 2023….and hopefully flow through into the valuation.

Choosing a partner will not be straightforward.
Each potential partner will have their agenda and potentially different capabilities in different regions.
The depth of any partnership will be important….but there will not be many that have no conflicting interests.and the more partners there are the more future M&A is potentially compromised….
Hutchmed has built a large oncology sales force in China, ideally it could do with some approved assets to push down that pipe as well as US/EU/JP distribution….that is win win for a partnership…
I hope they will do a global deal for Frau+Suru involving a large upfront payment/ assignment of China rights to other drugs by the partner.
Failing that, I hope CKHH will take a 15-20% stake in an enlarged China organisation by combining HCM with other local players where sales / manufacturing and admin synergies can be realised alongside some pipeline rationalisation.

MNGs IFRS analysis shows a different outcome to others in that the PruFund revenues are advanced which is different to annuities / risk products where the profits are delayed. Reckon when this lands MNG will get a small boost relative to others…..
It will still have a significant contract service margin which is a proxy for future profits.

Hopefully the fund flow turnaround story continues at the asset management side…..and the acquisitions start improving performance in 2023.

The old adage of Buy the rumour/ expectation and sell the fact appears to hold good.

LGEN has said the change to IFRS will impact annuity business.
A large chunk of value will be held as the contract service margin on the balance sheet and released to P&L over the lifetime of the contract - for annuities 30+ years.
They re attribute much of the reserves and dont charge market movements / experience variances to P&L, these now go through CSM.
As a result profits as measured by release of CSM are much more stable but 20-25% lower for LGEN annuities…and less dependent on new business…..
The analysts will take a while to work out what the value of the company looks like, but a multiple of the CSM could become a comparator between companies and their market value.

Solvency, cash generation and dividend paying capacity said to be be unchanged…..
No M&A until the market works out what is what (as was the case for move to Solvency II).
A large CSM at Just may be the trigger needed to change the sideways direction of the SP of late.

In theory this means a faster completion of the NDA process. Completion in Q2 but I doubt that means an FDA decision until late 2023 (what has happened elsewhere in our experience?)

I am somewhat surprised that there has been no update on Surufatinib, to an outsider it seems a no brainer to aim for a multi centre study….the safety results were apparently good and it is selling well in China, so why has it not been progressed in the last 9 months?

Agricore - I think we can meet in the middle, yes there are administrative synergies and no doubt they will sell as a group to wholesale distributors……but I see little end user cross selling because of the specific nature of the products and there is no common brand to be able to draw customers to other products….
they are likely to continue marketing existing brand names as they do have a value in market (or the goodwill will need to be written off quicker).

Hoping for a brighter outlook in 2023.

PCAOB announcement Should be good news when HCM is removed from the at risk list….but the damage has been done to investor sentiment in the US which may take time to recover although the brightest prospects will bounce back fastest. A successful FDA approval of Fruquintinib is the next milestone for US relations to show their face….Q1 2024?

The Jackson holding is not significant to Pru……but i for one dont mind posts here about JNL…where else are longer standing pru owners who now have JNL going to post.

Ups its price to 200 but goes to sell. Mixed messages indeed.

Good deal I hope PokerChips.
Reckon you will be able to pick up Pru for 9xx and sell for 10xx almost every month until China makes up its mind.
Can’t see Pru being able to do many deals…more of an organic play…in a market that has been growing at 12-15% for quite a while…..confident it will do well in the future…but as a USD stock rises in £ have taken the edge off recently..

A couple of reiterated buy recommendations but no price upgrades since the plan was set out…..seems the market thinks this is about right / high enough at present.

NB is has only been higher during lockdown…..is it just a coincidence a lot of new pets were acquired at that time……

To me this is looking fully valued……other opinions welcomed.

Magmanus
This is a much better entry price than the 90p fund raise exercise about 18m ago.
Those funds have been deployed on acquisitions that account for most of the current mcap.
The previous business was based on buying unwanted underinvested brands which have proved tougher to reinvigorate…..so the new strategy appears to be to buy small but growing businesses and plug them into VLG distribution to accelerate their development….potentially a winning strategy, but also an eclectic group of products with limited direct synergy…..decent businesses in themselves, management has to demonstrate it can add value…..the brokers seem to think they can from here…..

If I may be picky Mr Picky
I believe Pru retains a near 20% holding in Jackson, and nil in M&G.
Jackson results will not be consolidated and so will not affect Pru earnings in a meaningful way.
It did sell some in the recent buy back programme, but the BB was targetting about 10% of equity so I dont think Pru dropped its share of ownership by much.

Quite a strong recovery…..it seems a little progress on Covid policy is all that is needed for that part of the world to feel a lot better about the future. (Ping An was up 13% in HK today - which has a large financial is a very rare level of positive movement).

Investors fear of missing out seems to drive these burst of recovery well ahead of fundamentals changing much

Plumbs, yes they have enough cash for the next three quarters in fiscal 23 and some for Q1 fiscal 24……but you don’t want the clock to run down too far……it is a delicate decision…the longer they wait the more evidence of sales there will be and they may get FDA approval…but wait too long and there could run out of money / have to raise at very disadvantageous prices.

And the rebuild of VLG continues with another growing business…..
The legacy run off brands are hard to regenerate, the three recent acquisitions are a promising way forward.

Def need to raise funds soon……ideally following exponential growth in testing and FDA approval……prime candidate for a buy out by management and PE to reap the upside.

Rare indeed, especially with no news release to drive it. Not even particularly heavy volume either.
Others (eg Beigene up but not moving nearly as much)……todays winner…..tomorrows loser?
It matters little in the long run.