1 See the last page of this report for important disclosures
Roadshow Commentary
China Healthcare
Future stays good
On 15 Feb 2017, we hosted a non-deal NDR with Jacobson Pharm (JP)
(2633.HK, NR) with its management at our HK office. Our investor’s
questions focus on: (1) Po Chai Pills’ (PCP) (保济丸) sales and
formulation in China and Hong Kong; (2) newly acquired Ho Chai
Kung’s (HCK) (何济公) wider net margin; and (3) western generic drug
sales and pipeline. The counter currently trades at 18.0x trailing P/E
(12.2x EV/EBITDA), versus global and HK sector median at 24.2x
(17.0x EV/EBITDA) and 18.0x (12.2x EV/EBITDA) respectively.
Top generic drug supplier to HK hospitals and local doctors
In 2015, JP’s market shares within HK Hospital Authority in cardiovascular, oral
anti-diabetics, digestive system, central nervous system, and respiratory system
areas were 68.8%, 65.0%, 52.1%, 50.1%, and 29.9% respectively. Whereby its
generic drugs made by its subsidiaries such as Europharm (欧化药业) and Jean
Marie (香港正美药品) have been well recognized and prescribed by local HK
doctors for decades. Amongst the top five drug-makers in HK generic (western)
drug market, JP was ranked #1 with 32.7% market shares by revenue in 2015.
Renowned OTC - Po Chai Pills outlook keeps solid
JP also sells proprietary OTC Chinese medicines, reaching as much as HKD139m in
3/FY16 (+28% y-o-y), making up 12.8% of 3/FY16 total revenue (3/FY15: 11.5%).
However, in 1H17, Chinese medicine sales fell 7% y-o-y, on the absence of PCP’s
China sales for several months, from the change of PCP’s China distributorship.
Further, management clarified to our investors that the PCP’s formula for sales in
HK and China, which are under different name as Po Chai Pills (保济丸) in HK/
overseas and Puji Pills (普济丸) in China, are largely the same. However, as some
local firms in China have already made PCP years ago in altered formulae using the
same trade name Po Chai Pills (保济丸) in China, JP would have to coin their PCP at
another similar name for China sales. Note that, in May 2016, the CFDA reclassified
PCP as an OTC drug in China instead of being a prescription drug sales in the past.
We see PCP will have broader usage in China, should JP intensify its
advertisements over China’s media.
Stock catalyst stays at newly acquired Ho Chai Kung
On 12 Dec, JP announced it to acquire another OTC Chinese medicine brand, Ho
Chai Kung (HCK), a well-known analgesics (pain-killer) medicine. The cash
consideration is HKD568m, implying a 14.7x 3/FY16 P/E versus JP’s over 20.0x. The
deal was funded by IPO proceeds and bank loans, expecting it at a net gearing
position of over 15% at end-Mar 2017 (end-Sept 17: net cash at HKD55m). HCK had
a reported net profit at HKD39m (+7.8% y-o-y) in 3/FY16F, with a wider net margin
at 45.4% versus its PCP at 20%-30%. We reckon this was due to HCK’s (1) sales
。。。以上简介无排版格式，详细内容请下载查看