Any insights on the CEO change? Was it unexpected?
Leadership Changes
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Seems to be unexpected. For quite sometime Syngene was struggling on revenue growth. The momentum that it gained after Covid was lost due to negligible revenue growth. This was touted as infosys of CDMO space but it seems even long term investors lost patience. Hunt did great talking but could not manage investor expectations. And to be fair, You can not expect investors to wait for ever to get the desired outcomes. Other CDMO players are doing fine but Syngene is still in struggle mode
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Syngene looks interesting @ cmp
With these triggers in place
- Change in CEO
- Mangalore plant coming online in recent future
- Recent acquisition of Biologics facility in USA
At least at these level, Heads I win and Tails I donāt lose much. Downside looks limited.
Personal opinion
Invested and Biased
dr.vikas
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Last 5 Years EPS Gr at 10% odd
Price Earning at 60++
Dividend Yield 0.18%
ROCE < 15%
How can downside be limited ??
IT services are 100% better business compared to this so called speciality CDMO capital intensive business
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Sorry but none of the metrics you mentioned are appropriate to value a CDMO company. There profit pool is always some years down the road and at TTM valuation one will always find it overvalued. When their time comes, ROCEās move from single digit to mid twenties as well and one good year gives them EPS CAGR of 15-25% even if first 4 years have been low double digits. N number of other things that helps in valuing CDMOās but not the ones you mentioned
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This is what I heard in 2019 , 2020 , 2021 ā¦
The Rainbow at the horizon is crazy way to invest in listed business .. Good for VC in unlisted business
Businesses need to deliver over 3/5 year period otherwise it is lottery ..
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Syngene still needs to have manufacturing capabilities - last year they acquired stelis manufacturing plant and this year new acquisition again..
Then plant USFDA audit inspection needs to happen
Then research should deliver results (CRO)
Then trail needs to happen
Then commercialization needs to happenā¦
I think all this takes time..
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Ceck out their recent video.
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Just sharing an in depth review of Syngene by Antifragile Thinking.
Only thing you have to do is subscribe to Substack, which is free
Not invested.
dr.vikas
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It Is interesting to see Mr. Sajal Kapoor came down hard on the previous management. Resonates with what I had written in the past (click here) - how not only the execution at Mangalore had been poor, but that the management had been less than honest in its communication with investors as well. Glossy Annual Reports are no substitute for genuine information sharing, and one can easily see through it.
Even the new management, I am surprised has not released any investor presentation post the Q4 results, though a Press Release with token information has been released. A change of CEO, especially under the circumstances in which it happened, requires a more transparent communication from the promoters to minority shareholders about the vision & future roadmap of the company. It is also important to note that non-promoters now own almost half the company, unlike in the last when promoter stake was nearly 75 %. In fact, Biocon itself has 60 % promoter stake, which means the actual promoter (KMS) stake in Syngene is just about 30 %. Surely minority investors deserve more respect.
(Disc.: Have a tracking position)
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