FinVolution Group

FINV Details

FinVolution Group (NYSE: FINV) is one of China's major significant fintech platforms that connects banks with underprivileged individual borrowers. With innovative technologies and vast experience in credit risk assessment, fraud detection, big data, and artificial intelligence, FINV is a pioneer in China's online consumer financing business. The company had over 135.6 million registered users as of September 30, 2021.

Latest News:

• ESG Ratings from Sustainalytics: Sustainalytics has granted FINV a "low risk" rating in the category of Environmental, Social, and Governance (ESG). Sustainalytics is a global leader in ESG research, ratings, and data, servicing the world's most prestigious institutional investors and corporations.  FINV is recognized by Sustainalytics' ESG Risk Rating methodology as not only "low risk" but also among the top 10% of its industry peer group in terms of ESG performance, with a score of 15.8 points.
• Share Repurchase Program: FINV approved a twelve-month extension of its existing USD 60 million share repurchase programme on November 17, 2021, beginning January 1, 2022, and ending December 31, 2022. The company has the option to repurchase its Class A ordinary shares in ADSs with a total value of up to USD 39.7 million until December 31, 2022.

Q3FY21 Results:

• Surge in Revenues: The company reported an YoY growth of 40.81% in net revenues to RMB 2.53 billion during Q3FY21 (ended September 30, 2021) from RMB 1.79 billion in Q3FY20, attributable to the growth in loan facilitation service fees and post facilitation service fees.
• Growth in Net Income: FINV's net profit increased to RMB 632.45 million in Q3FY21, up from RMB 596.95 million in Q3FY20.
• Growth in New Borrowers: In Q3FY21, the total number of new borrowers was 1.18 million, up 190.2% from 0.41 million in Q3FY20.
• Expansion in Transaction Volume: Total transaction volume increased to RMB 38.1 billion in Q3FY21 from RMB 17.3 billion in Q3FY20.

Key Risks:

• Voting Concentration Risk: The Class B common stock of FINV has twenty votes per share, whereas the Class A common stock has one vote per share. As a result, Class B common stockholders, including the electing directors, controlled about 93.3% of the voting power as of March 31, 2021. This constrains the ability of other shareholders to influence corporate decisions.
• Political & Regulatory Risk: The Chinese authorities' crackdown on its US-listed businesses and the consequent possibility of stricter rules could dent the company's operations. After the passage of a bill in the US, this could lead to the delisting of some Chinese companies from the country's exchanges (if the US authorities cannot satisfactorily audit the company for three consecutive years). These constitute significant political and regulatory risks for the firm.

Outlook:

• FY21 Estimates: As of Q3FY31, FINV expects full-year FY21 transaction volume to range between RMB 130 -135 billion increased from prior guidance of RMB 100 – 120 billion, thus representing a YoY growth of 102.8-110.6%.

Valuation Methodology: Price/Earnings Per Share Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation:

FINV's share price has fallen 36.31% in the past nine months and is currently leaning towards the lower-band of the 52-week range of USD 3.50 to USD 10.61. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 5.06.

Considering the significant correction in the stock price, favorable ESG rating from Sustainalytics, strong top and bottom-line growth, surge in transaction volumes and borrowers, and other associated risks, we recommend a "Speculative Buy" rating on the stock at the current price of USD 4.07, up 3.83% as of February 08, 2022, at 12:01 PM ET.

Three-Year Technical Price Chart (as on February 08, 2022, at 12:01 PM ET). Source: REFINITIV, Analysis by Kalkine Group

Technical Analysis Summary:

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above. 

Antares Pharma, Inc.

ATRS Details

Antares Pharma, Inc. (NASDAQ: ATRS) is a specialty pharmaceutical firm focusing on developing and commercializing self-administered injectable pharmaceutical products using cutting-edge auto-injector technology. Teva Pharmaceutical Industries, Ltd., Pfizer Inc., and others are among the pharmaceutical companies the company is collaborating on a portfolio of proprietary and partnered commercial medicines. XYOSTED, OTREXUP, and NOCDURNA are among the company's FDA-approved drugs.

Latest News:

• Step Toward Regulatory Approval: On February 03, 2022, US Food and Drug Administration (FDA) had accepted New Drug Application (NDA) resubmission for TLANDO (testosterone undecanoate), an oral medication for testosterone replacement therapy (TRT). Under the Prescription Drug User Fee Act (PDUFA), the FDA designated the NDA as a Class 1 resubmission with a two-month review goal period and a target action date of March 28, 2022. The FDA has given TLANDO tentative approval as a twice-daily oral testosterone formulation for testosterone replacement therapy in adult males with a deficiency or absence of endogenous testosterone or hypogonadism.
• Favourable Results from ATRS-1902 Phase 1 Study: On January 11, 2022, ATRS announced that ATRS-1902, treatment for adrenal crisis, had shown positive results in a Phase I study. The positive results support the progression of the ATRS-1902 development programme to a pivotal clinical study in adults and adolescents to treat acute adrenal insufficiency. The Phase I cross-over study met its primary goal, demonstrating that ATRS-1902 (100 mg) had a pharmacokinetic profile comparable to Solu-Cortef (100 mg), the reference-listed drug, in 32 healthy adults. ATRS-1902 was also found to be safe and well-tolerated in the study.

 Q3FY21 Results:

• Double-Digit Growth in Topline: ATRS reported a YOY growth of 20.47% in its total revenues to USD 48.19 million in Q3FY21 (ended September 30, 2021) compared to USD 40.00 million in Q3FY20, attributable to revenue from NOCDURNA and growth in sales of XYOSTED.
• Improvement of Net Income: The company's net income increased to USD 5.39 million in Q3FY21 from USD 5.00 million in Q3FY20.
• Cash and Debt Position: As of September 30, 2021, the company had cash and cash equivalents of USD 57.37 million and total debt of USD 21.32 million.

Risks:

• Customer Concentration Risk: Teva Pharmaceutical Industries, Ltd., ATRS' largest customer, accounted for 40% of total revenue in FY20. The company's top three wholesale distributors, McKesson, AmerisourceBergen, and Cardinal Health, accounted for 12%, 12%, and 11% of total sales in FY20, respectively. The loss of any one of such customers could harm the company's financials.
• Dependence on Third Parties: ATRS depends on third-party service providers such as Cardinal for various requirements, including product distribution, contract administration, storage, transportation, and others. Any failure on the contractual obligation by vendors could harm the company's operations.

Outlook:

• Revenue Estimates: As of Q3FY21, ATRS expects its FY21 revenue to range between USD 180 – 190 million, increased from USD 175 – 200 million thus realizing YoY growth of 20% – 27%.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks. 

Stock Recommendation:

ATRS' share price has decreased 23.78% in the past twelve months and is currently trading close to the lower-band of its 52-week range of USD 3.11 to USD 5.07. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 4.43.

Considering the correction in the stock price, NDA resubmission for TLANDO, favorable results from ATRS-1902 phase 1 study, reduction in leverage, strong margins  growth prospects, and associated risks, we recommend a "Speculative Buy" rating on the stock at the closing price of USD 3.59, up 2.28% as of February 08, 2022.

Three-Year Technical Price Chart (as on February 08, 2022). Source: REFINITIV, Analysis by Kalkine Group

Technical Analysis Summary:

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.