Conviction | Patience's Threads

S1 : Majority NBE/NCE R&D projects fail. CDMO partner to that innovator "makes money in all failed" cases.

S2 : CDMO "may make larger money" in those lucky, successful (thin minority) cases, if the same #CDMO is retained as the manufacturing partner.

Extract from 2018 tweet 👇

Sajal Kapoor
@unseenvalue

Any animal healthcare stock you like
Any Bio and non-Bio CDMO you like
Any hospital you like …
Any domestic Pharma you …
Any complex API player you .. (in addition to pure CDMO)
Any industrial biotech you ..
Any diagnostics you …
Any human and agri biotech you 👌

#uv_Tijori

Sajal Kapoor
@unseenvalue

There are many such from @oraunak @soicfinance @jeevanpatwa and https://t.co/208eQbYKEF #22 by @tusharbohra

My advice would be - invest time in researching how and why synthetic biology and #biotechnology be disrupting many petro derived chemicals, textiles and other materials.

Sajal Kapoor
@unseenvalue

@connectgurmeet Impact of Bioeconomy / Biotechnology be very visible by 2030. This runway is ridiculously long, so even those who buy after 10 years, will create serious wealth if they could hold for a long enough period.

Allocation + Patience = 💰💰💰💰

Sajal Kapoor
@unseenvalue

Avadhpur
Balrampur
Bazpur
Burhanpur
Dalmiapur
Dhampur
Dwarikeshpur
Jaunpur
Kolhapur
Lakhimpur
Prajpur
Renukapur
Sitapur
Solapur
Sultanpur
Trivenipur
Wopur
Yepur
...
...

मिले सुर मेरा तुम्हारा तो Pur बने हमारा 🎶🎷🥁

Sajal Kapoor
@unseenvalue

Not all chemicals companies are expensive today. I’d screen those where current EV/Sales is in 3-5x range and more importantly where the capex is set to unfold that should improve ROE, ROCE and EV/Sales. It’s more about the individual business cycle leading to earnings growth …

Sajal Kapoor
@unseenvalue

@harindersnanda @soicfinance Most were bullish on #SeQuent a day before the annual results the other week. Most would have left the train in next few quarters due to ESOP led margin compression on P&L. Playing long innings like Rahul Dravid is not same as watching him play :)

@RemindMe_OfThis in 200 days

Conviction | Patience
@unseenvalue

You offer me 80% cost arbitrage (discount relative to Japan/EU/US) along with low confidence / assurance on Critical Success Factors and I won't give you a single NCE/NBE to discover, develop or manufacture. Capex/opex arbitrage is too low in the disruptive-science-pecking-order! https://t.co/O2l8dK4BUv

@unseenvalue Given high capex/opex cost structures of US/Japan/EU, how will they be able to compete with Indian API companies? https://t.co/OYhC2PUZpL
— Hiren (@hiren_investing) August 11, 2021

Conviction | Patience
@unseenvalue

@punitbansal14 Every single CDMO/API I’ve spoken about has still many many unseen angles. Below is a small example. Last added @LaurusLabs near 330 last year and immediately disclosed that I’ve added. Nothing sold since. Waiting for correction to add more 🙏🏻

Keywords: Many many unseen angles

Sajal Kapoor
@unseenvalue

Private Equity is "smart money". They enter only when there is a potential to unlock value.

CVC Capital (#HCG)
Carlyle Group (#SeQuent)
#Biocon Biologics (True North)
KKR (in talks to buy a controlling stake in #JBChemicals & Pharmaceuticals)

| Smart money is after my holdings!

Healthcare is a big (correction : very big) opportunity with a multi-decadal growth runway looking at the demographics and decades of underinvestment in India.

Keep averaging-up as the business performs.

Not easy.

Capacity to suffer consolidation/underperformance is paramount.

Sajal Kapoor
@unseenvalue

If you were born in June and you're competent and trustworthy and hold CEO and CFO designations in a good Business and a good Industry Structure - you can stay ahead of the curve and create wealth.

Keywords :: June And Competent Trustworthy CEO CFO Business Industry Structure

Sajal Kapoor
@unseenvalue

Most stocks are fit for short term trading. Not every business will compound wealth over the long term. Some commonly used proxies for long term compounding 'potential' (in alphabetic order) ::

Cash flow per share
Earnings per share
Scientists per share
Tweets per share

Sajal Kapoor
@unseenvalue

FCF = Free Cash Flow (Operating Cash after adjusting for working capital - total Capex)

MCap is based on last Friday's closing.

Q :: What stocks?
A :: “Bhaiya Ji Smile ... Kamaal karte ho Pandey jee ...” 😅

Disc: invested in the 3 businesses at single digit MCap/10Y FCF 😉

Conviction | Patience
@unseenvalue

@connectgurmeet Real estate - unseen exposure

Playing real estate and home improvement structural story in \U0001f1ee\U0001f1f3 via a focused proxy consumption \U0001f9fa

1. Asian Paints
2. Pidilite
3. SHIL (Hindware portfolio)
4. Fragrance SpecChem (Kelkar & Fairchem)

Consumption | Proxy Consumption
— Conviction | Patience (@unseenvalue) January 10, 2020

Sajal Kapoor
@unseenvalue

In hindsight this is how a gruesome business would look like ::

Pricing power

Sticky and mandatory consumption

30-35% ROCE once optimal capacity utilisation is reached and asset has depreciated

170x stock returns excluding dividends over 25 years

D: I’ve been averaging up

Conviction | Patience
@unseenvalue

@oldschoolinvest I said 20-25% #CDMO (Synthesis) growth going forward in @IIC_Conference June 2020 conclave. They have delivered better than my expectations.

Never Knowingly Misguide.

Money making and fake advisory/PMS propaganda has never been my agenda

In just 15 years, #LaurusLabs has scaled up like no other..!

Numbers v Narrative: Well balanced 2800 Cr sales + huge competitive advantage in terms of IP/patents/synthesis capability!

Comparing Laurus with others - 1 hrs 28 mins\U0001f447https://t.co/Zzx6AwHZLH

Conviction | Patience pic.twitter.com/I6bImfjDCW
— Conviction | Patience (@unseenvalue) July 5, 2020

Sajal Kapoor
@unseenvalue

My interaction with @ETNOWlive earlier today on a variety of topics - Consumption, Healthcare, IPOs to name a view.

Sajal Kapoor
@unseenvalue

Bolo Jaikara Bicara 🇮🇳🇺🇸

#Bicara presented clinical data from the lead immunotherapy program, BCA101, at ASCO 2021 - June 2021

Title: First-in-human phase I study of the bifunctional EGFR/TGF\u03b2 fusion protein BCA101 in patients with EGFR-driven advanced solid cancers

Unseen Bicara Pipeline\U0001f9ec https://t.co/bMhtUEnw0C pic.twitter.com/cz6V5BLeuc
— Punit (@punitbansal14) June 17, 2021

Sajal Kapoor
@unseenvalue

Domestic pharma's Acute was disrupted in FY21 due to Covid and most businesses are sitting on a low FY21 base. They can grow handsomely not only this fiscal, but also medium to long term. If a debt-free businesses can do 20-25% ROCE despite Covid, what can be the FY23e EV/Sales?

Sajal Kapoor
@unseenvalue

Animal Pharma innovators are actively looking at competent, reliable API/CDMO partners.

"We predict that the sourcing, partnering, development and funding of innovation will be more transformational and significant the next five years than ever before in animal health" - #Elanco

Authors Conviction | Patience