Aligning with my strategy – portfolio changes

To align my portfolio further with my investment philosophy it’s time for another larger portfolio change with as many as four new holdings – Tethys Oil, Valneva, Tianneng Power and Union Medical Healthcare. I haven’t written as much over the past months, but I have spent a lot of time trawling for new investment ideas and yes I have quite many of them coming! But first what goes out:

Inditex

As of the last day of 2019 I sold my full holding in Inditex, which holds the famous clothing retailer Zara as it’s main asset. This is another of my very large cap companies where I took the view that the market was overly scared of the retail-apocalypse and that Zara would come out strong in this. In my view today, I have a very weak edge to make such a call – although it this time turned out to be fairly true, both fundamentally and stock price wise. Therefore I today sell this holding, as I by know surely have no edge in forecasting where this stock is going to move on from here. I did my best to hold the stock in the weak positive momentum it’s been in for a while and I was rewarded nicely lately with a strong rally towards year end. My only doubt here is that I probably should ride the positive momentum a bit longer, but I’m eager to get to prioritizes right in the portfolio. Good riddance Inditex, you are truly a quality company, but you do not fit my strategy any longer.

Swedbank

This was a opportunistic holding which did not really turned out as planned. I had a quick gain for a while, but did not cover. More “dirt” was uncovered about Swedbank as the months passed by. I think banking stocks in Sweden in general are going to perform better now that the negative interest rate is gone. So the stock traded up not on me really being right, but just general revaluation of banking stocks. I have to say this was an opportunity which I should not have swung the bat on. Again maybe I’m a bit early to sell now, but I’m not a big believer in Swedbank has a winner in the Swedish banking sector long term. So the opportunity has pasted and this was a speculation that did not give me the quick gains I hoped, so now it’s time to close the trade. I sold my full position as of close 30th Dec.

AK Medical

As I mentioned in my performance review this quickly became my best performing stock during 2019. I have to thank twitter handle @alexeliasson for this investment idea. He was the one that first mentioned this stock and this has actually opened my eyes to look more broadly into the healthcare space on the HK exchange. Unfortunately I had only taken a “starting” position in the stock and was expecting to get to know this holding better over the years. I have been back and forth on if I should keep this holding, even though the valuation now is very stretched. First I just reduced my position with the plan to keep the rest “no matter what valuation wise”. But I come to the conclusion, that doesn’t work for me. I need to feel that the valuation is not pricing in some type of blue sky scenario that might never happen. I would not buy the stock today if I did not have it already, that is sometimes a little bit brutal way to look at it, but at the end of the day that’s how you should evaluate things in my view. So I decided to sell the full holding I had left in AK Medical. I’m very happy to buy this back if the valuation would come down somewhat again, I think the most probable scenario is that they have a long runway of growth in-front of them, but things can always go wrong in terms of competition, Chinese policy changes etc.

Dairy Farm

I have been reducing and increasing in Dairy Farm since my initial investment. I recently bought quite a lot more, punting on that we have seen the worst in Hong Kong in terms of protests. I changed me view on this and I’m afraid that the annual results that will come out of Dairy Farm is going to be terrible. On top of that the big holding in Yonghui Superstores has declined quite a lot in value lately, whereas Dairy Farm stock has been trading water sideways at very depressed levels. So I take the opportunity to reduce my holding with as much as I recently bought. I’m very close to closing out this position, but although the company is fairly big it’s still an overlooked stock in my eyes. The most important question though of course is if the company is a good enough investment. I will need a bit more information during 2019 to decide on that, but it’s not a high conviction position for me anymore.

In the below stocks I have taken a position on their last trading of 2019

Tethys Oil – 4% Long term position

I love being contrarian and right now sector wise, there is nothing more contrarian than the Energy sector. But I’m no macro investor, I need to be able to express this through a stock which seems unreasonably cheap and at the same time is a well managed company. I think Tethys Oil qualifies here on many levels. I have followed this company for a very long time and seen it’s execution. Very few oil companies has delivered such returns as Tethys Oil. Since 2004 the stock has compounded 21% annualized (incl dividends). If we instead look from the worst possible time, just before oil prices crashed from over US$100/barrel in 2014, the company has still compounded 7.5% per year.

The company has a 30% share in an oilfield in Oman with very low production cost, meaning that the company is cash flow positive even at very low oil prices. The downside of this is that you don’t get the same leverage in the share price if oil actually goes up. But my whole point of this investment is not speculate in if oil is going up or down, but buying a company that hopefully can perform well no matter what. Then as a kicker I love to get some energy exposure into my portfolio.

The company has a very high pay-out ratio, which is done both through dividends and special shares that are redeemed by the company (more tax efficient). In 2019 the company returned a total of 8 SEK and the stock is today trading at 84 SEK. Even so they still have money left over for exploration in Oman where they own quite vast areas of land. So there is a significant kicker to the upside if they strike oil.

Downside risk factors that should be mentioned is Oman itself. The country is run by a dictator (Sultan) and it seems that not all in the country are so happy with this. The country in general got rich on oil, but supplies are dwindling and it’s harder to please the people when cash is not pouring in anymore. Another risk factor is that the field which today is steadily pumping oil to Tethys would dwindle quicker than forecasts, but that is a small risk compared to the general country risk. This stock will probably always be trading at fairly low multiples due to the country risk, but I think there is a good chance for some general multiple expansion for energy stocks in 2020 and Tethys would benefit from that. Even with that not happening it’s a cash cow which just keeps pouring in money to investors. Insiders have recently also made some smaller purchases which is nice to see.

Valneva – 4% Long term position

Back in 2017 when I did my first rounds of trying to find some good exposures towards the Pharma sector I came across this company. I was very close to taking a position, but then the stock ran away from me when it quickly gained some 35%. I kept it on my radar since and now recently it traded down below where I initially were interested. And this time with in my view better fundamentals than back in 2017. Valneva is something as unusual as a vaccine producer. This is a bit of a sidestep from the investment case, but something that is good to understand looking at this type of companies:

Vaccine producers are a very strange animal in medicine since you are only selling one shot and then hopefully the patient never gets infected/sick. Whereas a normal drug is the most “successful” when you have patented something that the patient need for a long time, in the “best of worlds” to even survive. It’s pretty cruel when you think about it, but Pharma companies does not really have an incentive to cure us, but keep us needing their drugs as long as possible. So vaccine instead belongs to a total different category which is preventive care, just like exercising or eating healthier. One would think that there exists a ton of vaccine companies then since surely preventing care is more clever? Well this is were free economics kind of fail us, due to the above argument of it being more profitable that we are sick. This also means that governments understands this dilemma, especially governments which pay for public healthcare. So they actually are pretty helpful in promoting in various ways to develop vaccines. For example via grants or speed up trial processes. The trial process which has it’s Phase I/II/III like drugs is also quite different. Given that you can’t give 500 people a vaccine and then infect them with whatever the vaccine was for you end up with a bit of a dilemma, how do you test the vaccines effectiveness? Well basically you have to develop vaccines for something that is so common to be infected by that within a large enough group you know a certain number of people will be infected. This means you either need a huge test group, or a vaccine for something which is extremely common (at least within a certain region). This is why vaccines for example for the ZIKA mosquito can be developed so quickly, the outbreak is so significant, that testing if a vaccine works is a very quick process. But if you are a small company doing such large scale tests is still very burdensome. And unfortunately given the income potential of only 1 shot of vaccine is so low, very few companies finds it worthwhile developing vaccines even for things that many people suffer from around the world.

Over to the investment case. Valneva has one star vaccine on the market for a very serious infection called Japanese encephalitis, I have myself taken this vaccine when I moved to Asia. The vaccine is called Ixiaro and the largest customer for the vaccine is the US military, where this vaccine is a mandatory shot for every soldier sent abroad. The US military spends as much on this vaccine as the rest of the world combined. The second product is Dukoral, which is a Swedish developed drinking vaccine for prevention of diarrhea. Basically the product is used for tourists which are afraid that some type of Delhi Belly will destroy their vacation plans. Canada is here the largest market for this product.

A few things make the investment case interesting here:

  1. The cash flow from Ixiaro and Dukoral is now enough to fund research for new vaccines without burning cash (which has been the case in the past). The company is actually turning a profit in 2020 if nothing goes majorly wrong with the current trend.
  2. The company has a very promising vaccine in the pipeline for Lyme disease. This is a very serious unmet medical need with a huge number of cases in Europe and North America every year. Due to climate change the number of cases has increased even more over the past decade. This would be a vaccine which probably would be recommended to almost the whole population of some countries, if released. Back to governments supporting this kind of development for example FDA has fast tracked the development of this vaccine.
  3. Chikungunya is a disease that has existed in poorer countries for a long time. But not so long ago a huge outbreak happened in the Caribbean, also affecting USA. Since richer nations see as in their interest that such outbreaks should not be widespread they allocate funds to finds vaccines. In this case for Valneva some 20 million EUR was awarded (current MCAP 236m EUR): CEPI award Valneva. This vaccine has competitors developing their versions, but here comes Valneva’s deep expertise in producing vaccines in, where they are the only product which will give coverage with only a single dose/shot. Obviously this is a big plus for a government which wants to protect their population, a lot of people miss to take follow-up dosages. So also here Valneva has a strong candidate for a good future income stream.
  4. Valneva recently raised 50m EUR from mainly US Pharma funds at 3.75 EUR per share:  Valneva Raises €50 Million in Oversubscribed Placement Led by US Healthcare Investors. Today the stock trades 2.57 EUR, without anything fundamentally being worse in the company.
  5. And why this is a good investment long term? Founder led and the family has a large shunk of shares (15%) which I always see as a positive. Track record of building something good long term, building a vaccine portfolio takes much longer time, but has a very long payoff profile too. I’m also convinced that the world has to wake up over the coming years to actually promote more preventing healthcare. It’s just in the interest of every government that is going to struggle to keep paying the populations healthcare bills through taxes.

Tianneng Power – 4% Opportunistic position

So this is probably not a great company which when I have sold we can go back and look at the fantastic return it had over the coming 10 years and I wish I just held on to it. This is a swing the bat, because now is a good opportunity to do so case. Since I followed the Electric Vehicle sector for so long I know a lot of players in this supply chain. This company looked for a while like it was going to a player in the battery space for EVs. Instead they took another route. When all other battery factories scrambled to develop the latest generations of Lithium ion batteries this company instead perfected in making the more simple old technology. Basically the lead batteries you have in your petrol car to turn the ignition on. I understood early that EVs would one day be big, which is happening right as we speak, even buses. But what i did not consider as much were to two wheeled objects we have, like motorbikes, scooters and even bicycles. It’s become a huge trend worldwide to have electric versions of these. In fact in China electric scooters has totally taken over the market. And the thing is, that these batteries need to be cheap, really cheap, otherwise the economics don’t make sense. So majority of these batteries are of the older cheaper type. Which has made Tianneng selling volumes go through the roof and hugely profitable in a market where most Lithium ion battery producers are fighting a very tough pricing war battle in the EV space. So for a few years now the cash has been raining in, but the market has not really revalued Tianneng because there will come a reckoning day when Lithium batteries will be cheap enough and take over the market. But how cheap should the company be?

The company is currently trading at P/E of 4.5 this is historically below average, but due to cash build up EV/EBITDA is a better measure.

The company is then incredible cheap. So it could be stuck in value trap land for a few years and then lithium battery prices gets so low that fundamentals start to deteriorate. To counteract the value trap you often need a corporate event of some time. That just happened the other day when they filed to spin-off parts of the company on the Mainland exchange. This might unlock some of that value and this is the trigger to take a bet on the company here right now. They plan to spin-off the battery division on the mainland exchange, where it will most likely be valued much higher than the depressing valuation on the Hong Kong exchange currently. The maneuver is a bit complicated though since the shareholders in Hong Kong can not own the mainland listed shares directly. So the listing of the shares in mainland China will have to go to a new set of investors. But effectively a new set of investors are going to pile into this company at a much higher valuation. I’m not sure where that leaves the HK listed stock in terms of share price, theoretically it could stay the same of course, but most likely some convergence will happen. I see fundamentally little downside to punt on this and potentially quite a lot of upside, although somewhat unclear how much. This will be an interesting one to follow.

Union Medical Healthcare – 3% Long term position

This is another stock that I came across in my search for healthcare related investments in Hong Kong. The same twitter handle that found AK Medical I believe is invested here as well. This is a Hong Kong healthcare provider that started off in the more light services around medical beauty services and has from there expanded into dental and doctor clinics. A big part of the growth story has been mainland Chinese that come to Hong Kong for medical services. Obviously with the situation in Hong Kong that should have slowed down significantly lately and it also explains why the share is trading weaker the past six months. But what drew me into this case is the founder. He has a bit of story how he came to found the company, he is still fairly young and the way he consolidated and built this company really impressed me. I don’t think this is the perfect timing to enter this company, there might definitely be setbacks in the next annual report due to the HK situation. That’s why I start with a small position, but I do think the founder is on to something here and the fundamentals speak of it, with revenue growth of some 30% YoY and EBITDA in the same range. At the same time the stock is trading at P/E 14 trailing and P/E 12 expected for 2020. I hope I will be able to buy more even cheaper going forward, as long as the underlying business keeps going in the right direction.

26 thoughts on “Aligning with my strategy – portfolio changes

  1. I did a fire sale this morning at the market open – now only retaining 1 position.
    Unlike most of you, I exclusively invest in the Hong Kong markets.
    It was now or never. Having held steady throughout 2019 and adding to my positions until last Friday – the corona virus news weighed heavily on my mind throughout CNY. I thought the upside would be limited but the down side too devastating (thinking 2nd or 3rd order effects of prolonged economic disruption).
    Painful January – time will tell if it’s the right decision or not.

    1. Alright, you might be right to do so. More because of the panic of people than the actual danger level of the virus..

      1. Yep , big decision factor is what will happen next week when the China markets open next week ?

        1. Big panick?
        2. It won’t open next week? In which case, how will investors in HK react?

    2. I did some fire sale selling on Monday night too. There are too many unknowns:
      – Many people left Wuhan before the quarantine, thousands went overseas.
      – The virus may spread during the incubation phase ( 2-12 days of no symptoms)
      – Some people carry the virus with no symptoms
      I think things get worse before they get better.
      I plan to wait till then end of next week, then start monitoring the numbers. I think when the growth rate of (official) number of infections starts slowing, it will be a good time to buy (even if the number is still increasing). Probably sometime between 3 weeks to 3 months. If I’m alive!

      Things *will* get better. The virus will either spread (making everyone immune/dead) or stop. Timing is hard since the market looks forward 3-6 months.

      1. You are painting a very bleak case, maybe you are a bit ironic/joking (cant really tell)? The virus is not that deadly we have many cases of recovered ppl already. The largest risk in my view is that people panic over this and stop consuming, triggering a credit crisis which might be long overdue anyway with 0% interest rates and rampant spending to win eyeballs grow revenue but making losses etc..

        1. Hi, I was joking a bit about dying – it did not come out well in text. But serious about the rest.

          Even though the virus is not that deadly (est. 3% mortality rate), its easy transmissibility, and lack of clear symptoms have made it spread further than SARs (which could be detected 100% by temperature).

          I don’t think its just a matter of irrational fear – let me try to give you another point of view. Have you ever lived in a crowded city? It is impossible to avoid close contact with strangers, you are constantly jostling for space eg: in the supermarket, on public transport. If you have old parents living with you, or young children, and you have to go through this (https://www.asiaone.com/singapore/photographer-snaps-slices-spore-today-frozen-mrt-moments) everyday, you would be worried.

          The Wuhan containment was too late (https://www.scmp.com/news/china/society/article/3047805/coronavirus-thousands-left-wuhan-hong-kong-bangkok-singapore-or). I think theres a good chance it spreads to other Chinese provinces (leading to widespread local transmission), and a small chance it the same happens to some Asian countries. If Beijing/Shanghai get locked down – eg: all restraunts, transport, public gatherings closed, and people stay at home all day…. how can this not affect the global economy?

          I’m not really worried about it on a personal level after taking some precautions…..honestly I’m more worried about missing the next rally! But I think it will get the market will get worse first.

          1. Agree, I think we have not seen the worst of it by far yet. Still I think the largest effect comes from how people stop going out eating/shopping/spending not how many in the end actually died by the disease. A regular flu also kills a lot of (mainly older) people.

  2. Some thoughts on parts of Dairy Farm:
    – The recent HK election results showed the protests have popular support. I can’t see this getting better, and even if the protests fade away, there may always be a spark to re-ignite them again.
    – I live in Singapore, a small market for DF. Groceries here used to be a duopoly, but a new SGX-listed player, Sheng Siong has broken it – their shops are out of the way, their products are messily stacked, but they are efficient (fast queues to checkout) and abt 10% cheaper than Giant (DF’s mass market grocery). Probably similar to Aldi & Lidl vs Tesco in the UK. Dairy farm seems to be slow to recognise this, or maybe its too small a market for them to care.

    1. Thank you valuable input. Agree on the Hk situation, this is mainly an issue for Maxims group which DF owns 50% of and Mannings, which rely a lot on mainland tourism. In fact I think Welcome and Marketplace will be posting better results, because the situation has forced people to eat more at home. Singapore seems to be hopelessly poorly run by DF. My bet is on that the new CEO is turning things around, but from your perspective you dont see any improvement yet? How about Cold Storage brand? Sheng Siong looks interesting, do you think its a buy at these levels?

      1. Hi, on the ground I see no improvement in Giants in the neighborhoods. Still a bit slow, disorganized, and not that cheap, Cold Storage is fine, more up-market, or for when you want to buy something a bit different (western/foreign ingredients). They serve that market well, IMO. I don’t own Sheng Siong, missed the boat, its always had a high PE.

    1. That seems strange, its just a normal listed company in HK. Any broker with access to HK main list should be able to buy it

  3. Hi,

    Thanks for sharing. I have taken a look at both Tianneng and Union Healthcare as I am looking to add some exposure to HK/China market. Here are my thoughts.

    I think Tianneng looks really cheap. The spin-off listing may indeed be the catalyst needed. There is definitely risk/reward asymmetry here. In addition Tianneng is valued at the same multiple as its smaller competitor Chaowei. This does not make sense since Tianneng is growing better and enjoys better margin.

    With regard to Union Healthcare, it looks attractive on numbers. But I think their business is not as good as it seems. The main business is Dr. Reborn, the medical aesthetic segment, which is already the largest in HK. So in order to find growth they expanded into China. It is a reasonable move however the success in mainland is not guaranteed. Management does not give a plan on this expansion for the coming year. So I think aesthetic business will be a cash cow with limited growth. Now the main narrative is to leverage the new insurance change and to move into medical service. It is again a sensible move to diversify the business. High-end medical service has a long way ahead. But growth and profitability may be weak in the short run. Expanding medical service requires licensed doctors. This is quite costly unlike training therapists for aesthetic business. The growth rate will also be slower. In fact I suspect they are losing money on the medical business. Too bad they hold minority share in Tencent Clinics, otherwise they may be able to bump up the revenue number soon. Overall I think this business is not bad but it is hard to see any significant upside in the short term.

    1. Thanks for great feedback and thoughts! Agree that success in mainland is not guaranteed but I think they are building from a strong position given that a lot of mainlanders are aware what is popular in HK from their visits there. Again I agree that a tricky point is doctors, who are in short supply in HK, especially good ones and they expect to be paid very well. I did not really follow you on the minority share part, what do you mean? Agree with you that short term the case is not as strong, I hesitated if I should invest now or wait for a possible better entry. In the end I felt this was a good position to have long term in the portfolio

      Since you are looking at HK stocks I would love to hear your views on my already quite long term holding Dream International. I think the company is too cheap at these levels, but market does not seem to agree with me. No triggers really for it to revalue to a higher multiple, so I will just sit and wait while the stock hopefully slowly grinds higher.

  4. Valneva looks very interesting!
    I tried to get more info on their existing vaccines.
    On Dukoral, I found this writeup alarming:
    “In the context of travel and tropical medicine practice, the evidencebased use of DUKORAL would be infrequent and not considered a priority except for those working within a cholera outbreak region (eg, humanitarian workers). ”
    https://www.cfp.ca/content/cfp/65/3/171.full.pdf

    To be the devil’s advocate, I could also ask why is it that Canada accounts for 55% of Dukoral use? Why are other developed countries not using it? (I realize this might be also an opportunity)

    GSP, do you think the stock is cheap enough even if we assume that Dukoral (23% of sales) might be at risk?

    What do you think of the probabilities for succeeding on the Chikungunya and Lyme front?

    If you have some back-of-the-envelope calculation / probabilities for that, can you share it?

    Thanks
    J

    1. Very good questions, so good that I have to come back in the form of a blog post. Too much to write here. Short answers on some of your questions: Dukoral is not the growth story, company themselves says its mature product. Doctors in different countries have different approaches. Dukoral is more of a short term preventive (the effect only last for some 3-6 months) for getting stomach issues (diarrhea) for tourists, not actually preventing something really dangerous. Probabilities are high, but the process is long and will cost more money than Valneva has, they need a partner..

      1. Valneva caught my eye as well!

        Been doing some quick surveillance of it last two days. While I’ve been looking into companies that do have some vaccine assets (mainly bigger players) in the past, I’ve never looked into a vaccine pure play like this. The share price looks depressed, given that they actually seem to have a healthy underlying business with products on the market with potentially long tail.

        However, I think this case is quite much a Lyme disease story at this moment, and I would interpret the market as skeptical about this asset’s overall risk/reward profile at this stage. There are some quite big numbers about regarding TAM, and given the lack of available alternatives it does look quite promising. Nevertheless, there are some aspects that I think the market might have catch onto. The fact that GSK had a previous OspA product (although for 1 serotype only, so in theory not that wide of a cover compared to Valnevas), that seemed to work OK in forms of efficacy, but choose to discontinue the vaccine “due to low demand” do put some question marks about the ability to penetrate the market with a functional product.

        GSK then had an exclusive option to take over / partner the current vaccine in development from Valneva but in June choose to end this agreement. Apparently, GSK, which as far as I know is the current global market leader in vaccine therapeutics (in tot. revenue), do not find this asset more attractive than the 9+7MEUR that Valneva now pays them for leaving. Of course, this could be more a matter of priority from GSK, and it’s not uncommon for still great assets to be left by BF.

        Like GSP wrote above, they need a partner to accomplish this, but one must wonder about the prospects of finding such a partner, or if other also reason like GSK here? I think the most likely scenario is that Valneva will have to wait for their phase 2 readout anyway.

        And about that readout, coming up to Jockey’s question, the chance of success seems quite high, the primary endpoint is to measure the levels of produced antibodies against each OspA, 6 different serotypes. The biggest risk is probably the fact that different serotypes do display quite some variability in the response. However, marketwise, I’m not even sure they would need to show robust response from all six in reality. Also, GSK previous OspA vaccine for one serotype, do give some confidence that the approach in general works. It’s worth to point out however that they are running two phase2 studies, they initiated a second one with an alternative vaccination schedule (different time points between administrations), and this study is 6months behind the first one (first one with readout in mid 2020). Looks a bit like this 2nd was initiated after additional data from phase1, but I’m not sure.
        Given that this is their late stage asset which burns most money, the eye of the market is usually very fixed on this one.

        Nothing new to GSP probably, and further blog post about this company would be interesting 😊
        Btw, I like the post frequency lately 😀

        /Joey

        1. Fantastic input Joey! Very much appreciated. I was not aware about the full story around GSK and its vaccine that they discontinued. Given what you wrote it almost felt that you shot down my case, after doing some reading on my own on the OspA type vaccine, leaning on this information I found this fairly comforting explanation to why it was not successful in the market:

          “The available Lyme vaccine came with several immediately apparent limitations. First, the vaccine efficacy of <80% meant that 20% of fully vaccinated individuals could still get Lyme disease [20]. Second, achieving full protection required three vaccine doses given at the time of the initial dose and 1 month and 12 months after the initial dose. Third, the vaccine safety and efficacy database lacked tests in young children, a population at high risk of developing Lyme disease [3]. Also the vaccine was effective only against the predominant North American Borrelia strain without necessarily conferring protection against international subspecies [16, 22]. Finally, uncertainty about the length of vaccine-induced immunity implied that recipients might need booster vaccine doses as often as every year to prevent waning immunity."

          Media coverage
          Lyme disease entered the high-profile public spotlight with the first descriptions of the infection. The licensure of the LYMErix™ vaccine also received extensive prime-time coverage, with the reports emphasizing the vaccine benefits with little mention of potential risks. The media encouraged people living in endemic areas to speak to their health-care providers about vaccination.

          However, LYMErix™ experienced only a short time of popularity. Within a year of licensure, reports of adverse reactions occurring after vaccination started to appear. Although individuals claimed a wide variety of vaccine side-effects, musculoskeletal complaints such as arthritis dominated. The media put a human face on this suffering by carrying the stories of these ‘vaccine victims’. The Lyme Disease Network, a non-profit citizen action group, devoted extensive website coverage to this growing controversy.

          Spawned by the growing concern over vaccine safety, the Philadelphia law firm of Sheller, Ludwig & Bailey filed a class action lawsuit against the LYMErix™ manufacturer, SmithKlineBeecham, on 14 December 1999. The law firm represented 121 individuals who claimed they experienced significant adverse reactions to the licensed Lyme vaccine. The suit claimed that the vaccine caused harm and that the manufacturer concealed evidence about its potential risks.
          .................................................................
          By 2001, with over 1·4 million Lyme vaccine doses distributed in the United States the VAERS database included 905 reports of mild self-limited reactions and 59 reports of arthritis associated with vaccination [29]. The arthritis incidence in the patients receiving Lyme vaccine occurred at the same rate as the background in unvaccinated individuals. In addition, the data did not show a temporal spike in arthritis diagnoses after the second and third vaccine dose expected for an immune-mediated phenomenon. The FDA found no suggestion that the Lyme vaccine caused harm to its recipients.

          All taken from this excellent text:
          https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2870557/

          1. uff, those community groups against vaccinations strikes again it sounds like.
            Achieving significantly better than 80% protection and less frequent administration / better documented time of protection (Valneva uses 3 injections in current p2) might indeed move the needle for adoption to take place, even though GSKs decision to opt out still raises questions. Could overall, factoring in their current products on the market and rest of pipe, still be a quite good case tho

  5. Been following your work for a while and really enjoyed this post. Wanted to get your thoughts on the EV space, and thought the electric motobikes/moped markets seems promising. Apart from Tianneng Power, have you looked at NIU? It’s a chinese based electric motobike company.

    Have you looked at other EV based companies in HK/China? They seem to be huge on this apart from the US/European car manufacturers.

    1. Hi ben, I have not looked that much at NIU, so I don’t have a good view of their position and how strong their brand is. I have looked at Yamaha and the more classical motorbike companies. They are pretty cheap currently and most of them are launching electric motorcycles as well. Even Harley Davidson is launching electric. These are different segments though, where some are high performing bikes, which probably will have lithium ion batteries in them. The other are as cheap as possible scooters with limited interested in quick acceleration etc.

      From what I have seen travelling in China the market saturation for Electric mopeds is pretty much high already in the larger cities. Everyone has them, everywhere. As you know in Asian countries due to bad traffic people prefer scooters to not get stuck in their commute. The reason why this space is so much smaller than the car space is just that the costs of a moped/bike is so much lower so the market is not nearly as big as cars. The battery packs are also much much smaller than in a car. I recommend you read some of my older posts about BYD for example for input on the big player in China EV space. I have written quite a lot about it a few years back.

      1. I would like to my previous reply that I took a quick look at NIU, it looks pretty interesting! The case here seems to be more upscale Scooter for the western markets, rather than cheap scooters for Asian markets. They make a thing of high quality products like Bosch brakes and Panasonic Lithium Ion batteries, so in this case it’s for sure not Tiannenng “cheap” batteries..

        NIU looks much more promising than the big brother NIO, which tries to make cars. I might look deeper at NIU – thank you for the stock idea!

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