Innovent: We Are Positive on Its Slightly Dilutive Share Placement; Valuation Unchanged

Narrow-moat Innovent’s share placement at approximately HKD 34.66 per share (net of fees) sent its share price down as much as 8% on the morning of Sept. 12 following the news release. We believe the market is overly concerned with the move as it raises worries over its financial position, which we think is unfounded. Also, the dilution to earnings is minimal. The issuance raises Innovent’s total enlarged number of shares by 4.2%-4.4%, so the total dilutive effect is less than 1%. We are seeing Innovent’s share price recover from the initial negative reaction.