Thursday, April 30, 2009

>Market Opportunities (WHARTON)

Finding Market Opportunities in 'the Best Place to Get Sick'

India's health care industry ails from severe under-penetration among its population, especially in rural areas. Still, the low penetration levels are a glass half full for global pharmaceutical companies, many of whom have steadily increased their investments in the country, drawn by India's talent base and R&D capabilities for drug development, and its strengths in alternative medicine, like Ayurveda (India's traditional system of holistic medicine). Insurance providers, meanwhile, like the country's low cost of health care, which has made it a destination for so-called "medical tourists" from developed countries.

Those are the key drivers for pharmaceutical firms, hospital chains and investment funds as they look for opportunity in India's health care industry, according to a panel discussion on "The Health Care Duopoly: India, the Medical Center of the World" at the recent Wharton India Economic Forum in Philadelphia. The panel included top executives from pharmaceutical companies GlaxoSmithKline and Cadila Pharmaceuticals, Asia's largest health care chain Apollo Hospital Group, and investment funds, who identified areas
of advantage in an otherwise dismal scenario.

The Upside of Low Penetration

"I am happy and delighted there is under-penetration [in India's health care industry]," said Anula Jayasuriya, co-founder of the Evolvence India Life Science Fund, a US$90 million venture capital fund formed three years ago to invest in pharmaceutical, biotechnology, medical device and related contract service companies based in India. "From an investor's perspective, we see a great opportunity" to extend the health care industry in under-served areas.

Jayasuriya added that she expected Indian pharmaceutical companies to become a bigger force globally in the near future. "My crystal ball says ... I see an Indian company and a European and U.S. pharmaceutical company becoming one," she said, noting that Sanofi-aventis and GlaxoSmithKline are reportedly talking about a possible acquisition with India's Nicholas Pharmaceuticals. That's only speculation, she said, "but that [kind of deal] would be one measure of success."

Jayasuriya was responding to a relatively pessimistic scenario offered at the beginning of the session by the panel's moderator, Michael Fernandes, executive director of the investments division and country head for India at Khazanah Nasional, the investment arm of the Malaysian government. Fernandes said that while global pharmaceutical companies had steadily increased their investments in India over the last 50 years, including contract research in the last five years, the overall results of these investments have been disappointing. He also noted that the largest Indian pharmaceutical company -- Ranbaxy Laboratories -- was sold last year to Japanese firm Daiichi Sankyo.

"It doesn't seem like an Indian company would be among the top three in generics globally," Fernandes said. "Some experts say it may not happen at all." Pharmaceutical innovation in India, too, has had "a number of false starts," he added. "Lots of phase two and three products have failed; not a single Indian-innovated product has been launched globally, although there are a number in the pipeline."

Jayasuriya read the scenario differently. "Innovation is an attrition game," she said. "The number of molecules that failed in India is not surprising, even if you use a fraction of the U.S. failure rate." She added that she is encouraged by the pipeline of Indian generics, and that while pharmaceutical drug development in the U.S. has many of its roots in universities, "Indian companies are hotbeds of innovation." Offering an example, she talked of Indian biotechnology company Biocon launching the country's first new drug -- a monoclonal antibody for head and neck cancer. The drug was originally created in Cuba, "but that is also a developing country, an emerging market," she said.

Hasit Joshipura, GlaxoSmithKline's vice president for South Asia and managing director of
GlaxoSmithKline India, was also optimistic about the ability of India's health care industry to deliver on new drug development. "I can see an Indian role in every major new drug, such as developing medicines for AIDS or other problems of poor countries," he said. For many years, pharmaceutical companies in India were, for the most part, subsidiaries of multinational players, so "there was no need to look at innovation.... But now you see frenetic activity, and in five to six years, you will see the next innovative products coming out of India."

Indian pharmaceutical companies could seize the opportunity to be "at the forefront for the next generation of vaccines and biologics," according to Michael Ross, president of the U.S. subsidiary of Indian drug firm Cadila Pharmaceuticals. His company is currently working on a vaccines program. "For every dollar you spend on vaccines," he noted, "you save US$8 down the line. It's a very efficient way to lower costs of healthcare."

Here Come the Medical Tourists

Ross said India's relatively lower health care costs have also spurred a surge in "medical tourism -- although I hate that term." Hospitals in India could secure accreditation from the non-profit Joint Commission International to take advantage of the increasing interest from patients and insurers in developed countries, he added. "The cost of a procedure is a third less in India, but the care is excellent. You will see more and more people going overseas for health care."

Insurers like Blue Cross waive a patient's co-pay if they go overseas for surgery because of the lower costs. For companies having trouble keeping up with today's medical expenses, this could be a tremendous opportunity, Ross said, joking that ailing companies like General Motors could benefit. In fact, he suggested to fellow panelist Shobana Kamineni, executive director of Apollo Hospital Enterprises, that her chain consider alliances with large insurers to lower the cost of its services for patients, and thereby expand its market opportunity.

According to Kamineni, about 15% of Apollo's patients are foreigners, and they come not "for vanilla care" like cosmetic surgery, but for complex surgeries like hip replacements. "India can become a real hub for medical tourism," she said, noting that Apollo attracts patients from Canada, the U.K. and even countries like Afghanistan because of lower costs and also shorter wait times. Over the years, costs for medical services have remained low in the country because they would be otherwise unaffordable for most of India's citizens, who are unable to obtain health insurance beyond age 60. "India is probably the best place to get sick -- it is the cheapest," Kamineni said.

In recent years, health insurance in India has been growing at a rate of 38% to 40%, according to Joshipura of GlaxoSmithKline. He said that although India has shown increases in life expectancy, its health care industry will have to factor in the need to treat a wider range of diseases as health awareness and affordability grows, especially in the larger rural markets.

Increasing Reach

Joshipura stressed the need to develop health care infrastructure to ensure access to the rural markets. He pointed out that India's expenditure on health care is just about 4.5% to 5% of its GDP, compared with 10% to 11% in France, Germany and Switzerland, and more than 15% in the U.S. The government could play a greater role in expanding access to health care in India, he added: Government-funded health care reaches only 0.9% of the market; the private sector fills in the gap.

But intelligent use of technology could help reach "the 500 million people who don't have access to health care" in India, according to Jayasuriya. She cited applications for India's rural markets, such as diagnostic labs in kiosk-like facilities where, for instance, a sick child's parents could determine whether or not an infection calls for rapid intervention. Sanofi-aventis had a model built around such kiosk-type labs that don't necessarily have to be staffed by doctors, she noted. Similar applications could also find uses in developed markets like the U.S. in, for example, neonatal screenings. Another technological
innovation Jayasuriya referenced was a reverse-engineered home dialysis machine that Indian computer maker HCL had developed for US$400 compared to a price of US$4,000 in the U.S. market.

Expanding the reach of health care services is easier said than done in India, Kamineni said. Apollo Hospitals, which now has 42 hospitals and 8,000 beds nationwide, plans to open four hospitals next year in Mumbai. Creating new capacity in hospital beds is a formidable challenge, she noted, adding that the high cost of land in urban areas is not offset by any government concessions even though the end use is health care. "My dad [Prathap Reddy, the group's founder and chairman] says it is easier to build a liquor factory, because the risks are so much [higher] with hospitals. It's like flying a plane every single day."

Finding good talent is also a problem, Kamineni said. Her group runs two medical colleges and 14 nursing schools to serve its talent needs. The solution lies in privatizing education with a for-profit model to attract investors, she argued. "There is no [talent] planning in the health care business. Between last year and this year, we added 20,000 people to our work force."

Alternative Medicine

Kamineni was, however, optimistic about the possibilities with India's traditional systems of alternative medicine, notably Ayurveda. Johnson & Johnson is looking for Ayurvedic drugs, for both prescription and nonprescription uses, including non-alcoholic mouthwashes and pain-relieving medications, according to Ross. "They are hunting in India for products to sell all over the world."

According to Joshipura, India hasn't done enough to develop its alternative systems of medicine. "China has done a good job with Chinese medicine," he said, suggesting India follow that example. "It's going to take time for a Western company to develop familiarity [with alternative medicine systems like Ayurveda]." Ross agreed: "If you talk to the multinationals [about alternative medicine], you have to develop scientific data; it's not just about word of mouth."


Chronology of recoveries: Credit, asset markets or the real economy first?

We consider it very important to know whether, in an economic recovery, it is credit, asset prices or the real economy that recovers first. An examination of economic recoveries in the past (1992 to 1995, 2002 to 2005) shows two different chronologies: in the former case, the real economy first, then credit and asset prices; in the latter case, credit and asset prices first, then the real economy.

The current economic situation is special: in a situation of global deleveraging, it is hard to expect a recovery in credit or the prices of assets for which purchasing is credit-related; does this rule out a recovery in the real economy? The two recoveries of the past give different indications on this subject. It is also unclear whether other asset prices will recover before or
after the real economy; if they recover before it, there will be no exit strategy for central banks, which will be unable to destroy excess liquidity until it is too late. We have seen in the past that tightening of monetary policy always came last, after both the economic recovery and the recovery in credit and asset prices.

If we could know the order in which credit, asset prices and the economy will recover in the present situation, this would clarify a number of important questions:

1. Can there be an economic recovery without a recovery in credit?

Deleveraging is continuing at present (we will examine the situations of
the United States and the euro zone, See Charts), and may be longlasting, because the high debt levels reached before the crisis (except for companies in the United States, See Charts) will normally take several years to come back to acceptably lower levels, given the fall in asset prices, the rise in interest rate margins on loans, higher risk aversion, etc.

The question therefore is whether an economic recovery can take place
before credit picks up again.

2. Can a recovery in asset prices be expected?

We have seen in the recent period a slight recovery in:

− stock markets (See Charts);

− the prices of oil and certain other commodities(e.g. aluminium, copper, maize, (See Charts));
− credit markets (See Charts).

To see full report: FLASH MARKETS

>Economic effects of Swine Flu (WACHOVIA)

Economic Effects of Swine Flu: Mexico and Beyond

The swine flu epidemic has become front page news this week. Mexico is the epicenter of the outbreak and thousands of cases have been reported in that country. However, scores of cases have been confirmed in the United States, and countries as far afield as Israel and New Zealand have hospitalized people with symptoms that resemble swine flu. Not only have the Mexican stock market and currency been hammered over the past few days, but financial markets in most other countries have been adversely affected as well.

The financial and economic costs of the epidemic will ultimately depend on its severity. The outbreak of Severe Acute Respiratory Syndrome (SARS) that swept through Asia in the spring of 2003 is instructive. The SARS epidemic was deadly—nearly 800 people in 7 countries died—but it was not catastrophic. The economic effects of that epidemic were significant but temporary. However, if the current outbreak were to morph into something like the influenza pandemic of 1918, which killed 50 million people worldwide, the economic and financial fallout would obviously be much more devastating.

In this brief note, we attempt to outline how the economies of Mexico and other countries could be affected by the current outbreak of swine flu. In that regard, we draw on the experience of the 2003 SARS epidemic to inform our economic prognosis and we reference some analytical work that has modeled the economic effects of severe pandemics. We acknowledge, however, that it is ultimately impossible to forecast precisely the economic and financial effects of the current outbreak due to the unpredictable nature of the epidemic.

Significant, But Temporary, Economic Effects Likely in Mexico
Because Mexico is the epicenter of the swine flu outbreak let’s begin our discussion with the Mexican economy, which could be adversely affected in a number of ways. First, Mexico’s trade with the rest of the world could be disrupted. Indeed, many nations have already announced import restrictions on Mexican pork products. We do not have data on Mexican pork exports, but they surely represent a small proportion of the $7.9 billion worth of agricultural goods that Mexico exported last year. Moreover, the direct effects of an import embargo by foreign countries on Mexican pork products would be rather miniscule in terms of the $1 trillion Mexican economy.

To see full report: SWINE FLU

>Zee Entertainment (DEUTSCHE BANK)

Improving GRPs, weak ad scenario

Weak ad scenario, strong DTH revenues
A relatively weaker advertising environment has nullified the 35% sequential growth in DTH revenues and led to a 19% YoY decline in Zee's Q4 earnings. We expect a weaker Q1 FY10 due to a strong base in Q1 FY09, and thus we cut our FY10 earnings estimates by 12%. However, this comes at a time when GRPs (the key driver for higher ad rates) have improved in a consolidating GEC scenario and DTH revenues remain strong. Thus we recommend Buy with a new TP of INR 160.

New programming drives operational metrics
Zee’s GRPs have remained solid: The flagship channel improved its average GRPs to 208 for the quarter against 201 GRPs in Q3 FY09 (the latest GRPs stand at 235 with an improvement across time bands which should be reflected from the September quarter onwards). New prime time programming has been the key driver of relatively strong ratings.

Competitive landscape has eased, consolidation of GRPs
Competition has eased among the general entertainment channels (GEC), with Sony, NDTV Imagine and 9X continuing to struggle. Although Star Plus has lost momentum over the past two weeks, we believe it will recover as it strengthens its weekend slots. Overall, the top three networks achieved more than 800 GRPs, i.e. 85% of the GRPs of the mainline GECs.

Revising our target price to INR 160 (from INR 175)
Our new, DCF-derived target price of INR 160 is based on 12.7% cost of equity, 11% earnings growth FY9-11E and 4% terminal growth. We believe our earnings growth estimates are conservative, factoring in a drop in Zee’s relative market share and the uncertain ad environment. At the current price, Zee trades at 13.8x FY10E earnings. Key risk includes a significant drop in weekly GRPs. See valuation and risk details on pages 6-8.

To see full report: ZEE ENTERTAINMENT

>Steel Picture Book (CITI)

World Steel Association Demand Growth Estimates Drift Lower

Inventory De-stocking Decelerates — CIRA anticipates a trough in demand in 2Q09, as inventory de-stocking abates, but underlying demand is expected to remain extremely weak in 2H09. Steel output in Europe dropped 43.8% in 1Q09 compared to 1Q08. North American steel production fell 52.1% YoY, whereas Asia’s steel production only fell 8.9% YoY.

WSA Growth Outlook — The World Steel Association (WSA) published its shortterm
growth outlook for steel demand on 27 April. The WSA forecasts a global 14.9% decline in apparent steel consumption in 2009: a -28.8% decline in the EU-27, -32.2% in NAFTA, -23.1% in the CIS, and -8.1% in Asia and Oceania.

Growth Outlook — CIRA forecasts a 30% YoY decline in crude steel production in Europe and a similar decline in the USA in 2009.

Production Discipline Tested — Cash constraints are driving traders and distressed companies to sell steel products below cash costs. Steel prices are likely to increase from the lows as inventory de-stocking comes to an end, but will place pressure on spot-focused producer profitability.

China, the Ongoing Focus — The WSA forecasts -5% growth in apparent demand in China in 2009. China’s lower exports and a slowing domestic economy are the cause. Apparent steel use for the world excluding China is expected to decline by -20.4% in 2009. CIRA forecasts China’s demand growth as flat YoY.

Stay Selective and Defensive — We see the risk of negative guidance and earnings shortfalls as extremely high in 2009. We believe the market’s shift to reflation trades is too early and remain cautious on the sector. Working capital build will test balance sheets in the early phase of the recovery.

To see full report: STEEL PICTURE BOOK


Where do we go from here?

■ We provide an update on the latest valuations and risk/reward trade-off for Asian equities.

■ Asia ex Japan has rallied strongly over the last seven weeks, rising 27.5% from its local trough on 2 March. The rally has, however, been supported by improving fundamentals – stresses in the (global) financial sector have eased; there is growing evidence that the global economic cycle may be forming a floor; investors’ appetite for risk (particularly for emerging markets) has risen; and, importantly, our earnings revisions indicator for Asia ex Japan has
continued to move higher.

■ Moreover, with Asia ex Japan now trading on 13.9x forward earnings, 10.8x trailing earnings, 1.5x BV and 6.7x cash flow, valuations – particularly on those metrics that are the most reliable signals of value – remain well below long-run average levels. The only exception to this is forward PER, which, impacted by both a rising market and falling earnings, is now above its longrun average of 13.0x.

■ Low valuations and improving earnings revisions mean the 12-month risk/reward trade-off for Asian equities is extremely favourable. If history is any guide, the odds of losing money on a 12-month view are currently a mere 12%, while the odds of a better than 10% return are 70%. History suggests that Korea is likely to give the most beta over this time horizon, while along the sector dimension tech, banks and consumer discretionary sectors are the sectors most likely to outperform.

■ The three-month outlook is, however, considerably more uncertain. Markets have run hard, investor sentiment towards – and appetite for – emerging markets is certainly very elevated at present (relative to other risky asset classes, that is) and we are very mindful of the potential for this to pull back in the coming weeks and months.

■ On the other hand, backtesting of fundamentals does suggest a palatable 3-month risk/reward trade-off, earnings revisions suggest the near-term balance of risks could be to the upside and the overwhelming investor sentiment is to buy on any decent pullback (which suggests that any pullback is likely to be limited in terms of duration and magnitude).

To see full report: ASIA STRATEGY

>Monthly Economy Review (SHAREKHAN)

Economy: All eyes on RBI monetary policy review

■ The Reserve Bank of India (RBI) will announce its annual policy review on April 21, 2009. The policy review is staged against the backdrop of near-zero inflation (in terms of the Wholesale Price Index [WPI]) but near double-digit increase in the Consumer Price Index (CPI) and slowing economic growth. Besides, the credit growth has witnessed a sharp deceleration while the banking system is awash with liquidity. In view of this, we expect the RBI to announce a token cut of 25 basis points each in the repo and reverse repo rates in keeping with its stress on a low interest rate regime. The central bank is expected to keep the cash reserve ratio (CRR) and the statutory liquidity ratio (SLR) unchanged. However, we feel the business growth target for the banking system and the outlook for the economy to be given by the RBI for the current fiscal will remain a key monitorbale.

■ India’s trade deficit stood at USD4.91 billion in February 2009 compared with USD6.07 billion in the previous month. The trade deficit for February 2009 declined (for the second consecutive month in FY2009) by 26.9% year on year (yoy) and by 19.2% on a month-on-month (m-om) basis. With this, the year-till-date (YTD) trade deficit has widened to USD104.98 billion from USD74.89 billion in the comparable period of FY2008.

■ In February 2009, industrial production growth once again entered the negative zone as it declined by 1.2% yoy. The fall in the industrial output was led by a y-o-y decline of 1.4% and 1.6% in the output of the manufacturing and mining segments respectively. On a

YTD basis, the IIP growth for the period April 2008- February 2009 stood at 2.8% and was significantly weaker compared with the 8.8% growth achieved during the comparable period of the previous year. Importantly, the Index for Industrial Production (IIP) figure for January 2009 has been revised upwards to indicate an increase of 0.4% yoy against a drop of 0.5% (provisional) earlier. While there has been some improvement in automobile sales, cement dispatches and steel production during March 2009 (indicating better industrial activity), the high base effect is likely to play a spoilsport.

■ Inflation continued its southward journey and stood at 0.18% for the week ended April 04, 2009 after touching a record high of 12.91% in August 2008. However, on a week-on-week (w-o-w) basis, the inflation rate inchedup by 0.4% on the back of higher food and fuel prices.
The inflation rate is at near zero levels and we believe it is likely to enter the negative territory in the coming few weeks as the high base effect comes into play. Furthermore, the Indian Meteorological Department (IMD) expects the monsoon rainfall to be near normal to normal this year (96% of the long-period average). We believe a near normal to normal monsoon would help in bringing down the food inflation, which is currently at elevated

To see full report: ECONOMY REVIEW

>Ballarpur Industries (EMKAY)

Results below estimates

BILT reported poor Q3FY09 results. Revenues remained flat at 6.9 bn while EBITDA margins dropped by 650 bps to 19.8% as a result APAT fell by 76% to Rs 179mn. Results were affected mainly on account of – 1) Poor show at Sabah, Malaysia plant due to sale of high cost inventory and maintenance shut down which have resulted in EBITDA loss of ~Rs 240 mn 2) Lower demand for rayon grade pulp (RGP), Kamalapuram plant resulting in plant shut down, leading to EBIT loss of ~Rs 110 mn. We expect that the current quarter poor performance was mainly driven by extra ordinary circumstances. However global prices still remain weak hence putting pressure on margins at Sabah plant and Kamalapuram plant is likely to resume operation from May’09 and company is expected to start consuming pulp for its captive purpose. Its capex plan at Bhigwan is completed and expansion plan at Ballarpur is on schedule (completing June’09) which will increase its capacity by ~45%. We expect full benefit of this expansion to flow from Q1FY10 and Kamalapuram and Sabah plant should also stabilise by that time. To factor poor ongoing problem at Sabah and its Kamalapuram plant, we are reducing our FY09 revenue estimates by 10.6% to Rs 28 bn and APAT by 37.3% to Rs 1.8 bn. However our FY10 estimates remain unchanged. We maintain our BUY recommendation on the stock with a price target of Rs 24.

Poor show at Sabah plant and pulp plant affected results
Disappointing Q3FY09 results is mainly attributed to poor results from Sabah plant and rayon grade pulp at Kamalapuram plant. Company’s Sabah operation reported losses of approx Rs 413 mn due to sale of high cost inventory during the quarter and also due to maintenance shutdown for a month which affected its production. Sabah plant had an inventory of ~17,000 mt in Q2FY09 which was sold during current quarter at lower prices. Unit Kamalapuram, which produces rayon grade pulp, continued to remain shut due to sluggish pulp demand. Pulp division also contributed a loss of Rs 107 mn for the quarter.

Stand alone results remain stable
BILT standalone performance remained stable. BILT on stand alone reported net sales of Rs 2.5 bn with EBITDA margins of 24.2% and APAT of Rs 321 mn. Paper demand and realisations in domestic market remained stable.

Revising FY09 estimates keeping FY10 unchanged, maintain BUY
We have reduced our FY09 revenue, PAT and EPS by 10.6%, 21.7% and 37.3% to Rs 28.5
bn, 1.8 bn and Rs 2.8, respectively. We keep our FY10 estimates unchanged. We believe
that FY10 growth will be driven by 45% growth in paper capacity. We expect that pulp
operation at Kamalapuram will resume from Q1FY10 and company will start consuming pulp for its captive consumption. We maintain our BUY recommendation on the stock with a price target of Rs 24.

To see full report: BALLARPUR INDUSTRIES


Decent show…
3i Infotech announced flat q-o-q top line at Rs 607 crore, which was in line with our expectation. EBITDA margin improved 157 bps sequentially driven by improvement in gross margins in the products and services segment. The company has also been able to maintain gross margin in the transaction services segment. Buy-back of FCCB and one time advisory and legal fee payment led to profits increasing to Rs 90.5 crore (profit removing these exceptional items increased 3.3% to Rs 67 crore).

Highlight of the quarter
The flat q-o-q performance by the company was primarily a result of the poor performance of the services segment which saw de-growth of 11% qo-q. Transaction services segment was comparatively the best performing segment with sequential growth of 6.2%. Product revenue bounced back this quarter with 3.1% q-o-q growth in Q4FY09 (compared to q-o-q degrowth
of 4.5% in Q3FY09. the company has bought back FCCB worth Rs 152 crore during the quarter. For the full year FY09 the company grew 89.6% on the top line. More than 50% of this growth was contributed by the acquisitions made by the company during the year.

3i-infotech has an outstanding order book of Rs 1445 crore which is 56% of FY09 revenue. The order book growth has slowed down in the recent past. The management has also refrained from giving guidance for FY10 due to the uncertain demand environment. We recommend a Hold rating on the stock with a revised price target of Rs 49.

To see full report: 3I INFOTECH

>Jaiprakash Associates Limited (MORGAN STANLEY)

Adjusting Price Target for Higher Liquidity Environment

Investment conclusion:
Over the next two to three years, we expect Jaiprakash to emerge as a top-5 player in India in each of its main businesses – cement, construction, power, and real estate. We believe that
with worries on execution and funding receding a bit (given the strong results and the easing debt funding environment), the stock can trade above our base case. We add 30% of the differential between our base and bull case to our base case to set our PT of Rs166, which
implies potential upside of 27% from current level.

Strong Results Ease Execution Issues:
Jaiprakash declared a strong set of numbers in F4Q09, with its construction and real estate businesses driving revenues and profits up 55% YoY and 52% YoY, respectively. With the company also commissioning 2.5 mn tons of cement capacity in F4Q09, and taking their
presales on Yamuna Expressway up to 5.23 mn sq ft (0.73 mn sq ft in F4Q09), we believe that execution worries have reduced.

Debt Funding Availability Easing from Crunch in

F3Q09: Our interaction with banks also reveals that debt funding in no longer as difficult to secure as in F3Q09. We continue to expect the company to use presales of real estate, sale of treasury stock, and discounting of power asset cash flows to fund the equity requirements
of their planned power generation assets.

What’s next:
We believe that declaration of financial closure on the company’s generation projects (especially Bina and Nigrie) will be a driver of stock price. Also, we believe the execution of the projects it has in hand (especially the internal ones) will reassure the market, driving the multiple and the stock price up.