Hutchison China MediTech

US: HCM

£2813m market cap

4220p last close

Hutchison China MediTech (HCM) is an innovative China-based biopharma company targeting the global market for novel, highly selective oral oncology and immunology drugs. Its established China Healthcare business is growing ahead of the market. HCM is the healthcare arm of CK Hutchison (c 40% listed on AIM and NASDAQ).

Investment summary

Hutchison China MediTech (HCM) has built a substantial pipeline of potentially first-in-class or best-in-class tyrosine kinase inhibitor (TKI) drugs, some of which are in development with strategic partners. Near-term readouts include interim analyses of SANET-p (mid-2019) and SANET-ep (late-2019), Chinese registrational trials investigating surufatinib’s efficacy in patients with neuroendocrine tumours (NET). In April, HCM submitted an application to list on the SEHK during Q319, alongside its current listings on AIM and NASDAQ. Through this proposed offering, the majority shareholder CK Hutchison will look to sell a portion of its current 60.2% shareholding to bring it below 50%, which will improve liquidity. At 31 December 2018, HCM had net cash of $274.2m. After failing to reach the primary endpoint in the Phase III FALUCA trial, our valuation of HCM is under review.

Y/E Dec
Revenue (US$m)
EBITDA (US$m)
PBT (US$m)
EPS (c)
P/E (x)
P/CF (x)
2016A 216.1 (44.3) (47.4) 19.6 282.4 N/A
2017A 241.2 (50.7) (53.5) (43.3) N/A N/A
2018E N/A N/A N/A N/A N/A N/A
2019E N/A N/A N/A N/A N/A N/A
Last updated on 21/05/2019
Industry outlook

HCM’s profitable Chinese healthcare business continues to benefit from the fast-growing domestic market, while the clinical, regulatory and technological environments are highly conducive to novel drug development. In the longer term, if the oncology and immunology pipeline comes to fruition, we expect HCM to become a major Chinese and international oncology company.

Last updated on 21/05/2019
Sector
Healthcare
Share price graph
Balance sheet
Forecast net debt (US$m) N/A
Forecast gearing ratio (%) N/A
Price performance
%
1m
3m
12m
Actual (9.3) 11.1 (11.3)
Relative* (7.7) 8.8 (4.7)
52-week high/low 5600.0p/3305.0p
*% relative to local index
Key management
Simon To Chairman
Christian Hogg CEO
Johnny Cheng CFO
Dr Weiguo Su Chief Scientific Officer
Mark Lee SVP, Corporate Fin & Dev.

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