Onwards and upwards

Hutchison China MediTech 14 August 2019 ADR Update
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Hutchison China MediTech

Onwards and upwards

Interim results

Pharma & biotech

14 August 2019

ADR research

Price

US$20.1

Market cap

US$2680m

ADR/Ord conversion ratio 0.2

Net cash ($m) as at 30 June 2019

237.3

ADRs in issue

133.3m

ADR Code

HCM

ADR exchange

NASDAQ

Underlying exchange

AIM

Depository

Deutsche Bank

ADR share price performance

52-week high/low

$37.69

$19.81

Business description

Hutchison China MediTech is an innovative China-based biopharmaceutical company targeting the global market for novel, highly selective oral oncology and immunology drugs. Its established commercial platform business continues to expand its outreach.

Next events

Surufatinib non-pancreatic NET Phase III (SANET-ep) data presentation

H219

Elunate (fruquintinib capsules) inclusion on China NRDL

H219

Surufatinib pancreatic NET Phase III interim data (SANET-p)

H120

Analysts

Dr Susie Jana

+44 (0)20 3077 5700

Dr Daniel Wilkinson

+44 (0)20 3077 5734

Dr Sean Conroy

+44 (0)20 3077 5700

Hutchison China MediTech is a research client of Edison Investment Research Limited

Hutchison China MediTech (HCM) continues to make progress towards its global strategic aspirations. The interim results highlight the opportunities for Elunate (fruquintinib) capsules in China, with potential inclusion in China’s exclusive NRDL list in Q419, and the breadth of clinical and regulatory catalysts that lie ahead for multiple R&D assets. Surufatinib’s China NDA submission is on track (Q419) and approval in NET would seal HCM’s position as a premier, innovative, China-based oncology company. The years 2021–22 are pivotal; partner AstraZeneca (AZN) could launch savolitinib in China for NSCLC (MET exon 14) and it could become HCM’s first asset to launch globally (2022) in combination with Tagrisso for NSCLC (c-Met +ve). Given the recent underperformance of the shares and the real potential for HCM to become a global oncology player, we believe it is appropriate to revisit the shares. We value HCM at $5.7bn.

Year end

Revenue ($m)

Net profit*
($m)

EPADS
($)

DPADS
($)

P/E
(x)

Gross yield
(%)

12/17

241.2

(26.7)

(0.02)

0.0

N/A

N/A

12/18

214.1

(74.8)

(0.06)

0.0

N/A

N/A

12/19e

182.9

(117.8)

(0.09)

0.0

N/A

N/A

12/20e

194.4

(147.6)

(0.11)

0.0

N/A

N/A

Note: Converted at **/US$. Dividend yield excludes withholding tax. Investors should consult their tax advisor regarding the application of any domestic and foreign tax laws.

Pipeline coming to fruition

Elunate is now being commercialized in China (third-line CRC) by partner Eli Lilly (Lilly), a major inflection point for HCM and validation of its R&D philosophy. While the early sales trajectory is notable (H119 in-market of sales of $11.4m), the most interesting opportunity lies in inclusion on China’s NRDL, as this would translate into automatic inclusion in all state-funded hospitals (more eligible patients) and automatic reimbursement (albeit it at a lower price). Next for potential launch in China is surufatinib (launch for treatment of NET expected early 2021). In addition, an interim analysis of the pivotal China Phase III study (SANET-p) in pancreatic NET is due in H120, which, if positive, could further widen its market potential in this area of unmet need.

Financials: Funded to key inflection points

HCM has reduced its FY19 R&D expense guidance to $130–170m (from $160–200m), reflecting the depreciation of Chinese yuan versus the US dollar (China R&D) and the phasing of global surufatinib and fruquintinib Phase IIb/III trials. HCM reported available cash resources of $383.6m, which, combined with the net profit generation from the CP division, means it is well funded to key value inflection points (NDA submissions for savolitinib, surufatinib and fruquintinib in 2019–21).

Valuation: $5.7bn ($42.62/ADS)

We value HCM at $5.7bn ($42.62/ADS) vs $5.6bn previously. We make no changes to our product forecasts, but have trimmed R&D costs for 2019 (phasing costs into 2020) to reflect FY19 guidance, rolled forward our model, and updated for FX and net cash of $237.3m at 30 June 2019.

Global aspirations

HCM’s recent share price underperformance provides an opportunity to revisit the investment case. We believe the long-term investment case is solid, with multiple near-term catalysts (regulatory filing and potential approval for surufatinib and savolitinib) as HCM successfully launches numerous assets to market (~2020/21 and beyond) in China and internationally. Its broad mid- to late-stage innovation platform (IP) will translate into diverse global revenue streams with a multitude of other compounds coming to the fore from HCM’s established and proven innovative R&D platform. Existing partnering deals for savolitinib and fruquintinib support the investment case as milestones and royalties on sales continue to bolster the P&L. HCM has global strategic aspirations, and it is only a matter of when rather than if its aspirations are met, in our view. HCM continues to invest in expanding its global innovation organization; it now has >440 scientific personnel based in China and the US (Shanghai, Suzhou and New Jersey).

CK Hutchison Holdings (CKH) completed a secondary offering of ADSs in July 2019, which has reduced its holding to 51.15% (from 60.2% previously). We see this as a significant positive for HCM as it increases the free float, potentially leading to better liquidity. We note that this had no effect on shares in issue and does not dilute any current shareholders. An eventual listing on SEHK will be determined by a number of factors including, but not limited to, management decisions and market conditions. In our view, a capital raise on existing markets (AIM/Nasdaq) is still likely in the next 24 months. However, cash resources as last reported (30 June 2019) of $383.6m are more than sufficient to fund HCM to key inflection points (NDA submissions for savolitinib, surufatinib and fruquintinib in 2019–21). HCM could explore non-dilutive finance options such as divesting non-core commercial platform (CP) assets. Exhibit 1 highlights the plethora of clinical and regulatory catalysts ahead. For more details, see our outlook note, An emerging global biopharma.

Exhibit 1: H219/H120 catalysts

Product

Indication

Date

Next news

Global (ex China)

Savolitinib

Gastric cancer

H219

Data: Preliminary Phase II data (VIKTORY) for savolitinib monotherapy or in combination with Taxotere in second-line gastric cancer

RCC

H120

Data: Interim Phase II data (CALYPSO) for savolitinib in combination with Imfinzi in RCC

NSCLC

H120

Data: Interim Phase II data (SAVANNAH) for savolitinib in combination with Tagrisso in second/
third-line NSCLC

NSCLC

H120

Potentially announce plans for further US Phase II/III studies in NSCLC

Fruquintinib
(Elunate)

CRC

H120

Initiation of a US/EU Phase II/III pivotal trial in third/fourth-line CRC*

Solid tumors

H120

Initiation of Phase I/Ib PD-1 combination trial

Surufatinib

Pancreatic NET (pNET)

H120

Initiation of pivotal Phase II/III PD-1 trial in pNET*

Solid tumors

H120

Initiation of Phase I/Ib PD-1 combination trial

HMPL-523

Indolent NHL

H219

Initiation of Phase I study

HMPL-689

Indolent NHL

H219

Initiation of Phase I study

China

Savolitinib

NSCLC

H120

NDA submission for first-line NSCLC* (MET exon 14 patients)

Fruquintinib
(Elunate)

CRC

H219

Potential inclusion into the NRDL for third/fourth-line CRC

NSCLC

H219

Data: Present data from the FALUCA Phase III trial at a conference (primary endpoint missed)

Gastric cancer

H120

Data: Second interim analysis from Phase III study (FRUTIGA) for fruquintinib in combination with Taxol for second-line gastric cancer

Surufatinib

Non-pancreatic NET

H219

Data: Present data from the SANET-ep Phase III trial at a conference (primary endpoint met)

Non-pancreatic NET

H219

NDA submission for extra pancreatic NET based on data from SANET-ep*

Pancreatic NET

H120

Data: Phase III interim data (SANET-p)

Biliary tract cancer (BTC)

H120

Data: Phase Ib/II data for second-line BTC

HMPL-523

Indolent NHL

H120

Initiation of a registrational Phase II study

Source: HCM presentations, Edison Investment Research. Note: *Subject to supportive data.

Elunate early sales encouraging; NRDL inclusion is key

The launch of Elunate (fruquintinib capsules) for metastatic colorectal cancer (third-line and above) by partner Lilly was a defining moment for HCM, as it was the first of its IP assets to launch in China, and the first China-discovered and developed new drug for oncology to have full approval and reach the market. HCM reported H119 royalties of $1.7m and $3.0m of sales of Elunate manufactured by HCM for Lilly. The reported $1.7m royalties translates into $11.4m Elunate end-user sales in H119, as reported by Lilly.

At the interim results, HCM presented data on the sales evolution of oncology drugs by its international and domestic peers. A key inflection in sales growth is inclusion on China’s National Reimbursement Drug List (NRDL), which will define the opportunity for full-scale reimbursement nationally, albeit on lower pricing (discount to be agreed by Eli Lilly and China’s central government). A fourfold ramp in the second full year from launch would require us to revisit our overall peak sales expectations. Inclusion on the NRDL is expected in Q419. Elunate has been added to two regional reimbursement lists in China during the last six months (Zhuhai and Shanghai), which highlights that Elunate’s utility in third-line CRC has been recognized at a local level.

Elunate’s next China development focus is on Phase III gastric cancer (FRUTIGA), for which approval could occur in 2021/22. Life cycle management and extending the labeled use to other solid tumor types will expand Elunate’s commercial opportunity further. The global development program is underway in colorectal cancer, with Phase Ib enrolling patients in the US. HCM has started planning the global Phase II/III US/EU registration trial (starting in 2020) in third/fourth-line mCRC in patients who are resistant or intolerant to Bayer’s Stivarga. It has filed the FALUCA data for publication, potentially at ESMO 2019 or WCLC 2019; the data should shed light on the failure of fruquintinib monotherapy to meet the overall survival (OS) endpoint in third-line non-small-cell lung carcinoma (NSCLC), having demonstrated statistically significant improvement in all secondary efficacy endpoints.

Surufatinib next in line for China launch

Surufatinib (previously known as sulfatinib) could be the first of HCM’s non-partnered assets to reach the China market in early 2021 (NDA submission expected in late 2019). The strategy for surufatinib was recently validated as positive interim data were announced in the SANET-ep Phase III trial testing surufatinib in non-pancreatic NET China patients. This was based on the trial meeting its primary endpoint of progression-free survival (PFS) at the interim analysis and the trial was unblinded a year ahead of schedule.

NETs are cancers that arise out of cells of the endocrine and nervous systems, predominately the digestive and respiratory tracts. While the current prevalence of NET in the US is ~141,000 patients (incidence of ~19,000 new cases per year, source www.cancer.net), current treatment modalities are limited to subsets of NET with no broadly effective drugs across the NET spectrum. HCM believes that actual incidence of NET in China could be higher than the reported incidence of 67,600, and prevalence could be even greater once an effective broad-spectrum treatment becomes available. Expanding the treatment paradigm could improve diagnosis rates and increase eligible patient numbers. Surufatinib could improve on the profiles of existing NET treatments, including somatostatin-based treatments and kinase inhibitor therapies (such as Afinitor and Sutent). Broad spectrum use will yield commercial success if it can be used for treating the broad base of NET patients. An interim analysis for the pivotal China Phase III study in pancreatic NET(SANET-p) is due at H120, which, if positive, could further widen its market potential in this area of large unmet need.

A US Phase Ib/II trial in pancreatic NET and biliary tract cancer has completed enrolment of NET patients. An end of Phase II meeting with the FDA is planned for Q419, to discuss the Phase III US/EU registration study which HCM expects to start in Q120. HCM retains full worldwide rights to surufatinib.

Savolitinib could coat-tail Tagrisso

An estimated 2–3% of newly diagnosed NSCLC patients have a specific mutation known as MET Exon 14 skipping (Exon 14 of the MET gene is not functioning or deleted), leading to c-Met over expression. In China, HCM estimates this to be 10,000 patients. A registrational Phase II clinical trial is underway (enrolment complete) in patients who have progressed on prior chemotherapy, or are unable to tolerate additional rounds of chemotherapy. Although the patient size is relatively small, this indication could be savolitinib’s first China NDA submission in 2020 and its first monotherapy indication in the region. In the longer term in China, we believe a savolitinib plus Tagrisso combination will expand use in other subsets of NSCLC.

In the field of lung cancer, AZN’s Tagrisso is raising the bar as it moves into the first-line setting in EGFR mutation-positive NSCLC, reporting sales of $1.41bn in H119. Savolitinib’s largest opportunity could be in combination with Tagrisso in EGFRm MET+ NSCLC patients as MET mutations are one of the biggest drivers for Tagrisso resistance. Following the encouraging data seen from the TATTON study, in December 2018 AZN and HCM initiated the global registrational study SAVANNAH for Tagrisso refractory NSCLC patients. HCM’s partnership with AZN remains crucial to the development of savolitinib and our forecast peak sales. Interim data are expected in mid-2020 and the strength of the data will determine whether a larger Phase III is required as part of the US regulatory submission package, although it could be sufficient for NDA filing.

Commercial platform profits reinvested in R&D

HCM has multiple strings to its bow. Its China commercial platform division continues to deliver year-on-year revenue growth of 2% (7% at CER) and net income growth of 3% (9% at CER). Contributions from non-consolidated JVs, primarily Shanghai Hutchison Pharma (SHPL) and Hutchison Baiyunshan (HBYS), are reported below the loss from operations line under US GAAP as equity in earnings of equity investee, net of tax. HCM receives the majority of profits generated from this division as dividends, which the company has reinvested in its innovation pipeline since inception. To date, $423m has been reinvested in the business. HCM’s non-consolidated JV HBYS’s vacant land (Plot 2) in Guangzhou remains for sale as part of the Guangzhou municipal government urban development scheme. HCM expects an auction value in excess of $100m, of which 40–50% would be paid to HBYS as compensation for return of the land use rights. We expect that half of this would make its way to HCM via special dividends and would likely be reinvested in the business, although this is not reflected in our forecasts given the uncertainty on timing. Exhibit 2 highlights HCM’s objectives for existing assets spanning the breadth of its businesses in 2019–21.

Exhibit 2: Three-year objectives

Innovation Platform (Global)

Innovation Platform (China)

Commercial Platform (China)

NDA submission for savolitinib in combination with Tagrisso following SAVANNAH data (second/third-line NSCLC, c-Met +ve)

Expand enrolment of MET exon 14 skipping trial globally to enable label extension for savolitinib (NSCLC, MET exon 14)

Start registrational studies for fruquintinib (second/third-line CRC) and surufatinib (NET)

Complete proof of concept trials for HMPL-523 (Syk, iNHL) and HMPL-689 (PI3Kδ, iNHL)

Establish fruquintinib as best-in-class VEGFR TKI through line extensions (gastric cancer, PD-1 combinations) and inclusion on the NRDL

NDA submissions for surufatinib (ep-NET) and savolitinib (NSCLC, MET exon 14)

Start registrational studies for HMPL-523 (Syk, iNHL) and HMPL-689 (PI3Kδ, iNHL)

Expand the life cycle development on all assets

Maintain cash-generative Chinese commercial platform

Leverage from this to facilitate launch and uptake of drugs from the innovative platform

Source: HCM presentations, Edison Investment Research

Valuation

We value HCM at $5.7bn ($42.62/ADS) vs $5.6bn previously. We make no changes to our product forecasts; we have trimmed R&D costs for 2019 (phasing into 2020) to reflect FY19 guidance, rolled forward our model and updated for FX and net cash of $237m at 30 June 2019.

Exhibit 3: HCM SOTP valuation

Product

Indication

Launch/peak

Peak sales ($m)

Value
($m)

Probability
(%)

rNPV ($m)

rNPV/ADS ($/ADS)

Savolitinib (AZD6094/volitinib)

PRCC

2024/2029 (China)

$64m (China)

100.9

50%

62.0

0.46

2022/2026 (RoW)

$267m (RoW)

71.8

75%

50.6

0.38

ccRCC

2025/2029 (China)

$169m (China)

90.9

35%

27.3

0.20

2023/2028 (RoW)

$664m (RoW)

96.7

35%

33.9

0.25

NSCLC

2022/2030 (China)

$387m (China)

255.4

75%

189.8

1.42

2022/2029 (RoW)

$1.7bn (RoW)

365.5

75%

274.1

2.06

Gastric cancer

2023/2030 (China)

$326m (China)

141.7

35%

45.4

0.34

2024/2028 (RoW)

$757m (RoW)

132.0

35%

46.2

0.35

Fruquintinib

CRC

2018/2024 (China)

$211m (China)

97.3

100%

97.3

0.73

2023/2028 (RoW)

$565m (RoW)

1,181.7

75%

883.1

6.62

NSCLC

2025/2031 (China)

$393m (China)

80.6

50%

32.7

0.24

2025/2030 (RoW)

$721m (RoW)

792.7

50%

375.3

2.81

Gastric cancer

2021/2028 (China)

$276m (China)

165.4

75%

122.1

0.92

2025/2030 (RoW)

$392m (RoW)

475.9

50%

226.5

1.70

Surufatinib

NET

2021/2028 (China)

$169m (China)

402.7

90%

361.7

2.71

2024/2029 (RoW)

$454m (RoW)

643.5

50%

305.5

2.29

BTC

2022/2028 (China)

$194m (China)

396.9

75%

295.9

2.22

2024/2029 (RoW)

$148m (RoW)

178.6

50%

83.5

0.63

Epitinib

Glioblastoma

2023/2028 (China)

$43m (China)

135.0

30%

36.9

0.28

HMPL 523

Hematological cancers

2023/2029 (China)

$149m (China)

282.8

30%

79.1

0.59

2025/2029 (RoW)

$584m (RoW)

784.1

30%

222.7

1.67

HMPL-689

Hematological cancers

2024/2030 (China)

$108m (China)

155.4

30%

39.6

0.30

2025/2030 (RoW)

$486m (RoW)

579.9

30%

159.5

1.20

Commercial Platform

800.4

100%

800.4

6.00

Unallocated costs

(428.0)

100%

(428.0)

(3.21)

Net cash at 30 June 2019

237.0

100%

237.0

1.78

Terminal value

1,022.4

100%

1,022.4

7.67

Valuation

 

 

 

$9,239.4

$5,682.5

$42.62

Valuation of IP only

 

 

 

$6,088.1

$4,050.7

$30.38

Source: Edison Investment Research. Note: Non-risk adjusted NPV per share assumes 100% probability of success. Number of shares outstanding = 666.57m.

We use a risk-adjusted net present value (NPV) method to discount future cash flows for the innovation platform (IP) (valuation of $4,050m). We use earnings-based multiples for HCM’s commercial platform (CP) (subs and JVs), and applying a 20.4x multiple on our forecast 2019 net attributable profit (equity in earnings of equity investees, net of tax) for the JVs of $39.2m yields a valuation of $800.4m (Exhibit 3).

Financials

HCM reported consolidated group revenues of $102.2m in H119 (+0% as reported, +5% CER; H118: $102.2m) and group net loss of $45.4m (H118: $32.7m). Depreciation of the Chinese yuan versus the US dollar has affected top-line growth as reported in US dollars given the translation impact, as all revenues related to its China commercial platform (CP) business are generated in Chinese yuan.

CP reported consolidated sales of $90.2m (+2% as reported, +7% CER; H118: $88.6m). Sales of non-consolidated JVs SHPL and HBYS grew +2% (+8% CER) to $276.9m (H118: $271.7m). Total consolidated net income from CP increased +3% (+9% at CER) to $27.7m (H118: $26.9m). We forecast consolidated CP revenues of $154.2m in 2019 and $157.6m in 2020.

IP reported consolidated revenues of $12.0m in H119 ($5.5m of which was received from Lilly for Elunate manufacturing, service fee revenues and royalty income) compared to $13.6m in H118. In H119, IP reported a net loss of $63.8m (H118: $52.9m). We forecast IP revenues of $28.7m in 2019 and $36.8m in 2020, largely driven by developmental royalties on sales on Elunate and service fees from partners.

Profit before tax and equity in earnings of equity investees at group level reported a loss of $68.3m in H119 (vs a loss of $50.5m in H118). R&D expenses increased significantly to $69.3m in H119 ($60.1m in H118), reflecting investment throughout the portfolio, expansion of the US and international clinical and regulatory operations, and establishment of the China oncology commercial infrastructure. S&M expenses decreased to $7.5m in H119 (vs $9.4m in H118) and administrative expenses increased to $18.8m (vs $14.5m in H118). For FY19, HCM has reduced its guidance for R&D expenses to $130–170m from $160–200m and adjusted non-GAAP group net cash flow excluding financing activities to $90–120m from $120–150m. The depreciation of the Chinese yuan has effectively reduced China R&D expenses in US dollar terms, and start-up costs for the global Phase II/III registration studies for surufatinib and fruquintinib will move into 2020.

We now expect R&D expenses to increase to $152.5m in 2019 and $190.0m in 2020 (reported GAAP basis), reflecting the substantial need for investment in the burgeoning clinical trial programs across the IP division, including the increased investment in China and global trials plus the initiation of combination strategies across the portfolio.

We forecast net losses at group level of $117.8m in 2019 and $147.6m in 2020. HCM reported a healthy cash position, with available cash resources of $383.6m (at 30 June 2019) at group level (cash and cash equivalents and short-term investments of $237.3m, and unutilized bank borrowing facilities of $146.3m). Additionally, HCM’s non-consolidated joint ventures (SHPL, HBYS, and NSP) held $64.0m (at 30 June). HCM reported no debt at 30 June 2019 after paying down debt in H119, with the intention of drawing down debt from a facility with HSBC in H219. In terms of cash utilization by operations, we forecast $99.2m in 2019 and $130.0m in 2020.

Exhibit 4: Financial summary

US$000s

 

2017

2018

2019e

2020e

Year end 31 December

US GAAP

US GAAP

US GAAP

US GAAP

PROFIT & LOSS

Revenue

 

 

241,203

214,109

182,885

194,426

Cost of Sales

(175,820)

(143,944)

(128,232)

(129,499)

Gross Profit

65,383

70,165

54,653

64,928

Research and development

(75,523)

(114,161)

(152,500)

(190,000)

Other overheads

(43,277)

(48,645)

(51,604)

(52,752)

EBITDA

 

 

(50,692)

(88,975)

(144,811)

(172,358)

Operating Profit (before amort. and except.)

 

 

(53,417)

(92,641)

(149,452)

(177,824)

Intangible Amortization

0

0

0

0

Operating Profit

(53,417)

(92,641)

(149,452)

(177,824)

Net Interest

(235)

4,969

2,458

(382)

Exceptionals

0

0

0

0

Profit Before Tax (norm)

 

 

(53,536)

(86,655)

(146,994)

(178,206)

Profit Before Tax (reported)

 

 

(53,536)

(86,655)

(146,994)

(178,206)

Tax

(3,080)

(3,964)

(5,004)

(5,200)

Equity investments, after tax

33,653

19,333

39,233

40,813

Profit After Tax (norm)

(22,963)

(71,286)

(112,765)

(142,593)

Profit After Tax (reported)

(22,963)

(71,286)

(112,765)

(142,593)

Minority

(3,774)

(3,519)

(5,000)

(5,000)

Discontinued operations

0

0

0

0

Net profit (norm)

(26,737)

(74,805)

(117,765)

(147,593)

Net profit (reported)

(26,737)

(74,805)

(117,765)

(147,593)

Average Number of Shares Outstanding (m)

617.2

664.3

666.6

666.6

EPS - normalized (c)

 

 

(4.3)

(11.3)

(17.7)

(22.1)

EPS - normalized and fully diluted (c)

 

 

(4.3)

(11.3)

(17.7)

(22.1)

EPS - (reported) (c)

 

 

(4.3)

(11.3)

(17.7)

(22.1)

Average number of ADS outstanding (m)

123.4

132.9

133.3

133.3

Earnings per ADS - normalized ($)

 

 

(0.02)

(0.06)

(0.09)

(0.11)

Earnings per ADS ($)

 

 

(0.02)

(0.06)

(0.09)

(0.11)

BALANCE SHEET

Fixed Assets

 

 

165,737

161,577

176,169

192,947

Intangible Assets

3,738

3,533

3,301

3,028

Tangible Assets

14,220

16,616

22,207

27,014

Investments

147,779

141,428

150,661

162,905

Current Assets

 

 

432,195

370,541

257,157

89,107

Stocks

11,789

12,309

10,540

10,644

Debtors

53,566

56,392

56,000

29,830

Cash

85,265

86,036

64,729

47,745

St investments

273,031

214,915

125,000

0

Other

8,544

889

889

889

Current Liabilities

 

 

(104,600)

(85,479)

(101,457)

(94,778)

Creditors

(25,344)

(26,180)

(42,158)

(35,479)

Short term borrowings

(29,987)

0

0

0

Other

(49,269)

(59,299)

(59,299)

(59,299)

Long Term Liabilities

 

 

(8,366)

(34,384)

(34,384)

(34,384)

Long term borrowings

0

(26,739)

(26,739)

(26,739)

Other long-term liabilities

(8,366)

(7,645)

(7,645)

(7,645)

Net Assets

 

 

484,966

412,255

297,485

152,892

Minority

(23,233)

(23,259)

(28,259)

(33,259)

Shareholder equity

 

 

461,733

388,996

269,226

119,633

CASH FLOW

Operating Cash Flow

 

 

(8,943)

(32,847)

(99,217)

(129,984)

Net Interest

0

0

0

0

Tax

0

0

0

0

Capex

(5,019)

(6,364)

(10,000)

(10,000)

Acquisitions/disposals

0

0

0

0

Dividends

(1,594)

(1,282)

(2,000)

(2,000)

Equity financing and capital movements

291,737

(2,322)

0

0

Other

(255,761)

50,116

89,910

125,000

Net Cash Flow

20,420

7,301

(21,307)

(16,984)

Opening net debt/(cash)

 

 

(56,914)

(328,309)

(274,212)

(162,990)

Increase/(decrease) in ST investments

248,761

(58,116)

(89,915)

(125,000)

Other

2,214

(3,282)

0

0

Closing net debt/(cash)

 

 

(328,309)

(274,212)

(162,990)

(21,006)

Source: HCM accounts, Edison Investment Research


General disclaimer and copyright

This report has been commissioned by Hutchinson China MediTech and prepared and issued by Edison, in consideration of a fee payable by Hutchinson China MediTech. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

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Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

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The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Hutchinson China MediTech and prepared and issued by Edison, in consideration of a fee payable by Hutchinson China MediTech. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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