0R15 8884.0068 1.4156% 0R1E 9171.0 0.0% 0M69 None None% 0R2V 255.5 0.3929% 0QYR 1619.0 0.0% 0QYP 434.5 -0.344% 0RUK None None% 0RYA 1600.0 4.5752% 0RIH 195.2 1.3763% 0RIH 195.2 1.3763% 0R1O 225.5 9877.8761% 0R1O None None% 0QFP None None% 0M2Z 255.0 0.2457% 0VSO 33.3 -6.4738% 0R1I None None% 0QZI 596.0 0.0% 0QZ0 220.0 0.0% 0NZF None None% 0YXG 236.3943 1.5483%
Hutchmed (China) Limited (LON: HCM) – Recently launched the IPO on Hong Kong Stock Exchange.
Hutchmed (China) Limited (LON: HCM) is an FTSE AIM 100 index listed Company engaged in the manufacturing and sale of drugs. Moreover, the Company is focused on the development and commercialization of targeted therapies and immunotherapies for the treatment of cancer and immunological diseases. HCM had about ten cancer drug candidates undergoing clinical studies around the world. Nonetheless, the first two oncology drugs had received mandatory approvals and subsequently commercialized.
On 28 July 2021, HCM will announce H1 FY21 results.
R&D Initiatives and Clinical Development Activities
The Company had witnessed an accelerated expansion of the US/EU clinical & regulatory team, progressing abroad clinical portfolio of trials and regulatory engagements. HCM had a healthy clinical trials pipeline -
(Source: Company result)
Growth Prospects
Key Risks
Now, we will analyse the Key Fundamental Statistics & Shareholding Pattern of Hutchmed (China) Limited.
Hutchison Healthcare Holdings Ltd. is the most significant shareholder as it holds nearly 316.90 million shares as of 30 June 2021.
Recent Developments
FY20 Financial & Operational Highlights (for the twelve months ended 31 December 2020, as of 04 March 2021)
(Source: Company presentation)
Financial Ratios (FY20)
Share Price Performance Analysis
(Source: Refinitiv; Analysis done by Kalkine Group)
On 08 July 2021, at 09:30 AM GMT, HCM’s shares were trading at GBX 523.00, down by around 1.32% from the previous day closing price. Stock 52-week High and Low were GBX 656.00 and GBX 337.00, respectively.
From a technical perspective, a 20-days exponential moving average of GBX 481.18 is indicating an upside potential in the stock price.
Over the last two years, HCM’s stock price has delivered a positive return of ~87.32%, and it has outperformed the FTSE AIM 100 index (benchmark index) with a return of about 32.60% and FTSE All-Share Pharmaceuticals & Biotechnology (benchmark sector) with a return of around 15.01%.
Valuation Methodology: EV/Sales Approach (NTM) (Illustrative)
Peers used in the valuation methodology (EV/NTM Sales)
Business Outlook Scenario
The management had posted a strong revenue guidance for 2021 with Oncology/Immunology consolidated revenues to increase to USD 110 - 130 million in 2021 from USD 30.2 million in 2020. However, the Company fails to share the guidance for net cash flow but also remains optimistic about the increase in investment to support the many new potential registration studies and continued expansion in China, the U.S., and Europe over the next three years. The management continues to assess non-core asset divestiture prospects and has successfully launched the IPO on the Hong Kong Stock Exchange. The next important support level on the technical chart is at GBX 427.00.
Considering the healthy clinical pipeline, strong revenue guidance, robust cash generation, strong liquidity profile, better leverage position as compared to the industry, and support from the valuation as done using the above method, we have given a “Speculative Buy” recommendation on Hutchmed (China) Limited at the current price of GBX 523.00 (as on 08 July 2021 at 09:30 AM GMT), with lower-double digit upside potential based on 22.50x EV/NTM Sales (approx.) on FY21E sales (approx.).
*The reference data in this report has been partly sourced from REFINITIV.
*All forecasted figures and Peer information have been taken from REFINITIV.
*Dividend Yield may vary as per the stock price movement.
*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached or if the price closes below the support level (indicative stop-loss price).
Disclaimer
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