Chinese-focused healthcare products group Hutchison China MediTech (HCM) looks like it's in the right market at the right time. That's because the Chinese government is pushing forward a national healthcare plan that has lifted healthcare spending six-fold between 2005 and 2011 to $89.5bn (£59bn), which, combined with rising Chinese wages, is generating decent demand for Hutchison.
The healthcare division looks especially well-paced - it targets the cardiovascular and cold and 'flu markets with traditional Chinese botanical drugs, and last year net attributable profits there grew 11 per cent to $15.5m. The drug research and development division boasts impressive prospects, too, and has now signed major drug programmes with AstraZeneca and Nestlé Health Science covering cancer and inflammatory bowel disease, respectively. During 2012, the deal with Nestlé produced a one-off joint-venture gain of $11.5m and the unit reported a net profit of $2.8m. Still, the group's overall performance was hit by a $7.2m restructuring charge at the consumer products division as Hutchison scaled down loss-making operations there - so divisional revenues fell 9 per cent and the it generated a net loss of $3.6m.
Adjust for the joint-venture gain and broker Panmure Gordon reckons Hutchison would have generated a loss per share of 8.9¢. The broker expects that to narrow to a loss per share of 2.77¢ in 2013, improving to positive earnings of 16.05¢ in 2014.
HUTCHISON CHINA MEDITECH (HCM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 454p | MARKET VALUE: | £236m | |
| TOUCH: | 450-457p | 12-MONTH HIGH: | 460p | LOW: 340p |
| DIVIDEND YIELD: | nil | PE RATIO: | 52 | |
| NET ASSET VALUE: | 136¢* | NET CASH: | $23.9m | |
| Year to 31 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2008 | 87.0 | -14.8 | -35.0 | nil |
| 2009 | 111 | -5.00 | -17.1 | nil |
| 2010 | 135 | -2.6 | -13.3 | nil |
| 2011 | 165 | 6.22 | 4.07 | nil |
| 2012 | 195 | 10.9 | 13.2 | nil |
| % change | +18 | +75 | +224 | - |
*Includes intangible assets of $23.9m, or 46¢ a share £1=$1.52 Aim: Pharmaceuticals & biotechnology | ||||
