It's rare to come across an Aim-listed biotech company making good money at the same time as it pushes proprietary drugs through trials, but Hutchison China Meditech (HCM) is doing just that. The strong drugs pipeline is supported by joint ventures with western pharma companies including AstraZeneca (AZN) and Eli Lilly (US: LLY), from which it earns cash in the form of upfront and milestone payments. Hutchison also has a commercial platform through which it sells drugs in China.
Despite spending $64m (£46m) on research and development last year, the group reported a net income attributable to the company of $8m, compared with a $7.3m loss in 2014. Turnover from joint ventures and subsidiaries grew in line with the group's strategy, helped by a 40 per cent increase in prescription drug sales, more than offsetting a decline in its consumer health business.
But statutory numbers for 2015 and 2014 (restated) were skewed by a US-friendly change in the way the group reports its financials, prior to its imminent listing on Nasdaq. US accounting principles require that those staged payments can only be recognised in their entirety when a milestone is achieved, rather than in each financial period as allowed under International Financial Reporting Standards.
Due to the forthcoming listing in the US, analysts have suspended coverage. But prior to the results, broker Panmure Gordon forecast adjusted 2016 pre-tax profits and adjusted EPS of $29.5m and 26.6ȼ, respectively.
| HUTCHISON CHINA MEDITECH (HCM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 2,440p | MARKET VALUE: | £1.38bn | |
| TOUCH: | 2,410p-2,470p | 12-MONTH HIGH / LOW: | 2,908p | 1,285p |
| DIVIDEND YIELD: | NIL | PE RATIO: | NA | |
| NET ASSET VALUE: | 148ȼ | NET DEBT: | 18% | |
| Year to 31 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (ȼ) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 22.4 | 11.9 | 18.2 | nil |
| 2013 | 46.0 | 10.1 | 14.1 | nil |
| 2014* | 87.3 | -20.0 | -0.64 | nil |
| 2015 | 178 | -10.5 | -0.64 | nil |
| % change | +104 | - | - | - |
Ex-div: na Payment: na *Restated to reflect new accounting methods £1=$1.39 | ||||
