Hutchison China Meditech (HCM) has impressed investors with a steady stream of positive drug updates over recent months. As a result, the group's share price has found good momentum, up 11 per cent since the start of 2017. Now the China-based biotech company has impressed from a financial perspective, reporting record revenue and a 46 per cent increase in net profit last year.
In the group's commercial division, expansion of its prescription drug service and strong demand for coronary heart disease drug Seroquel sent revenue up 43 per cent to $181m (£148m). But a 41 per cent increase in research and development expenses, caused by a ramp up in spending on the innovation platform, sent pre-tax losses spiralling down to $47m.
Thankfully, a $66m contribution from joint ventures sent Chi-Med into positive earnings territory for the first time since 2013. The group has two, large 50:50 joint ventures with pharmacy groups in China, which together generated $447m of revenue in the year.
With the commercial platform generating cash, headroom in the group's banking facilities and the recent US fundraising of $95.9m, Chi-Med looks to be in a stable financial position. Management expects the group's cash resources of $174m to fund the development pipeline for another two years.
HUTCHISON CHINA MEDITECH (HCM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 2,538p | MARKET VALUE: | £1.54bn | |
| TOUCH: | 2,510-2,565p | 12-MONTH HIGH: | 2,538p | LOW: 1,625p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 304ȼ | NET CASH: | $56.9m* | |
| Year to 31 Dec | Turnover ($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 |
| 2016 | 216 | -47.4 | 0.20 | nil |
| % change | +21 | - | - | - |
Ex-div:na Payment:na *Includes $24m of short term investments £1=$1.22 | ||||
