The implementation of a new two-invoice system at one of Hutchison China Meditech’s (HCM) joint ventures – Hutchison Sinopharm – explains why group revenues fell to $214m (£163m) last year. The joint venture has stopped recognising gross sales from specific third-party products, and declaring service fees instead, prompting a fall in sales at the commercial division, from $205m to $173m.
Even so, that $214m figure came in well ahead of both company guidance and analysts’ estimates, while a net loss of $75m beat Panmure Gordon’s forecast loss of $88m. Even better, the commercial division still managed to grow operating profits by 10 per cent to $47m following strong growth in the coronary artery disease business as well as higher service fees on mental health drug Seoquel and heart disease medicine Concor.
This year, HCM could spend between $160m-$200m on research and development (R&D), although broker Panmure Gordon argues year-end total cash resources of $420m – which includes short-term investments and unutilised banking facilities – should allow for a degree of financial flexibility.
| HUTCHISON CHINA MEDITECH (HCM) | ||||
| ORD PRICE: | 4,100p | MARKET VALUE: | £2.73bn | |
| TOUCH: | 4,000-4,200p | 12-MONTH HIGH: | 5,670p | LOW: 3,185p |
| DIVIDEND YIELD: | nilo | PE RATIO: | na | |
| NET ASSET VALUE: | 583¢ | NET CASH: | $274m | |
| Year to 31 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (p) |
| 2014 | 87.3 | -20.0 | -64 | nil |
| 2015 | 178 | -10.5 | -64 | nil |
| 2016 | 216 | -47.4 | -20 | nil |
| 2017 | 241 | -53.5 | -43 | nil |
| 2018 | 214 | -86.7 | -113 | nil |
| % change | -11 | - | - | - |
| Ex-div: | na | |||
| Payment: | na | |||
| £1 = $1.30 | ||||
