A 21 per cent improvement in half-year revenue leaves Hutchison China Meditech (HCM) on track to meet analysts’ expectations for the full year. But most of that income is still being poured into research and development, where costs moved up by $1.5m (£1.14m) to $37.5m during the same period. Encouragingly, however, Chi-Med remains cash rich, which will help fund around eight future drugs currently undergoing 31 trials as part of the ‘innovation platform’.
The innovation division does earn money for Chi-Med in the form of milestone payments, notably from big pharma partners such as Eli Lilly and AstraZeneca (AZN). In this period, the group received $4.5m for filing a new drug application in China for cancer drug fruquintinib and $5m for starting a third phase kidney cancer trial with savolitinib. As for the ‘commercial platform’, total consolidated sales rose 26 per cent to $104m, while sales of non-consolidated joint ventures nudged up 1.4 per cent to $253m due to a price increase on a key product in 2016.
The delay of potential property gains following a local government policy change has prompted analysts at Panmure Gordon to lower EPS estimates for the current year from a loss per share of 34.5¢ to -54.3¢ for the year ending December, compared with EPS of 19.6¢ in 2016.
HUTCHISON CHINA MEDITECH (HCM) | ||||
ORD PRICE: | 3,418p | MARKET VALUE: | £2.07bn | |
TOUCH: | 3,375-3,460p | 12-MONTH HIGH: | 3,658p | LOW: 1,783p |
DIVIDEND YIELD: | nil | PE RATIO: | na | |
NET ASSET VALUE: | 312¢ | NET CASH: | $65.7m |
Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
2016 | 105 | -16.8 | 0.01 | nil |
2017 | 127 | -16.7 | 0.03 | nil |
% change | +21 | - | +200 | - |
Ex-div: | na | |||
Payment: | na | |||