AIM:HCM

Stock Analysis Report

Executive Summary

Hutchison China MediTech Limited, a commercial-stage biopharmaceutical company, engages in discovery, development, and commercialization of targeted therapeutics and immunotherapies for oncology and immunological diseases in the People’s Republic of China and Hong Kong.

Rewards

Trading at 78.7% below its fair value

Revenue is forecast to grow 27.09% per year

Risk Analysis

Currently unprofitable and not forecast to become profitable over the next 3 years

Highly volatile share price over past 3 months

Shareholders have been diluted in the past year



Snowflake Analysis

Flawless balance sheet and slightly overvalued.

Share Price & News

How has Hutchison China MediTech's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: HCM's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

11.9%

HCM

2.8%

GB Pharmaceuticals

1.4%

GB Market


1 Year Return

33.3%

HCM

31.0%

GB Pharmaceuticals

12.4%

GB Market

Return vs Industry: HCM exceeded the UK Pharmaceuticals industry which returned 29.6% over the past year.

Return vs Market: HCM exceeded the UK Market which returned 12.7% over the past year.


Shareholder returns

HCMIndustryMarket
7 Day11.9%2.8%1.4%
30 Day20.3%2.8%2.0%
90 Day48.0%13.9%8.8%
1 Year33.3%33.3%36.3%31.0%18.3%12.4%
3 Year102.9%102.9%62.2%42.2%23.8%8.0%
5 Year227.9%227.9%77.0%40.6%41.8%8.9%

Price Volatility Vs. Market

How volatile is Hutchison China MediTech's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Hutchison China MediTech undervalued compared to its fair value and its price relative to the market?

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: HCM (£4.4) is trading below our estimate of fair value (£20.65)

Significantly Below Fair Value: HCM is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: HCM is unprofitable, so we can't compare its PE Ratio to the Pharmaceuticals industry average.

PE vs Market: HCM is unprofitable, so we can't compare its PE Ratio to the UK market.


Price to Earnings Growth Ratio

PEG Ratio: Insufficient data to calculate HCM's PEG Ratio to determine if it is good value.


Price to Book Ratio

PB vs Industry: HCM is overvalued based on its PB Ratio (10.9x) compared to the GB Pharmaceuticals industry average (3x).


Next Steps

Future Growth

How is Hutchison China MediTech forecast to perform in the next 1 to 3 years based on estimates from 10 analysts?

44.8%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: HCM is forecast to remain unprofitable over the next 3 years.

Earnings vs Market: HCM is forecast to remain unprofitable over the next 3 years.

High Growth Earnings: HCM is forecast to remain unprofitable over the next 3 years.

Revenue vs Market: HCM's revenue (27.1% per year) is forecast to grow faster than the UK market (3.6% per year).

High Growth Revenue: HCM's revenue (27.1% per year) is forecast to grow faster than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: HCM is forecast to be unprofitable in 3 years.


Next Steps

Past Performance

How has Hutchison China MediTech performed over the past 5 years?

-21.0%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: HCM is currently unprofitable.

Growing Profit Margin: HCM is currently unprofitable.


Past Earnings Growth Analysis

Earnings Trend: HCM is unprofitable, and losses have increased over the past 5 years at a rate of -21% per year.

Accelerating Growth: Unable to compare HCM's earnings growth over the past year to its 5-year average as it is currently unprofitable

Earnings vs Industry: HCM is unprofitable, making it difficult to compare its past year earnings growth to the Pharmaceuticals industry (2.2%).


Return on Equity

High ROE: HCM has a negative Return on Equity (-22.68%), as it is currently unprofitable.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Hutchison China MediTech's financial position?


Financial Position Analysis

Short Term Liabilities: HCM's short term assets ($309.5M) exceed its short term liabilities ($110.6M).

Long Term Liabilities: HCM's short term assets ($309.5M) exceed its long term liabilities ($11.6M).


Debt to Equity History and Analysis

Debt Level: HCM's debt to equity ratio (0.2%) is considered satisfactory.

Reducing Debt: HCM's debt to equity ratio has reduced from 55.3% to 0.2% over the past 5 years.


Balance Sheet

Inventory Level: HCM has a low level of unsold assets or inventory.

Debt Coverage by Assets: HCM's debt is covered by short term assets (assets are 534.5x debt).


Cash Runway Analysis

For companies that have on average been loss making in the past we assess whether they have at least 1 year of cash runway.

Stable Cash Runway: HCM has sufficient cash runway for more than 3 years based on its current free cash flow.

Forecast Cash Runway: HCM has sufficient cash runway for 1.6 years if free cash flow continues to reduce at historical rates of -68.5% each year.


Next Steps

Dividend

What is Hutchison China MediTech's current dividend yield, its reliability and sustainability?


Dividend Yield vs Market

companyn/amarketbottom25%1.8%markettop25%5.0%industryaverage3.4%forecastin3Years0%

Current dividend yield vs market & industry

Notable Dividend: Unable to evaluate HCM's dividend yield against the bottom 25% of dividend payers, as the company has not reported any payouts.

High Dividend: Unable to evaluate HCM's dividend yield against the top 25% of dividend payers, as the company has not reported any payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if HCM's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if HCM's dividend payments have been increasing.


Current Payout to Shareholders

Dividend Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of HCM's dividend in 3 years as they are not forecast to pay a notable one for the UK market.


Next Steps

Management

What is the CEO of Hutchison China MediTech's salary, the management and board of directors tenure and is there insider trading?

8.0yrs

Average management tenure


CEO

Christian Hogg (53yo)

14yrs

Tenure

US$1,330,074

Compensation

Mr. Christian Hogg, BSc, MBA has been the Chief Executive Officer of Hutchison China MediTech Ltd., since 2006. Mr. Hogg serves as the Chief Operating Officer of Healthcare Investments of Hutchison Whampoa ...


CEO Compensation Analysis

Compensation vs Market: Christian's total compensation ($USD1.33M) is below average for companies of similar size in the UK market ($USD2.25M).

Compensation vs Earnings: Christian's compensation has increased whilst the company is unprofitable.


Management Age and Tenure

8.0yrs

Average Tenure

54.5yo

Average Age

Experienced Management: HCM's management team is seasoned and experienced (8 years average tenure).


Board Age and Tenure

3.2yrs

Average Tenure

61.5yo

Average Age

Experienced Board: HCM's board of directors are considered experienced (3.2 years average tenure).


Insider Trading

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 3%.


Management Team

  • Edith Shih (67yo)

    Company Secretary & Non-Executive Director

    • Tenure: 14yrs
    • Compensation: US$70.00k
  • Simon To (67yo)

    Executive Chairman

    • Tenure: 14yrs
    • Compensation: US$167.40k
  • Christian Hogg (53yo)

    CEO & Executive Director

    • Tenure: 14yrs
    • Compensation: US$1.33m
  • Wei-Guo Su (62yo)

    Chief Scientific Officer

    • Tenure: 2.8yrs
    • Compensation: US$1.09m
  • Johnny Cheng (52yo)

    CFO & Executive Director

    • Tenure: 9yrs
    • Compensation: US$682.01k
  • May Wang (56yo)

    Senior Vice President of Business Development & Strategic Alliances

    • Mark Lee (42yo)

      Senior Vice President of Corporate Finance & Development

      • Hong Chen (49yo)

        Chief Commercial Officer - China

        • Tenure: 2yrs
      • Charles Nixon

        Group General Counsel

        • Tenure: 4yrs
      • Andrew Shih

        Senior Vice President of Human Resources - Organization & Leadership Development

        • Tenure: 1yrs

      Board Members

      • Dan Eldar (65yo)

        Non-Executive Director

        • Tenure: 3.4yrs
        • Compensation: US$70.00k
      • Edith Shih (67yo)

        Company Secretary & Non-Executive Director

        • Tenure: 14yrs
        • Compensation: US$70.00k
      • Simon To (67yo)

        Executive Chairman

        • Tenure: 14yrs
        • Compensation: US$167.40k
      • Christian Hogg (53yo)

        CEO & Executive Director

        • Tenure: 14yrs
        • Compensation: US$1.33m
      • Graeme Allan Jack (69yo)

        Independent Non-Executive Director

        • Tenure: 2.8yrs
        • Compensation: US$104.00k
      • Paul Rutherford Carter (58yo)

        Senior Independent Non-Executive Director

        • Tenure: 2.9yrs
        • Compensation: US$113.30k
      • Wei-Guo Su (62yo)

        Chief Scientific Officer

        • Tenure: 2.8yrs
        • Compensation: US$1.09m
      • Johnny Cheng (52yo)

        CFO & Executive Director

        • Tenure: 9yrs
        • Compensation: US$682.01k
      • Karen Jean Ferrante (61yo)

        Independent Non-Executive Director

        • Tenure: 2.9yrs
        • Compensation: US$102.50k
      • Tony Mok (58yo)

        Independent Non-Executive Director

        • Tenure: 2.3yrs
        • Compensation: US$84.00k

      Company Information

      Hutchison China MediTech Limited's company bio, employee growth, exchange listings and data sources


      Key Information

      • Name: Hutchison China MediTech Limited
      • Ticker: HCM
      • Exchange: AIM
      • Founded: 2000
      • Industry: Pharmaceuticals
      • Sector: Pharmaceuticals & Biotech
      • Market Cap: UK£2.997b
      • Shares outstanding: 665.97m
      • Website: https://www.chi-med.com

      Number of Employees


      Location

      • Hutchison China MediTech Limited
      • Cheung Kong Center
      • 48th Floor
      • Central
      • Hong Kong

      Listings

      TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
      HCMAIM (London Stock Exchange AIM Market)YesOrdinary SharesGBGBPMay 2006
      HNCM.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDMay 2006
      H7T2DB (Deutsche Boerse AG)YesOrdinary SharesDEEURMay 2006
      HCMNasdaqGS (Nasdaq Global Select)SPONSORED ADRUSUSDMar 2016
      H7T1DB (Deutsche Boerse AG)SPONSORED ADRDEEURMar 2016

      Biography

      Hutchison China MediTech Limited, a commercial-stage biopharmaceutical company, engages in discovery, development, and commercialization of targeted therapeutics and immunotherapies for oncology and immunological diseases in the People’s Republic of China and Hong Kong. The company operates through Innovation Platform and Commercial Platform segments. The company discovers and develops therapeutics in oncology and autoimmune diseases, as well as provides research and development services; and develops, manufactures, distributes, markets, and sells prescription and over-the-counter pharmaceutical products, and consumer health products under the Baiyunshan and Shang Yao brands. Its clinical stage drugs include Savolitinib, a c-MET inhibitor for the treatment of non-small cell lung cancer (NSCLC), papillary renal cell carcinoma, colorectal cancer, gastric cancer, and prostate cancer; and Fruquintinib, a inhibitor for the treatment of colorectal cancer and solid tumors. The company is also developing Surufatinib, an inhibitor for the treatment of pancreatic neuroendocrine tumors and solid tumors; and HMPL-523, an inhibitor for the treatment of indolent non-Hodgkin's lymphoma, as well as HMPL-689, a treatment for indolent non-Hodgkin's lymphoma and healthy volunteers. The company was incorporated in 2000 and is headquartered in Central, Hong Kong. Hutchison China MediTech Limited is a subsidiary of Hutchison Healthcare Holdings Limited. 


      Company Analysis and Financial Data Status

      All financial data provided by Standard & Poor's Capital IQ.
      DataLast Updated (UTC time)
      Company Analysis2020/01/18 20:52
      End of Day Share Price2020/01/17 00:00
      Earnings2019/06/30
      Annual Earnings2018/12/31


      Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.