Hua Medicine (Shanghai) (SEHK:2552) - Share price, News & Analysis

Q: What is the Fair Price of 2552 when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

2552 (HK$3.84) is trading below our estimate of [[fair value]] (HK$44.02)

2552 fundamental analysis
Snowflake Score
Valuation	2/6
Future Growth	6/6
Past Performance	0/6
Financial Health	5/6
Dividends	0/6

2552 Stock Overview

Hua Medicine (Shanghai) Ltd. operates as a clinical-stage drug development company that focuses on therapies for the treatment of diabetes in China.

Rewards

Trading at 91.3% below our estimate of its fair value

Earnings are forecast to grow 90.76% per year

Earnings have grown 25% per year over the past 5 years

Risk Analysis

Makes less than USD$1m in revenue (CN¥6M)

Hua Medicine (Shanghai) Competitors

Consun Pharmaceutical Group

SEHK:1681

HK$3.3b

China Shineway Pharmaceutical Group

SEHK:2877

HK$4.9b

Zhaoke Ophthalmology

SEHK:6622

HK$2.2b

SciClone Pharmaceuticals (Holdings)

SEHK:6600

HK$5.6b

Price History & Performance

Summary of all time highs, changes and price drops for Hua Medicine (Shanghai)
Historical stock prices
Current Share Price	HK$3.84
52 Week High	HK$5.38
52 Week Low	HK$2.40
Beta	1.26
1 Month Change	-1.54%
3 Month Change	6.67%
1 Year Change	-19.50%
3 Year Change	-44.99%
5 Year Change	n/a
Change since IPO	-53.62%

Recent News & Updates

Apr 22

Companies Like Hua Medicine (Shanghai) (HKG:2552) Can Afford To Invest In Growth

Even when a business is losing money, it's possible for shareholders to make money if they buy a good business at the...

Shareholder Returns

	2552	HK Pharmaceuticals	HK Market
7D	0.8%	8.4%	2.1%
1Y	-19.5%	-43.3%	-23.3%

Return vs Industry: 2552 exceeded the Hong Kong Pharmaceuticals industry which returned -43.3% over the past year.

Return vs Market: 2552 exceeded the Hong Kong Market which returned -23.3% over the past year.

Price Volatility

Is 2552's price volatile compared to industry and market?
2552 volatility
2552 Average Weekly Movement	9.5%
Pharmaceuticals Industry Average Movement	6.1%
Market Average Movement	7.0%
10% most volatile stocks in HK Market	13.8%
10% least volatile stocks in HK Market	3.3%

Stable Share Price: 2552 is not significantly more volatile than the rest of Hong Kong stocks over the past 3 months, typically moving +/- 9% a week.

Volatility Over Time: 2552's weekly volatility (9%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
2011	146	Li Chen	https://www.huamedicine.com

Hua Medicine (Shanghai) Ltd. operates as a clinical-stage drug development company that focuses on therapies for the treatment of diabetes in China. It develops Dorzagliatin or HMS5552, an oral drug for the treatment of Type 2 Diabetes (T2D); and Dorzagliatin in combination with Metformin, Sitagliptin, and Empagliflozin that is in Phase I clinical trial for treatment of T2D. The company also offers Dorzagliatin in combination with Pioglitazone for NASH; in combination with GLP-1 for Alzheimer diseases; and in combination with late stage T2D and Type 1 Diabetes.

Hua Medicine (Shanghai) Fundamentals Summary

How do Hua Medicine (Shanghai)'s earnings and revenue compare to its market cap?
2552 fundamental statistics
Market Cap	CN¥3.15b
Earnings (TTM)	-CN¥325.73m
Revenue (TTM)	CN¥6.49m

486.3x

P/S Ratio

-9.7x

P/E Ratio

Is 2552 overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
2552 income statement (TTM)
Revenue	CN¥6.49m
Cost of Revenue	CN¥0
Gross Profit	CN¥6.49m
Other Expenses	CN¥332.22m
Earnings	-CN¥325.73m

Last Reported Earnings

Dec 31, 2021

Next Earnings Date

n/a

Earnings per share (EPS)	-0.34
Gross Margin	100.00%
Net Profit Margin	-5,019.01%
Debt/Equity Ratio	0%

How did 2552 perform over the long term?

See historical performance and comparison

We’ve recently updated our valuation analysis.

Valuation

Is 2552 undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

2/6

Valuation Score 2/6

Price-To-Book vs Peers
Price-To-Book vs Industry
Price-To-Book vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
PEG Ratio

Key Valuation Metric

Which metric is best to use when looking at relative valuation for 2552?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for 2552. This is calculated by dividing 2552's market cap by their current preferred multiple.
What is 2552's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	CN¥3.15b

2552 key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	388.6x
Enterprise Value/EBITDA	-8.3x
PEG Ratio	n/a

Price to Book Ratio vs Peers

How does 2552's PB Ratio compare to its peers?

2552 PB Ratio vs Peers

The above table shows the PB ratio for 2552 vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PB	Estimated Growth	Market Cap
Peer Average	1.2x
1681 Consun Pharmaceutical Group	1.1x	10.3%	HK$3.3b
2877 China Shineway Pharmaceutical Group	0.7x	10.3%	HK$4.9b
6622 Zhaoke Ophthalmology	0.8x	55.3%	HK$2.2b
6600 SciClone Pharmaceuticals (Holdings)	2.1x	-8.5%	HK$5.6b
2552 Hua Medicine (Shanghai)	7x	90.8%	HK$3.7b

Price-To-Book vs Peers: 2552 is expensive based on its Price-To-Book Ratio (7x) compared to the peer average (1.2x).

Price to Earnings Ratio vs Industry

How does 2552's PE Ratio compare vs other companies in the HK Pharmaceuticals Industry?

Price-To-Book vs Industry: 2552 is expensive based on its Price-To-Book Ratio (7x) compared to the Hong Kong Pharmaceuticals industry average (1x)

Price to Book Ratio vs Fair Ratio

What is 2552's PB Ratio compared to its Fair PB Ratio? This is the expected PB Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

2552 PB Ratio vs Fair Ratio.
Fair Ratio
Current PB Ratio	7x
Fair PB Ratio	n/a

Price-To-Book vs Fair Ratio: Insufficient data to calculate 2552's Price-To-Book Fair Ratio for valuation analysis.

Share Price vs Fair Value

What is the Fair Price of 2552 when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: 2552 (HK$3.84) is trading below our estimate of fair value (HK$44.02)

Significantly Below Fair Value: 2552 is trading below fair value by more than 20%.

Price to Earnings Growth Ratio

PEG Ratio: Insufficient data to calculate 2552's PEG Ratio to determine if it is good value.

Discover undervalued companies

Future Growth

How is Hua Medicine (Shanghai) forecast to perform in the next 1 to 3 years based on estimates from 2 analysts?

Future Growth Score

6/6

Future Growth Score 6/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

90.8%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: 2552 is forecast to become profitable over the next 3 years, which is considered faster growth than the savings rate (1.5%).

Earnings vs Market: 2552 is forecast to become profitable over the next 3 years, which is considered above average market growth.

High Growth Earnings: 2552 is expected to become profitable in the next 3 years.

Revenue vs Market: 2552's revenue (64.2% per year) is forecast to grow faster than the Hong Kong market (10.3% per year).

High Growth Revenue: 2552's revenue (64.2% per year) is forecast to grow faster than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: 2552's Return on Equity is forecast to be very high in 3 years time (51.6%).

Discover growth companies

Past Performance

How has Hua Medicine (Shanghai) performed over the past 5 years?

Past Performance Score

0/6

Past Performance Score 0/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

25.0%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: 2552 is currently unprofitable.

Growing Profit Margin: 2552 is currently unprofitable.

Past Earnings Growth Analysis

Earnings Trend: 2552 is unprofitable, but has reduced losses over the past 5 years at a rate of 25% per year.

Accelerating Growth: Unable to compare 2552's earnings growth over the past year to its 5-year average as it is currently unprofitable

Earnings vs Industry: 2552 is unprofitable, making it difficult to compare its past year earnings growth to the Pharmaceuticals industry (16.1%).

Return on Equity

High ROE: 2552 has a negative Return on Equity (-72.33%), as it is currently unprofitable.

Discover strong past performing companies

Financial Health

How is Hua Medicine (Shanghai)'s financial position?

Financial Health Score

5/6

Financial Health Score 5/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Stable Cash Runway
Forecast Cash Runway

Financial Position Analysis

Short Term Liabilities: 2552's short term assets (CN¥704.6M) exceed its short term liabilities (CN¥106.9M).

Long Term Liabilities: 2552's short term assets (CN¥704.6M) exceed its long term liabilities (CN¥346.3M).

Debt to Equity History and Analysis

Debt Level: 2552 is debt free.

Reducing Debt: 2552 currently has no debt however we can't compare to 5 years ago as we have no data for that period.

Balance Sheet

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: 2552 has sufficient cash runway for more than a year based on its current free cash flow.

Forecast Cash Runway: Insufficient data to determine if 2552 has enough cash runway if its free cash flow continues to grow or shrink based on historical rates.

Discover healthy companies

Dividend

What is Hua Medicine (Shanghai) current dividend yield, its reliability and sustainability?

Dividend Score

0/6

Dividend Score 0/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Future Dividend Coverage

Dividend Yield vs Market

Notable Dividend: Unable to evaluate 2552's dividend yield against the bottom 25% of dividend payers, as the company has not reported any recent payouts.

High Dividend: Unable to evaluate 2552's dividend yield against the top 25% of dividend payers, as the company has not reported any recent payouts.

Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if 2552's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if 2552's dividend payments have been increasing.

Earnings Payout to Shareholders

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

Cash Payout to Shareholders

Cash Flow Coverage: Unable to calculate sustainability of dividends as 2552 has not reported any payouts.

Discover strong dividend paying companies

Management

How experienced are the management team and are they aligned to shareholders interests?

3.2yrs

Average management tenure

CEO

Li Chen (59 yo)

12yrs

Tenure

CN¥23,856,000

Compensation

Dr. Li Chen, Ph.D. is the Co-Founder of Hua Medicine (Shanghai) Ltd. and serves as its Chief Scientific Officer and served as its President until May 19, 2016 and has been its Chief Executive Officer since...

CEO Compensation Analysis

Compensation vs Market: Li's total compensation ($USD3.57M) is above average for companies of similar size in the Hong Kong market ($USD393.76K).

Compensation vs Earnings: Li's compensation has been consistent with company performance over the past year.

Leadership Team

Experienced Management: 2552's management team is considered experienced (3.2 years average tenure).

Board Members

Experienced Board: 2552's board of directors are considered experienced (3.8 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

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

Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Data	Last Updated (UTC time)
Company Analysis	2022/06/27 00:00
End of Day Share Price	2022/06/27 00:00
Earnings	2021/12/31
Annual Earnings	2021/12/31