The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
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thankyou for alerting everyone to the updated note jatw!
https://www.edisongroup.com/wp-content/uploads/2020/08/Hutchison-China-MediTech-To-China-and-beyond.pdf
Companies listing on Hang Seng had to be profitable but the listing rules were changed last year so it no longer applies
The ADS are 47.11 using the Edison valuation - this is not diluted by share options already granted and the GA Warrant.
The latest Edison research has increased the valuation by c$390m, and from $6.3bn (£6.84 to £7.24) $6.69bn.
Oddly they give the £ rather than ADS valuation but a company value in $. I suspect the recent $ weakness makes the £ increase better news.
Amones, yes it is a strange condition.
There have been a number of HK IPOs by China entities with little in the way of commercial success.
I recall reading that HKSE was relaxing it’s rules to allow Bio companies that had never made a profit to list so I think this is self imposed and a bit “old school” as plenty of companies seem to be able to sell thin air and there is plenty of substance in HCMs pipeline.
Can not understand this pre condition “Prove commercialisation success” first before listing in Hong Kong? Is it a criteria for biotechs listing over there? Or, is it just self imposed?
indeed! The Company should be generating free cashflow in 2023 or 2024, and then the cashflow should be very significant.
On the subject of dividends I would far rather the Company re-invested Free Cashflow back int the business rather that deliver lower growth but pay dividends that people are not expecting.
If you look at others such as Incyte, Genmab etc they do not pay a dividend, probably because they know they can deliver more Shareholder value by re-investing their earnings back into the Business.
If a Company can deliver better Shareholder value by investing the cash generated back into the business I do not care about a dividend. I would just like Shareholder value to be created in the best way possible.
And the CEO himself also made that projection. Type this "Hogg Chi-Med profit 2024" into Google to get the articles.
No-one really knows when we'll be profitable. However, Edison in their research note are forecasting sustained profitability in 2024.
https://www.edisongroup.com/publication/eye-of-the-tiger/27214/
dnalkr1k - stick on this board, we'll educate you! well on the investment case for the Company if not the science!
Have a great weekend, looking forward to getting a good debate going here as the Company continues to deliver and execute their brilliant strategy!
tacly ... I notice that although you claim to know (along with just about everyone else) when HCM will start making profits, you are very careful not to share this knowledge with the uninitiated such as myself. I wonder if might just be because in all honesty, you don't have the remotest clue. Furthermore, if and when the company eventually becomes profitable, be it in 3, 6, or 10 years' time, it will be many, many years thereafter before it is able to extinguish the enormous past losses it has racked up which of course it must do prior to being in a position to commence paying dividends.
Thank you to all the irregular/old commentators, good to get some interesting questions and opinions being aired.
Dnalkr1k rather than emperors clothes, the analysts have lots of variables in their models that value the company. There are two researchers that are linked on the company website Edison and Trinity Delta. Sales, margins, market penetration, competitor activity and most of that is after low probability of success in trials.
If you look back at some of my recent posts, I would like to see more explanation of how they select their candidates based on commercial opportunity. There is no point spending 20m on developing a drug with only a few patients that can be treated. The analysts have these numbers (maybe supplied by the company). I can understand why CH may not want to set this out as it creates expectations, but he did so re Elunate and a target of 40% share in China.
What is certain is that we are moving into a period where evidence will be available to see whether management have been targeting valuable prospects or not.
What we have seen over the last few years of presentations is that the company is meeting its commitments and forecast progress.....the regulator giving priority review in China and US shows interest in surufatinib and Savolitinib
I remain optimistic, but also expect there will be some disappointments along the way.
dnalkr1k, the anwer to the question of "when the company might actually be expected to generate a profit" has been known for quite some time. I know the answer. I am sure the regular posters of this board also know the answer. Any analyst of HCM worth their soul must also know the answer. So there is no point in asking that question.
Until the company is profitable, there is no point in talking about paying dividends.
Yet another highly technical half-year announcement from Christian Hogg, around 90% of which i virtually totally unintelligible to mere mortals like myself and/or is a straight repeat of info we've heard many times before.
It would be good if, just once in a while, Hogg were to give us some sort of clue as regards if and when the company might actually be expected to generate a profit and, yes, be in a position to consider paying dividends. I can't help thinking that the ultra-tame presentation to the assembled analysts always appears to have been carefully stage-managed since there are never any key questions concerning HCM's likely breakthrough into profit. If I were a cynical doomster, I might at this stage be tempted to utter the dreaded two words "Emperor's Clothes".
Thanks ttyn for the article. Prove commercialisation success first. Listing in Hong Kong. Raise up to US$500 million. Plus the $130m factory news and the existing drugs' timescale. There is the strategy here for the next few years. With a hopefully sensible HK IPO price to prevent too much dilution, and hopefully GA won't exercising warrant until share price is in the mid $40/ADS and CKHH hands off, this share should fly.
interesting to know that about CKHH, I am trying to forget all about them after the placing. I still do not understand why they didn't divest over a longer period and also engage Brokers to do some off market deals. The way they handled the sale left me with severe indigestion from which I am still recovering from!!
On another note, I look forward to making another sizeable 6 figure purchase by the end of the month.
I continue to Buy shares in this fantastic Company.............!
I suspect they have enough cash resources, and if they don’t they will have the option of debt or equity....the CFO will have a key role to play.
BTW There was nothing about HCM in the CKHH results....but HCM is not consolidated and is held as an investment now.
hi jatw - I'll check on that as I can't remember, but with GA's extra warrants could we be cashed up until FCF? Unlikely but it could be possible depending on speedy approvals and launch of Surufatinib and Savolitinib.... ;o--)
Davey
Can you remember what monies have been raised sine the middle of last year.
This year the did 100 in feb, then 100 in July plus 100 on the warrant, plus 50 from the land transaction.
Did they raise in q4?
They have most of the 500m.
I dare say CKHH will sell another 5-10% as part of any HK listing. So the amount neede and raised by the company may be much less now.
BTW still rising in US, nearing 32.50
Yes fresh news on the business section of the TheStandard dot HK dot com, dated 6th August. A search on "Drug-maker-Chi-Med-still-aims-to-list-in-HK" should do the trick.
Good to see the share price on an uptrend, especially after adding on the recent dips.
Hi ttyn,
Welcome to the board. The link you provided has been removed, probably by lse. Matter of HK listing has been mentioned on numerous occasions. Did you see that news as a fresh item? ADRs at NYSE are exchanging hands at $32 a piece. Some relief!
Hi,
I've held HCM for nearly 10 years, so have been lurking for a while, so thanks to all, especially Davey for the continued updates.
Found this news on the HK listing today with a clear indication of the trigger .... "planning to list in Hong Kong as soon as next year, but it first needs to prove commercialization success by making its cancer drugs profitable, says chief executive Christian Hogg."
https://www.thestandard.com.hk/section-news/section/2/221606/Drug-maker-Chi-Med-still-aims-to-list-in-HK