Member Info for 1pencil

Evening Robert,

I can't advise either way on investing, that has to be your call.

Addressing your points, my own view on HFCAA is the current proposal (see below) will be passed without fundemental change. The changes within the existing bill are a direct response to the SEC's HFCAA which has been around for nearly two years now, both sides have been in discussions during the process so I would find it unlikely its passed and doesn't address the requirements as laid down.

See earlier post on Sun 22:49 details the changes and proposed outcome.

Additionally the tone and comments coming from Chinese regulators, reaching out to press is also very encouraging as is their remarks on attracting overseas investment.

If the worst case scenario HCM does have to delist it may not be a bad thing, much of the volume is in HK along with many key stake holders from last years fund raising - it has the potential to save the company $400-700k per year on listing fees and other associated costs, in all honesty I am not sure they are getting value for money.

Take a look at China BioPharma ETF which holds around 60 Chinese biotechs including HCM, 87% v 13% in favour of HK, there's also some commentary on HK v NASDAQ by Loncar

https://cdn-webmaker1.nyc3.digitaloceanspaces.com/v1_CHNA_Fact_Sheet_0422_09c4b0bf36.pdf

https://loncarfunds.com/chna

Directors, yes disappointed they haven't joined us supporting the share price but that may change, or there could be corporate activity preventing such especially at such a low valuation.

Todays announcement by China regulators must surely shine light on companies like HUTCHMED who have spent decades building their pipeline and infrastructure. How much time and money would it take to reach the same position as HCM if you wanted to enter the Chinese markets, recent accounts show HCM is currently carrying forward accumulated losses of $560 million, that's without the time element or regulatory barriers to entry.

In terms of investor communication my own experience is the exact opposite, emails answered promptly with helpful replies to most questions, calls returned by senior management next working day - my suggestion would be to email your questions direct, this way you can judge for yourself.

A general comment on forums, by all means take this and other information on board but verify it with other sources such as with the company where possible, price swings bring out all sorts of knee jerk reactions and comments - last thing you want to do is follow those.

Please allow for the odd error.

A lot of the time its the same people on both bid and offer, 'straddle'

It seems like they are struggling to exit now that the price has been beaten down.

The new document, released by the National Development and Reform Commission, said it is important to boost the bioeconomy during the next five years, to help meet the rising domestic demand for healthcare and better lives, foster high-quality economic development, prevent and control biosecurity risks and modernize China's system and capacity for governance.

http://www.chinadaily.com.cn/a/202205/10/WS6279f455a310fd2b29e5bbac.html

Looks like Voleon are throwing a bit more at THG while closing..

Markets in meltdown, not a time to be watching portfolios at least not for a while.

Should get my order filled tomorrow then that's it for me allocation wise, did you get a reply form the company yet NoS?

They probably have other things to worry about, this is not limited to just HCM.

Hopefully this will spur on China to get the HFCAA thing sorted.

I gave been on the lookout for any notifications regarding the above, also time frames is we are now over a month into the process. The extract below is from an informative article breaking down the proposed changes and amendments, this in one of the parts which concerns HFCAA

"It is worth mentioning that the provisions on overseas inspections have been amended in this adjustment, and the expression in the Provisions that "on-site inspections should be mainly carried out by mainland regulators, or rely on the inspection results of mainland regulators". It is clarified that where overseas securities regulatory authorities and relevant competent departments propose to conduct investigations, evidence collections, or inspections of domestic enterprises and securities companies and securities service institutions providing relevant securities services to such enterprises in connection with their overseas issuance of securities and listing-related activities, they shall conduct cross-border regulatory cooperation mechanisms, and the CSRC or relevant competent departments shall provide necessary assistance in accordance with the bilateral and multilateral cooperation mechanisms."

There's also a Q A by the journalist; the following answer highlights the joint inspections;

"It will also help relevant regulatory authorities and overseas regulators to safely and efficiently carry out cross-border regulatory cooperation activities, including joint inspections, and jointly safeguard the rights and interests of global investors."

"which will provide institutional guarantees for the safe and efficient development of cross-border regulatory cooperation, including joint inspections."

https://www.laitimes.com/en/article/3ist8_3zhu7.html

There's huge benefits with economies of scale, HCM would be a good commentary fit imo with immediate benefits to both sides.

How much would each company save on R & D by combining labs, not to mention manufacturing (HCM already building Shanghai factory)

http://www.sinobiopharm.com/en/

If the SP was around 600p then perhaps no, but when its valued at such a discount to its assets then breakup value comes into play.

Its difficult to predict demand caused by shorts closing, for instance we have had quite a big drop on Crest data which could have been filled with the JPM sale, on the plus side HCM still has a relatively small float and supportive shareholder base, most of the AGM resolutions were passed with 99% of votes cast.

Yes, I have received detailed replies from the company and calls with management. I may ask to see if they will allow me to post my last response.

Going through the AR in some detail there's a lot of value tucked away in their 'other' income category, something which the analysts tend to not for on, in particular;

Hutchison Sinopharm grew sales by 24% to $204m in 2021 plus the award of $40m to be received this financial year.

SHPL grew sales by 20% $332.6m in 2021 of which HCM receives payment via dividend, key product there is the SXBX pill.

These are very attractive assets selling into one of the largest markets in the world, one could argue they are worth the current market cap of HCM alone without any of the oncology pipeline or cash. It wouldn't surprise me to see a bid from another Chinese biotech which would really jump start their own pipeline, someone like Sino Biopharm

"INVOX, its wholly owned subsidiary in Europe, will continue to search for investment opportunities, while propelling the group company's internationalization based on strategies involving breakthrough innovation platform, advanced delivery platform and global license transactions, the company said."

http://www.chinadaily.com.cn/a/202204/01/WS6246b7a3a310fd2b29e54b5d.html

"Oliver Shah found in bed with Loch Ness monster"

Nessy was heard saying she hadn't seen anything quite so small before..

This is the reason given on the filing for disclosure;

Long position
1706 Miscellaneous
Notice filed because you ceased to be a director or chief executive of the listed corporation

It was large in relation to the overall days volume, normally you would expect at least a 60-/50 ratio but I guess someone took this on their account on one go.

HK regulatory disclosers which, tbh are a bit hit and miss as you cannot save the links (which is why I missed this a while back), each search needs to be refreshed if that makes sense.

Sorry if I came across bearish, that was not my intention - my approach is to pull everything apart until I am satisfied I know what's going on, pretty sure the short positions for both M & G/JPM are to do with making a market across US/HK given how stocks are bought in dollars but reregister in HK. It could be fund managers are actively moving ADR's into HK as they are fully transferable, and/ort the connect system.

I can try and coordinate contact with the company if that would help, or would it be better coming from someone with established relationship with management?

Link to HK regulatory filing, see boxes 25 and 26

https://sc.hkexnews.hk/gb/di.hkex.com.hk/di/NSForm3A.aspx?fn=DA20220307E00128&sa2=an&sid=344192&corpn=HUTCHMED+(China)+Ltd.&sd=08%2f05%2f2021&ed=08%2f05%2f2022&cid=0&sa1=cl&scsd=08%2f05%2f2021&sced=08%2f05%2f2022&sc=13&src=MAIN&lang=EN&g_lang=en&

Its easy to see how the price is where its at, very hard to see as so many catalysts but ultimately it was Christians trade that was top domino.

It could have been the reason behind JPM selling half their holding which notified a few days later, this is all set against NASDAQ dropping away along with Dow Hang Seng carving off huge chuncks.

CK Hutchison Holdings Limited (1) 38.46%
The Capital Group Companies, Inc. (2) 9.18%
JPMorgan Chase & Co. (3) 3.24%
CA Fern Parent (4)(5) 4.72%
Prudential plc group(6) 4.77%
Canada Pension Plan Investment Board (5)(7) 3.11%
Jean Eric Salata (8) 3.01%

Total 66.49%

Combined 69.58%

As best I can, cobbled together up to date shareholders lists from regulatory filings, please allow for the odd error.

Johnny Cheng 0.40%
Simon To 0.29%
Edith Shih 0.14%
Weiguo Su 0.84%
Dan Eldar 0.02%
Tony Mok 0.01%
Paul Carter 0.01%
Karen Ferrante 0.01%
Graeme Jack 0.00%
Christian Lawrence HOGG 1.38%

Total 3.09%

On the 4th March Christian sold 1,867,385 in HK. This may have been the cause of big drop as total volume for the day was 3.1m appx.

The results came out the day before when he also announced his retirement, hardly any movement until HK opened dropping from 41.85 to close at 35.1HKD

Not suggesting anything other than this volume may have overwhelmed the market as almost 2/3 of the days trade.

M & G (Prudential) have also increased marginally, couple of things of note looking at the HK reg notices, firstly Capital Group how did they manage to buy at 12.2 HKD as stock has never dipped to that price?

Notice also holders purchasing stock on NASDAQ but listing on HK exchange, M & G also has a long/short position - is this something to do with stock connect programme I wonder ?

https://sc.hkexnews.hk/gb/di.hkex.com.hk/di/NSAllFormList.aspx?sa2=an&sid=344192&corpn=HUTCHMED+(China)+Ltd.&sd=07/05/2021&ed=07/05/2022&cid=0&sa1=cl&scsd=07%2f05%2f2021&sced=07%2f05%2f2022&sc=13&src=MAIN&lang=EN&g_lang=en&

Just a thought (clutching at straws), could there be some corporate activity preventing such?

Its down on 28k of shares, ago keeps hitting the bid with 100 shares until it meets resistance.

Either way, directors are losing same of the rest of us, difference being they were gifted the shares.