Member Info for Jatw

A 5% buy back would cost around HK$1bn or £100m/ $130m.

I just dont see the Board doing it on current revenue visibility - there is too much uncertainty to be sure of being cash positive from drug sales. Of course if they land an international partner for Sovlep, then a large upfront payment may change the picture somewhat.

As for M&A, CKHH will need to be persuaded of the merits….a deep pocketed Western pharma can easily afford HCM even with a 100% premium….local offers may be more share based with lower premium…there are significant cost savings to be realised with overlapping programs with Innovent / Beigene etc but we dont know whether there are change of control terms in the licenced products that could strip product value out of any deal…it is complicated when potential M&A partners have competing licensing arrangements..

Mr To is CKHH’s man…..he will get his orders…..difficult for the Board to do anything that CKHH does not want.

HCM itself is too small and not yet listed in the mainland so will not be on the radar of the chinese financial market regulator…..the same cannot be said for China legacy pharma, esp those with CCP owners.

BTW when do you think HCM will be making sufficient profits to enable significant returns to Shareholders? I cant see this until 2026/27. The 2024 NDAs should lead to marketing approvals during 2025 and first full year of sales in 2026…..so that is my earliest timeframe for determining excess capital.

Currently around 3.5% of AUM……Jupiter has a similar sized book and is valued at 1.25%

Margin difference accounts for some of the above….but does this indicate ASHM is overvalued and Jup undervalued?

With the right incentives in place, owners and executives should be aiming to advance share prices…..when the regulator has to remind companies of this, there must be great concern about popular discontent in the CCP.

I don’t think the HCM board is in a position to declare it has excess assets to do a buy back yet..although that is quite a likely outcome in 2026/27…..but it might see short term opportunities to buy mainland operations…..the regulatory door would appear to be open to this…and if you dont pay much premium over the hard assets acquired there is limited risk..

Now we have some analysis of the Frutiga results, Takeda will need to decide whether to progress to a global study…..If they do, they will need to consider the design and end points, The PFS data looks strong, with OS harder to determine. From a patient perspective PFS may be just as significant as OS

how long it will take to hear their decision?

I am beginning to fear the worst for the Amdiz study….an NDA was suggested by end 23 but there has not even been news of the results….

They should tell us the bad as well as the good news….rather than just quietly dropping it into a pipeline update….it was prominent in last year’s milestones and there is no hiding from it.

Having said that, it could just be administrative delays….the Sovlep read out was given in (august/sept?) but missed the Y/E NDA target by a short time.

…it would appear so

If even the Guardian can carry an article grudgingly supportive of the 3/Vod UK merger, then the prospects for the deal are looking up…..although it may not be approved for some time.

Italy allowed 3/Wind tie up but imposed conditions that have allowed Illiad to dominate the cheaper PAYG space as a MVNO….such that it thought it could acquire VOD Italia.

MVNOs are already 17% of the UK market….with some support of the MVNO market, the 3/Vod merger will probably get through. Although whether this should be celebrated by the 3 remaining network operators will be an open question.

What is the PI mood?

Take the money and accept by 15th? And be paid at the end of Feb?

Or see what happens on 15th and then sell?

I have 1000 shares which is a rounding error in the number of shares so I am tempted to take the cash now.

Selling before the dividend entitlement and buying back when ex-div converts the dividend income into capital gain (if xdiv is the only movement), so if this is a GIA transaction you may prefer to have the divi (if within annual allowance) or capital gain (which has a lower tax rate if outside the annual allowance). In an ISA/SIPP there is no tax effect so in theory there should not be much to be gained by selling around the XD date…….but these are volatile times….good luck,but I will be holding within ISA/SIPPs rather than trading.

The value of the 4 assets licensed to Inmagene is probably not counted towards their future profitability aim….the two assets (IMG 004 and 007) are shown on the Inmagene pipeline as entering Ph 2….the phase 1s ran from 2022-23. Still several years from a regular income stream for HCM

I agree with 1pencil….very difficult to achieve.

It is only CKHH that could do it…and they would need to bid for the whole company…..the NEDs and advisor roles would be critical…..as they would need to consider the fairness and reasonableness of any offer for all shareholders.

HK used to have some rules that allowed creeping takeovers without a formal offer, I am not sure if those rules still exist….but that would require CKHH to buy in the market or perhaps a buy back of shares raising their stake over time…..

CKHH has a number of listed subsidiaries and as far as I am aware has not actively bought any out. Ownership % range from 15% to 75% - It has sold /merged a few of these with other listed companies eg Orange to Mannesmann/Vodafone, HTA (3 in Australia was listed and then merged with Vodafone and then merged again recently (the listing remains), Husky Oil was merged with Cenovus.

It does have large unlisted businesses (and has traded a number of Telecoms entities recently) and I would not be surprised if at some point CKHH looked to merge HCM with another business….whether that is listed or not will depend on the potential partner (eg a PE backed entity would not be, but presumably we would get a cash offer in that case).

CKHH is a relatively benign owner it holds HCM as an investment/Finance asset and while it has supported past development it has not put more cash in for some time and has been content for its ownership share to reduce. I think they will continue with this approach and be happy with a 15%-20% stake in a larger entity in time.

HK being separate from many China regulatory bodies has some disadvantages….HK could have had Elunate several years ago…..I assume no NRDL rates apply in HK….for the time being.

A few more million in sales can be expected in 2024.

It was loss making for RL, has had £££ invested in it and is still loss making….I doubt there will be much profit in a sale….esp since Succession is moving off the platform to Aviva (new owners).

Don’t expect a special dividend/ buy back on the back of this….they may be virtually giving it away.

Citywire is reporting that M&G has put its platform (bought in 2020 from Royal London) up for sale.

Good to see they are quitting a losing strategy and not throwing more cash into it if it is unlikely to reach scale to break even…..better to sell it and then rent someone else’s infrastructure.

It is the results day and what they say about the cash generation and dividend direction that is important…..the XD adjustment should be irrelevant.

These are some of the questions to be asking

How much capital is generated over the next 3 years?

What is the dividend cover?

Will there be a buy back programme?

What are their plans for debt refinancing/redemption and the SII debt ratio?

They have expressed a desire for the debt ratio to be under 30%. It was last reported as 36% with the excess % largely due to the last buy back removing £500m of assets from the company. With debt costing 5-6% and the dividend costing 8-9% the pure financial play is to gear up and buy back more shares….but that requires a change in approach. The results will be interesting for many reasons.

The fund performance must have been excellent to raise AUM as it did…..which will help justification for positive value assessments.

This is a business that needs some serious reforms which may be expensive and painful for the company and the “partners”.

In 2021, the SP was £17. Wealth management was seen as the sexy high margin part of financial services because controlling access to clients was seen as the stickiest of fee bases……

What has gone wrong?

Clients being charged for no service.

Clients being charged high fees and early termination fees

Market pressures to reduce costs and fee charges.

Inflation

STJ reputation is a little tarnished and the Share Price has deflated…..

But there is still a decent business here, it has a large (wealthy) client base, once it has been transformed there should be a decent chance of a recovery of the SP…..but not back to £15-17, I am thinking 8-10.

The new CEO needs to be given time to set out his reforms and then implement them, so I dont see this share going above £7 in 2024 (absent M&A).

Buy in mid 2025 - if the new business starts to make some headway.

Growth likely coming more from expansion overseas than UK….the CMA review will give greater clarity over the UK potential….there will be scope for continued expansion, but more limited and larger M&A will be off the table.

Debt has grown driven by the AUS purchases…this should not be a problem as mgmt has learnt to keep its debt under control….

Total div for 2023 likely to be in the range of last year + up to 5% per share.

The cash cost is about £500m pa….why would they want to add up to 25m to the cash outflow.

Ideally they need to have more dividend cover so as low an increment that the main investors will let them get away with is in order.

Let’s see what the debt equity split is on any fund raise….

The story seemed to be that funds were needed to allow business transfers between the advisors/salesmen “partners”.

The older ones are retiring faster than new ones want to take up the business…..think the partners are going to be in for a shock as to the haircut they need to take because future fees are not going to match those of the past and their successors cant afford to pay the old rate.

Maybe there are guaranteed terms in their partnership agreement, in which case shareholders are going to take the hit.

No one will feel sorry…..best avoid until the situation is clear.