Member Info for Jatw

It seems to me that Governments around the world are wrestling with increasingly expensive medications that the people and doctors want to access via public healthcare.

China has its national drug reimbursement list with large discounts to give access to the heatlthcare hospital pharmacies and state funding.

The UK imposes a levy on manufacturers to compensate for increasing costs of drugs

The US seems to be behind the curve….in paying what the manufacturer demands rather than negotiating a lower price to be on the government list….

It does seem to me that pharma may become slightly less profitable….but that may depend on what will the industry be able to claw back through higher charges to non government revenue streams? Or what other concessions it may be able to wring out of the politicians.

Apart from some shareholders in common, MNG and PRU are completely separate so there should be no direct effect on MNG. There is very little geographical overlap.

There will be an RNS about the exchange rate achieved slightly before the payment date…..last example is 27 April 2023…..

Or do the maths Tom78 nearer ex div date.

Have to remember Bulmer was an emergency appointment….after Turner walked suddenly.

The CEO and Board may want to give him another chance….or keep him as a scapegoat if the numbers dont work out so well.

It seems 2023 will give them a good start towards their target. 2024 may be harder against higher comparatives (including some catch up) then they need their investment of $1bn to payback.

The Asian middle class growth story continues to be a long term trend.

The JV issue in China and India is not being grasped. These have to be less integrated because of the ownership issues….but given the Chinese are claiming some India territory on their new maps that may be for the best.

The Executive Management team is now distanced from the old London based Executive. I hope they will drive the Asia / Africa focus with improved local insight.

Refinance with Asia based money, get Asian investors owning an higher proportion of Pru and move the main listing from London towards the end of the 5 year target period….little to be gained by retaining a London presence in the medium term.

Double new business and operating free cash flow over 5 years….not a shabby target, but similar to historic growth rates……

Should double the SP but that all depends on macro factors….

A buy for me under £11 and add a £ a year.

The bio pharma market seems to be back on a roll over the last week - in HK/China.

And the good news for HCM keeps on coming. I doubt they were expecting BTD for the Savo gastric cancer line…..it is a small scale study at 60 patients…but seems to take a while because of its end points….first patient enrolled in March this year, hopefully BTD will allow a faster accumulation of the cohort…still 2026 before new revenue arises.

The messaging from the medical community associated with FRESCO2 and the FDA rolling submission indicates to me that approval is highly likely….and that will unlock substantial sales for Takeda with approx 20% royalty for HCM.

in which case the question is how much of the value is already included in the SP?

Will there be a burst of speculative activity or will the market just shrug and wait for 2024-25-26 financial results?

might be more helpful to reverse engineer what a $xbn company needs to achieve.

larger (steady state?) pharma trade on 12-15x earnings they also carry debt, so their enterprise value is higher. hcm has no debt so maybe we ought to consider 20x earnings, so $10bn (4x todays value), it would need to be making $500m profit pa.

if takeda can make fru*****inib a blockbuster with $1bn usd sales ex-china that will provide about $200m. there will be other ex-china royalties - say they make $250m in total from royalties that leaves them to make $250m in china.

say they cover $300m pa in r&d costs that is $550m net margin which means about $1100m revenue target for china. they are currently at $200m pa across three products. some new indications plus some new products will raise the revenue targets but 1100 feels quite a stretch from here.

if they can cover r&d costs from china sales, then royalties could support $4-5bn mcap

there are so many assumptions even at this very high level…..but the direction of travel will certainly be clearer at the end of 2024 and i can certainly see a route to supporting double the current valuation.

at the moment cash + jv + fixed assets means little value is attributable to the pharma products. so it would appear the only way can be up.

Yes, indeed, Innovent produced strong financials after the market yesterday. They raised revenue by 20% and they are very close to an operational profit and have $1.2bn in cash. They are at a similar inflexion point to HCM - but are larger with a more extensive product set and partnerships, including a strategic investment by Sanofi. I am hopeful the two companies will follow similar paths to success. We can all do with some diversification.

These transitional pharma cos will soon be routinely generating cash from operations…..what will they choose to do with it?

If shares are still unloved, then a buy back will boost eps…..if they shares have doubled from here, then a 1-2% yield via dividends seems appropriate…..plus more (but focused) R&D.

I think China will want to see some local champions emerge so expect in market consolidation to reduce overall costs and duplicate R&D.

AIA reports on Thursday (24th) I expect Pru will take a cue from those results.

If the Chinese are putting equity into HK, then expect bouyant Q2 sales….any update on Q3 trading could swing the market.

The ESLIM-01 trial reports are said to be successful with the detailed results and NDA to appear later in the year.

The target addressable market appears to be around 45k pts in China (39% of ITP pts) that currently replace over a 3 year cycle…..it seems to me that we will have to wait for experience data in 5 yrs to see if there is an impact on overall patient survival. One really important element to adoption is that there was a very short observed response rate (with a couple of weeks) so clinicians can quickly try it out on their candidate patients and discontinue if there is limited response……no expensive bio marker testing, just try it and do a blood platelet count after a month. I suspect this can drive higher adoption rates.

There are about 50% by volume of similar patients in other major markets (US / Europe and Japan). Globally China 40%, Major markets 20% RoW 40%.

The development pathway will be a good test for their new strategy….will they be able to find a partner to do the global MRCT if they want to take this ex-China….the HY presentation implied they would be setting up trial work in the US….maybe they have to do that and gain FDA agreement (perhaps BTD) to start before they hand over to a partner…

SP currently flat in HK in a down market….unsurprising, it is only NDAs and cash that seem to get the market excited….best case scenario for Sovlep is high impact data presented, Chinese accelerated approval mid 2024, US trial starts early 2024 with a partner on board for global development….

That is a difficult one to respond to as most of my investments seem to be at best going sideways….it seems to me that the success stories of the last few years have often been built on hope of future profit rather than actual earnings…..currently anything AI is flavour of the month…..nothing listed is at its correct value…..

I hope HCM is bumping along the bottom of its likely value but as we know it can be lower!

I am not going to put new money in and may sell some to diversify into other companies (Beigene and Innovent seem likely candidates)….but I expect to hold the bulk of my current holding for 5 years or more

Hutchmed got a mention due to it being profitable and the cash received from Takeda.

While CKHH profits were down there does not appear to be a funding ./ profitability need that would trigger a sale transaction. However should its UK merger of 3 with Vodafone not go ahead next year, and its other business continue to lose profitability, this could bring more pressure to realise some of its investment in 2025-7…

HK has closed in a new bear market….yet it is about 20% higher than the lows it hit around end October last year…..v volatile and driven by the outlook for China which appears to be bearish again after not meeting expectations surrounding the end of Covid restrictions on the mainland, the ongoing property developer debt issues…..

All of which is irrelevant to HCM….who have cash in the bank, further product developments coming soon….and the prospect of meaningful royalty revenues commencing in 2024.

For long term investors this is surely a good time to buy..

Always wrong……and no actual analysis that shows an understanding of the company.

It is a skeleton article with some numbers dropped in……if you follow enough companies you will see the pattern…..

You will only be up the capital….the dividend will come off the share price and does not provide a return on its own.

Depending on how you hold your shares you may have to pay income tax on the dividend…..

Dear everything…..there are many here who have been seeing Just as undervalued for a long time….the market is either disinterested, does not trust the numbers (because all insurance is complicated). It has a checkered history with the regulator deciding its business model was inappropriate in 2018. Life was also tough in a near zero interest rate environment.

A lot of hard work has been done by the company to reshape its business, lifetime mortgages are a falling part of its portfolio and it has rebuilt its capital position. The market it operates in has come back to life as annuities provide a higher income for the purchase price in this higher interest rate environment.

There will be significant growth in the pipeline as shown in its investor presentation (well worth a read).

Will the market change its view? Well its competitors have had flat share prices too and they pay 8/9% dividends…..Just has some way to go on that measure yielding about 2%…..so you may be disappointed….

Either buy and be prepared for a long wait…….or wait for an upward trend to be established…but miss out on the lower end of any gains.

I dont think you are going to lose money if you enter in the low 80s, but dont expect a quick profit.

Having said the market is not biting….it is not chewing Just and spitting it out either.

Significantly better performance than other asset owners with significant annuity books.

LGEN -4% PHNX -3% MNG -2.5% AV -1.5%

Market not biting so far…there are a lot of uncertainties in valuing this business so caution is understandable.

However, the story does look brighter and if the CSM does double in 5 years that should double the SP on its own.

Re potential bidders, there are some that would need infrastructure (eg MNG) others would be consolidation - but the market does not need that as capacity is scarce and new business abundant.…. slow and steady appreciation is what we can hope for….or an increasing yield if the market is not willing to uplift the SP. I expect a total return of 15% will be seen through SP and dividends….not too shabby.