Member Info for tacly

After over 5 years I am only a few percent up, which in real term have lost money. Comparing HCM with Beigene I come to the conclusion that HCM management is inept at anything to do with the stock market. Both HCM and Beigene have fallen badly this year but Beigene is a few hundred percent up in 5 years whereas HCM isn't. HCM management is good at delivering the pipeline. Now that the CEO has a research and development background the pipeline delivery may get even better. Whether that translate to an exponential growth in share price or not I don't know. Luckily HCM is less than 5% of my portfolios so I intend to wait till it become profitable, hopefully in a few years time.

Beigene. A while back I sold some Hutchmed and bought Beigene because its management seem much bolder in making commercial decisions than Hutchmed. It went to HK before Hutchmed, already has a Shanghai listing, US manufacturing & R&D coming, large pipeline, good at building partnerships, good cash position. However, my timing was wrong so I am now sitting at a loss :-(

What has happened to the nearly 20% Russian stock in this tracker? The drop in share price recently seem to indicate that they have been priced at $0.00 ?

IWEB transfer took about a month. I have no idea about BMO's charges. I am not with them anymore.

Calm. Calm. Analysts are doing their job in DCF, projections for revenue, EBIT and cashflow … etc. They are useful. No analysts in the world can predict a “regulator” willing to harm their own citizens’ and their allies’ (Canada) investments to get at China, Ukraine war, Taiwan, Putin going nuclear… etc.

Hutchmed stated on their website that the Principal Place of Business is HK so that is their HQ. Therefore they can’t be audited from Cayman.

Don’t forget Hutchmed is 70% owned by CKHH, institutions & management, has enough cash to last until 2024/5 and is predicted to be profitable by 2025 so it is not going bankrupt overnight, worthless or worth less or something.

One problem with too low a share price is that the company might be tempted to take it private, do some deals with the institutions and buy out the retail investors at the prevailing price plus a premium.

In the current situation there are 3 possible outcomes:

1) China and US do a deal -> share price go up.
2) Company delist and go private -> share price go up (because retail investors will be bought out at prevailing price plus a premium) unless the company decides to fxxx the retail investors by only offer the prevailing price.
3) Company delist from US but continue in HK & London, later Shanghai -> share price go up slowly.

There seem to be an over- reaction to the potential delisting. I know the NASDAQ listing carries a premium because investors believe US market has what seems like a more vigorous regulatory environment. But is that premium worth 100% of the current share price? I doubt it.

Hutchmed’s ADS shares are fully fungible with the shares listed on HKEX and London AIM so US investors can switch to those two markets if need be.

Don’t forget Hutchmed is ~40% owned by CKHH (Li Ka-shing) and ~30% owned by institution and management so it not like it is going bankrupt overnight or something.

If Hutchmed is delisted from Nasdaq that is not the end of the world. It can always get a listing on the STAR market in Shanghai. There is an academic study paper here https://dspace.mit.edu/bitstream/handle/1721.1/127009/1191230769-MIT.pdf , page 22 that says the average company increased its value by 1.9 times between delisting in the US and relisting in China.

Hutchmed is still predicted to be profitable by 2025. That has not changed.

A relevant HK Newspaper report worth reading, especially the 3 options near the end of the report:

https://caifuhao-eastmoney-com.translate.goog/news/20220311124447099715150?from=guba&name=5ZKM6buE5Yy76I2v5ZCn&gubaurl=aHR0cDovL2d1YmEuZWFzdG1vbmV5LmNvbS9saXN0LGhrMDAwMTMuaHRtbA%3D%3D&_x_tr_sl=zh-CN&_x_tr_tl=en&_x_tr_hl=en&_x_tr_pto=wapp

Also, according to some HK Newspapers, it is not just a matter of handing over audit data because “Under the PRC Securities Law, China-based issuers may not provide documents relating to certain business activities to authorities abroad without Chinese securities regulator approval.”

Agree. HCM hasn’t got a response to this yet. The Company’s RNS is only re-stating the facts:

“…. shares will be delisted …… unless the Act is amended …..or the PCAOB is able to conduct a full inspection of the Company's auditor ….”

I think the Company is trying to work out how to deal with this.

Thanks saigonsally. Sadly no, the management has miss the opportunity of a London main market listing and a listing in Shanghai while it was still bright and sunny. Both the CEO and the CFO have not purchased any HCM shares in the last 5 years. It seems they are quite happy with the fat salary and free shares without taking risk with their own money.

Hi daveycaferacer, the link https://pdf.dfcfw.com/pdf/H3_AP202203071551123207_1.PDF you posted is from CMB (China Merchants Bank), released on 7th March. The one I have been searching for is the English version of this https://pdf.dfcfw.com/pdf/H3_AP202203081551379364_1.pdf from CMS (China Merchants Securities), released on 8th March.

Not much comfort to say this but I think the drop is largely due to the illiquid nature of the shares which I have pointed out in the past but HCM management failed to address.

I look at the trading volume (as percentage of share issued) in Nasdaq and this is what I found:

02/03 - Trading volume 0.15% share drop -6.45%
03/03 - Trading volume 0.20% share drop -6.95%
04/03 - Trading volume 0.45% share drop -11.49%
07/03 - Trading volume 0.31% share drop -13.26%
08/03 - Trading volume 0.32% share drop -3.1%

So, over 5 trading days, a total trading volume 1.12% caused a share price drop of 28%. I draw slight comfort from the fact that, volume wise, it hasn't been a massive sell off.

In comparison, the trading volume of Beigene's A-share in Shanghai is 2% - 3% in most days.

Incredible but true - China Merchants Securities (CMS) released an analyst report yesterday - here is the Chinese version - https://pdf.dfcfw.com/pdf/H3_AP202203081551379364_1.pdf - they also released an English version but didn't post a link to it. Same old blah blah blah and gave a 12 month target price of HKD$84.8 / £8.23.

It seems a bit like cooking. You gave 2 chefs the same ingredients. A good chef (Beigene) came back in half the time (10 years) with a good dish. A bad chef (HCM) took twice as long (20 years) and came back with a disaster.

Webmaster should stop using "," in a webpage's URL. Here is the link again https://guba-eastmoney-com.translate.goog/news%2Chk00013%2C1150554296.html?_x_tr_sl=zh-CN&_x_tr_tl=en&_x_tr_hl=en&_x_tr_pto=wapp

CICC (China International Capital Corporation) target price for Hutchmed HKD$56.26 / £5.49 see https://guba-eastmoney-com.translate.goog/news,hk00013,1150554296.html?_x_tr_sl=zh-CN&_x_tr_tl=en&_x_tr_hl=en&_x_tr_pto=wapp . Unfortunately I can't see the analyst report from CICC because apparently you need a HK / China mobile phone number to register.

This is down from the last target price of HKD$80.21 / £7.55 issued by CICC on 28 Sep 2021.

Report released to day, 7th Mar 2022 - see https://pdf.dfcfw.com/pdf/H3_AP202203071551123207_1.PDF

Is the management of HCM competent enough to achieve such a valuation for the share price?

Oops - here it is again - https://guba-eastmoney-com.translate.goog/news%2Chk00013%2C1148885020.html?_x_tr_sl=zh-CN&_x_tr_tl=en&_x_tr_hl=en&_x_tr_pto=wapp

HK paper reports that the market is not happy with the >50% increases in net losses - https://guba-eastmoney-com.translate.goog/news,hk00013,1148885020.html?_x_tr_sl=zh-CN&_x_tr_tl=en&_x_tr_hl=en&_x_tr_pto=wapp

I hope this leads to a listing in the stock market in Shanghai, where Dr. Su attended university. China is HCM biggest market so having a Chinese CEO who can promote the company in the local dialect can be a very good thing.

@Laughoutloud, without consolidation, there are more shares so each share would not get 31.5p for FY22. Each share would only get 31.5p x 3 / 4 = 23.625p for FY22. You only get 31.5p for FY22 because there are less shares around due to consolidation.