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My guess is the SP will go down in the first/few days as day traders & short termers off load them for a quick profit. Half of the news reports in HK mention Li Ka-Shing when reporting on Hutchmed https://www.baidu.com/s?tn=news&rtt=1&bsst=1&wd=%E5%92%8C%E9%BB%84%E5%8C%BB%E8%8D%AF&cl=2&origin=ps . This share should do very well in HK long term just because Li Ka-Shing is a very well respected business titan over there.
Amones, the going private option seems to explain the present situation pretty well whereas everything else don't make sense. CPP Investment was involved in taking Inmarsat private. Hutchison can pull in some private equity firms, together with GA, CPP, Baring etc to take this private. They have enough votes. Go private for a few years, to the point of “proven commercial success first”, then do a HK/Shanghai IPO.
Thanks for the information. Dividend at 5.2% is still good. I am a short term speculator. 20%-25% gain and I'll be out of here.
For reliable dividend I prefer one of those dividend heroes such as City of London or Merchants trust.
I looked at AV. website https://www.aviva.com/investors/dividends/#anchor-current-historical-dividend-table which stated dividend for the last 12 months as 6p + 7p + 14p = 27p.
I started buying AV in the last 2 week averaging 401p. I am attracted by the high dividend yield of 6.7%, the low P/E ratio, the cash from the recent disposals and the strategies of the new CEO. Hopefully this share will hit 500p by the end of this year.
Up till now I believe the Hutchmed board and HHHL, having mishandled their ADS placements a few times, are quite happy with relying on getting big chunks of $100M investment from GA, Baring etc to finance the company to the point of “proven commercial success first”, then do a HK/Shanghai listing.
Why did GA, Baring etc invest? It must be the promise of jam tomorrow with Hutchmed meeting milestones and HK/Shanghai listing pushing up the share price.
Thus the company has been either deliberately keeping the share price low in order to attract these big chunks of $100M investments, or incompetently handling the situation. Either way, the result is same: the share price is low and getting worst. It is quite alarming to see that the achievement of milestones or getting awards did not make any difference. There has been a persistence lack of interest in buying HCM shares.
As the result of the lacking of buying interest, even a small-ish sell can push down the share price dramatically as the market makers will just push down the price until someone buy the shares.
I am beginning to doubt whether a HK listing can rescue the share price now as the company may have waited too long and missed the opportunity. Surely, any potential future Chinese investors in HK/Shanghai will look at Hutchmed’s share price history on Nasdaq and AIM markets and wonder whether this company is investable. They too buy shares to make money, not because of patriotic duties.
I will see how Christian Hogg presents himself at the fireside chat. Up till now I think he behaves more like a Chief Scientific Officer than a CEO while the Chair, CFO and CSO are nowhere to be seen. Not sure the non-execs are worth their money either.
I am certainly wouldn’t buy anymore Hutchmed shares. I am agonising as to whether I should hold until 2024 “proven commercial success first” HK/Shanghai listing, or dump it now while I am still in a tiny profit and buy it back when the share is lower, or just call it a day and move on.
Selling while the share price is rapidly down is rarely a good idea unless there are clear signals of the company heading toward bankruptcy which Hutchmed is definitely not.
HHHL, GA, Baring, Christian Hogg, etc all have big chunks of skin in the game. There is literally billions of dollars at stake here. No way these guys will stand idly and let Hutchmed sink.
So it’s a hold for me. It’s time like this that you need to have nerves of steel. Numbers don’t lie.
It is very strange that the only reason I remain invested in HutchMed is because the money I didn’t invested in HutchMed is doing very well, therefore I can afford to wait.
The recent Baring, GA investments, plus CH having a lot of skin in the game (£40m+) also reassure me that this share will perform in the long term.
As to what the Company can do to change perception in the market, we all know that moving to the right markets:- LSE main listing, HK/Shanghai is the answer but the Company is not doing that. May be its one of Deng Xiaoping’s build your capability, bid your time thing from the majority shareholder HHHL’s Chinese owner.
As HutchMed now more or less has enough cash to last till 2024, I don’t think we will see any LSE main listing, HK/Shanghai till then. I hope I am wrong.
Reading some old news:
https://www.thestandard.com.hk/section-news/section/2/221606/Drug-maker-Chi-Med-still-aims-to-list-in-HK
and
https://www.edisongroup.com/publication/to-china-and-beyond-2/27486/
One thing in common is that Chi-Med is predicted to make a profit as soon as 2024 and the Edison article said sustainable profitability thereafter.
I do not believe HUTCHMED has any intention of a HK listing until 2024.
The reason is that they will need a lot of cash in the next few years to reach the profitability predicted for 2024. At the moment, with share price being low, it is much easier to persuade the like of General Atlantic (GA) to part with $100m if there is a good chance of GA double/treble its money in the next few years with a HK listing. Do a few more GA type deals, together with some of the options mentioned in Jatw’s post, then a HK listing to raise another $500m as stated in the first link.
If, on the other hand, HUTCHMED do a HK listing now and the share price double/treble, it will not be able to persuade the like of GA to part with $100m three times. All it has is $500m from HK listing.
If HUTCHMED can continue to do GA type deal in $100m blocks, then I believe we won’t have a HK listing until 2024. I hope I am wrong.
The market is valuing the company correctly at the moment. As I have posted before, HUTCHMED is in the WRONG market.
Anyone who has been to the Far- East, South East Asia will know that most of the locals love a fruit calls Durian. They even call it the “King of Fruit” and the local market is full of them.
Try selling Durians in the Western markets here! Hardly anyone is interested.
HUTCHMED is the Durian in the Western Stock Markets.
I started holding HUTCHMED in 2016 and it is not a large chunk of my portfolio so I can continue to wait and pray.
https://www.scmp.com/business/companies/article/3099770/hong-kong-surpass-nasdaq-king-biotech-listings-five-10-years - hopefully HCM will be there one day.
My thinking out loud.
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The share price was ~ 220p for about 2 months before the interim result came out. Today it is ~ 194p. So ~12% drop since then.
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Looking at the money, from H1 2020 result https://www.legalandgeneralgroup.com/media/17912/hy20-slide-template-finalcms.pdf:
Page 5 - LG gets its Operating profit from: Retirement (LGR) £721m, Investment Management (LGIM) £196m, Capital (LGC) £123m and Insurance (LGI) £88m. In the result, LGR up, LGIM up, LGC down, LGI down.
Page 15 – The biggest down was LGC (-£50m) due to COVID-19. Estimate pushes this to -£60m.
Page 16 - The next biggest down was LGI (-£46m) due to COVID-19 insurance pay out. CoVID-19 future claims pushes this to -£80m.
Page 13 – LGIM up a bit (+4m).
Page 9 – LGR up (+£66m). LGR comprises Institutional (LRRI – up, +£61m) and Retail (LGRR – up, +£5m). Profit up due to a variety of factors detailed on that page.
Page 8 – Overall H1 2020 Operating profit down -6% compared to H1 2019.
Page 18 - LG said ambition is for a similar performance in H2.
Page 6 - Dividend should be safe given its 1.7x cover.
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Conclusion: Biggest earner LGR (£721m). Biggest winner LGR (+66m). Biggest loser LGI (-£80m). Biggest cause COVID-19.
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My guesses for the next 6 month:
1) If UK housing uncertainty remains (COVID-19 impact unchanged, wet Autumn and icy Winter so less building work)
2) And the mortality rate is worse (death rate in winter is always higher + COVID-19 + mis-management)
3) And LGRI’s new PRT business continues to drop (page 10 – H1 2019 was £6677m, H1 2020 was £3424m) –sale for the biggest earner wasn’t good
4) And no vaccine before March 2021.
Then LGC and LGI may continue down with LGI getting worse. LGIM the same. LGR up a little. LGR profit may balance out LGC and LGI loses but not enough. So end of financial year result may be a down, -6% or worse.
Given that H1 2020 Operating profit is already -6% compared to H1 2019, COVID-19 risks the same or worse, the biggest earner LGR’s H1 2020 sale wasn’t good and that LG said their ambition is for a similar performance in H2, may be the current price of ~194p is a fair price (6% known drop + 6% risk margin)?
So the best the share price may get to short term is the level when the interim result came out i.e. ~220p. The share price many yo-yo between 180p and 220p due to COVID-19, US election, Brexit, bad final result, vaccine...
For me, in the short term, if the share price drops close to 180p, it is a definite buy. Anything between 190p and 220p is a toss-up. In the long term, once the COVID-19 crisis is over, LG should returns to its long term average P/E of 10.8 which, at the current forecast EPS of 26p, the fair price for the share long term should be ~280p. So 194p may be an attractive entry point for the long termers. The dividend yield of 9% at today’s share price is an excellent return while waiting for the share price to recover.
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Wisdom of the crowd, please sh
Beigene has a Hong Kong listing. Its market cap before the HK listing in August 2018 was about 9.5B (see https://ycharts.com/companies/BGNE/market_cap ). HCM doesn't have a HK listing, will not move to a main LSE listing and been doing quite a few self-harm in the last few years by selling off its shares for cheap.
I could not find any updated figures since the release of the 2020 H1 result on 5th August so I guess the drop in the last few weeks is purely due to investor sentiment caused by COVID-19 panic.
If one is buying for the dividend now seem the perfect time as the current price of 180p and a dividend of 17.57p mean a dividend yield of 9.76%. My average is 193p and I am happy to continue to average down and hold for the long term. Those that said “These guys rely on bond yields and income from investments to pass on as divi . That’s evaporating!” clearly did not read the annual report and understand LGEN and where it gets its income from.
(1) The 2019 annual report is here: https://www.legalandgeneralgroup.com/media/17715/240101077_lg_ar2019_web-ready_lo-1.pdf - page 135 - L&G gets its income from: Retirement (LGR), Investment Management (LGIM), Capital (LGC) and Insurance (LGI).
(2) The 2020 H1 result is here: https://www.legalandgeneralgroup.com/media/17912/hy20-slide-template-finalcms.pdf - page 5 - LGR up, LGIM up, LGC down, LGI down. Page 6 – dividend well covered.
(3) The forecast EPS is here https://www.marketscreener.com/quote/stock/LEGAL-GENERAL-PLC-4002140/financials/
(4) The case for buying is here https://seekingalpha.com/article/4374327-legal-generals-9-yield-is-steal-covered-1_8x-eps
The 2020 forecast EPS is 26p. At the current share price of 180p this gives a P/E of 6.923. According to (3), the 2021 forecast EPS is 29p. Using the same P/E will give a share price of 200.77p. According to (1) page 3, the dividend has grown 7% every year (apart from 2020) which gives a 2021 dividend of 18.79p. So a total profit of 200.77p - 180p + 18.79p = 39.56p which is 21.97% profit from today’s share price of 180p.
According to (3), the average P/E is 10.8. According to (4), the CAGR for EPS is 11% and 13% for the dividend. If L&G can move toward these numbers in the next few years the return will be massive.
I am happy to hold for the long term.
Perhaps you are mistaking 5 years for 10 years? In my message I said 5 years. Here are the facts:
Share price on 18/08/2015 - £8.78 (source Hargreaves Lansdown)
Share price today: 18/08/2020 - £8.75
5 years annualised return : 4.73% (source MorningStar)
5 Years average RPI from 2019 to 2014: 2.6% + 3.3% + 3.6% + 1% + 2.4% = 12.3% => 2.46% per year (source statista.com)
Therefore a real yearly return of 4.73% - 2.46% = 2.27%
And a share price that didn't even grow in line with RPI and therefore down in real term.
As to the CEO, see simplywall.st, https://simplywall.st/news/is-national-grid-plc-lonng-overpaying-its-ceo/ , the CEO compensation has increased by more than 20% whilst company earnings have fallen more than 20%.
And I haven't started on the Chairman yet.
Unfortunately, I haven't sold all my WITAN shares due to hitting the capital gain limit.
Their half year result for the first half of 2020 is extraordinarily bad. Only 4 out of 10 portfolios perform above benchmark!
Extraordinary indeed considering even monkeys throwing darts can statistically get 5 out of 10 correct.
Why bother paying a yearly non-performance fee of 0.87% to "professionals" when a low cost world tracker such as Vanguard FTSE Global All Cap Index (0.24% fee) or Fidelity Index World P (0.12% fee) easily beat them over a 1,3 and 5 years period!