HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

Hutchison China MediTech Ltd / Equity Bottom-Up

<ul>
<li>HUTCHMED’s 23H1 results were in line with expectation. We updated our forecast for the three core products. Its 2023 total revenue would achieve a high double-digit growth. HUTCHMED is undervalued. </li>
<li>Performance prospects for 2024 and beyond largely depend on whether fruquintinib can smoothly obtain FDA approval in 2023, which means significant progress in internationalization and possibility of breakeven in 2025.</li>
<li>Based on the performance so far, we think the clarity of HUTCHMED’s performance is high and the guidance given by management is reliable. The Company deserves more attention from investors.</li>
</ul>


HUTCHMED’s 23H1 results were in line with expectation. We updated our forecast for the three core products. Its 2023 total revenue would achieve a high double-digit growth. HUTCHMED is undervalued. 
Performance prospects for 2024 and beyond largely depend on whether fruquintinib can smoothly obtain FDA approval in 2023, which means significant progress in internationalization and possibility of breakeven in 2025.
Based on the performance so far, we think the clarity of HUTCHMED’s performance is high and the guidance given by management is reliable. The Company deserves more attention from investors.


Hutchmed China Ltd (13.HK/​HCM.US) 23H1 - This Company Is Becoming More Attractive

Ascentage Pharma Group Corp / Equity Bottom-Up

<ul>
<li>For full-year 2024, sales of olverembatinib is expected to reach about RMB240 million, and there is a possibility of exceeding expectations. RMB500 million sales of olverembatinib is expected in 2025.</li>
<li>Market value of US$1.25 – 1.9 billion is reasonable range for Ascentage if just considering olverembatinib alone. The peak sales of APG-2575 is expected to surpass olverembatinib in overseas markets. </li>
<li>The next big catalyst is the potential licensing cooperation with MNCs for APG-2575, if reaches, would push Ascentage’s market value to surpass HUTCHMED, as prospects of APG-2575 is basically guaranteed.</li>
</ul>


For full-year 2024, sales of olverembatinib is expected to reach about RMB240 million, and there is a possibility of exceeding expectations. RMB500 million sales of olverembatinib is expected in 2025.
Market value of US$1.25 – 1.9 billion is reasonable range for Ascentage if just considering olverembatinib alone. The peak sales of APG-2575 is expected to surpass olverembatinib in overseas markets. 
The next big catalyst is the potential licensing cooperation with MNCs for APG-2575, if reaches, would push Ascentage’s market value to surpass HUTCHMED, as prospects of APG-2575 is basically guaranteed.


Ascentage Pharma (6855.HK) - The Future Valuation Leap Is Worth Looking Forward To

<ul>
<li>HUTCHMED will receive a US$20 million milestone payment from its partner Takeda. In our view, peak sales of fruquintinib is expected to reach about US$700 million in overseas markets.</li>
<li>After the Head of AstraZeneca China has been detained by authorities, AstraZeneca's future commercialization would be affected, which will have a negative impact on savolitinib and HUTCHMED in short term.</li>
<li>Reasonable market value of HUTCHMED based on the three major products is about US$2.7-3.3 billion assuming P/S of 4. If market value is below US$2.5 billion, HUTCHMED is undervalued.</li>
</ul>


HUTCHMED will receive a US$20 million milestone payment from its partner Takeda. In our view, peak sales of fruquintinib is expected to reach about US$700 million in overseas markets.
After the Head of AstraZeneca China has been detained by authorities, AstraZeneca's future commercialization would be affected, which will have a negative impact on savolitinib and HUTCHMED in short term.
Reasonable market value of HUTCHMED based on the three major products is about US$2.7-3.3 billion assuming P/S of 4. If market value is below US$2.5 billion, HUTCHMED is undervalued.


Hutchmed China Ltd (13.HK/​​HCM.US) - The Fundamentals Remain Strong

Thematic (Sector/Industry)

<ul>
<li>The assassination of Trump in July has greatly increased the probability of his election as president this year. However, a Trump presidency is not necessarily good for healthcare industry.</li>
<li>Trump's reform in the field of healthcare has two major propositions - One is to achieve the independence of US pharmaceutical supply chain. The other is to reduce drug prices.</li>
<li>From a US national security perspective, China's APIs/CXO would be the segments with the highest sanction risk. China Biotech may also face some headwinds. The risk of "decoupling" further increases.</li>
</ul>


The assassination of Trump in July has greatly increased the probability of his election as president this year. However, a Trump presidency is not necessarily good for healthcare industry.
Trump's reform in the field of healthcare has two major propositions - One is to achieve the independence of US pharmaceutical supply chain. The other is to reduce drug prices.
From a US national security perspective, China's APIs/CXO would be the segments with the highest sanction risk. China Biotech may also face some headwinds. The risk of "decoupling" further increases.


What Does a Trump Presidency Mean for China Healthcare?

Event-Driven

China Traditional Chinese Medicine / Event-Driven

<ul>
<li>The “industry clearing”  of innovative drug companies is far longer and more brutal than imagined. But Chinese innovative drug ecosystem will ultimately usher in a better innovation pattern in the future.</li>
<li>For every innovative pharmaceutical company with ambitious goals, globalization is a “must option”. With more and more Chinese biotech achieving success, the internationalization prospects will become better and better.</li>
<li>China TCM’s privatization failure made us realize large SOEs we always believe in would violate their commitments to market/investors.Now, we need to get back to the fundamentals to minimize losses.</li>
</ul>


The “industry clearing”  of innovative drug companies is far longer and more brutal than imagined. But Chinese innovative drug ecosystem will ultimately usher in a better innovation pattern in the future.
For every innovative pharmaceutical company with ambitious goals, globalization is a “must option”. With more and more Chinese biotech achieving success, the internationalization prospects will become better and better.
China TCM’s privatization failure made us realize large SOEs we always believe in would violate their commitments to market/investors.Now, we need to get back to the fundamentals to minimize losses.


China Healthcare Weekly (Oct.20)-A Big Lesson from China TCM's Deal Break, “Must Option” of Biotech

Hong Kong

Hutchison China MediTech Ltd develops, manufactures, and sells pharmaceutical products. The Company offers drugs for oncology and autoimmune diseases treatment. Hutchison China MediTech markets its products globally.

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Hutchison China MediTech Ltd (HCM US)

Hutchmed China Ltd (13.HK/HCM.US) 23H1 - This Company Is Becoming More Attractive

We have seen over 35% share price rally after this insight was published. Obviously, the market is optimistic about the upcoming fruquintinib's FDA...

Xinyao (Criss) Wang

Ascentage Pharma (6855.HK) - The Future Valuation Leap Is Worth Looking Forward To

Olverembatinib sales is expected to reach RMB240 million in 2024, RMB500 million in 2025. Reasonable market value is US$1.25-1.9 billion. Licensing...

Xinyao (Criss) Wang

Hutchmed China Ltd (13.HK/HCM.US) - The Fundamentals Remain Strong

HUTCHMED receives $20 million milestone from Takeda. Fruquintinib peak sales is expected to reach $1 billion.AstraZeneca China Head's detainment...

Xinyao (Criss) Wang

What Does a Trump Presidency Mean for China Healthcare?

Trump successfully elected as the US President. His reform in healthcare is to achieve the independence of US pharmaceutical supply chain and...

Xinyao (Criss) Wang

China Healthcare Weekly (Oct.20)-A Big Lesson from China TCM's Deal Break, “Must Option” of Biotech

The break of China TCM’s privatization deal has taught us an important lesson.Globalization is a “must option”. The “industry clearing” of...

Xinyao (Criss) Wang

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Hutchmed China Ltd (13.HK/​HCM.US) 23H1 - This Company Is Becoming More Attractive

We have seen over 35% share price rally after this insight was published. Obviously, the market is optimistic about the upcoming fruquintinib's FDA...

Xinyao (Criss) Wang

Ascentage Pharma (6855.HK) - The Future Valuation Leap Is Worth Looking Forward To

Olverembatinib sales is expected to reach RMB240 million in 2024, RMB500 million in 2025. Reasonable market value is US$1.25-1.9 billion. Licensing...

Xinyao (Criss) Wang

Hutchmed China Ltd (13.HK/​​HCM.US) - The Fundamentals Remain Strong

​HUTCHMED receives $20 million milestone from Takeda. Fruquintinib peak sales is expected to reach $1 billion.AstraZeneca China Head's detainment...

Xinyao (Criss) Wang

What Does a Trump Presidency Mean for China Healthcare?

Trump successfully elected as the US President. His reform in healthcare is to achieve the independence of US pharmaceutical supply chain and...

Xinyao (Criss) Wang

China Healthcare Weekly (Oct.20)-A Big Lesson from China TCM's Deal Break, “Must Option” of Biotech

The break of China TCM’s privatization deal has taught us an important lesson.Globalization is a “must option”. The “industry clearing” of...

Xinyao (Criss) Wang

Hutchmed China Ltd (13.HK/HCM.US) 23H1 - This Company Is Becoming More Attractive

Hutchmed China Ltd (13.HK/HCM.US) - The Fundamentals Remain Strong

HUTCHMED receives $20 million milestone from Takeda. Fruquintinib peak sales is expected to reach $1 billion.AstraZeneca China Head's detainment...