HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

<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

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Quantitative Analysis

<ul>
<li>We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of December 20th.</li>
<li>The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.</li>
<li>We highlight flows for Alibaba, CCB, China Mobile, ICBC, Ping An Insurance, Meituan, Tencent.</li>
</ul>


We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of December 20th.
The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.
We highlight flows for Alibaba, CCB, China Mobile, ICBC, Ping An Insurance, Meituan, Tencent.


Hong Kong Connect Flows (Dec 20th): Alibaba, CCB, China Mobile, ICBC, Ping An Insurance, Meituan

<ul>
<li>Fruquintinib US sales continue to be the main performance driver. License-out expectations for surufatinib is low.Highlight for savolitinib is the combination with osimertinib for NSCLC, which would bring high growth.</li>
<li>Future playbook of HUTCHMED is “continued sharp reduction of expenses + milestones from Takeda based on fruquintinib overseas sales = rapid narrowng of losses”.2024 overseas market sales may exceed US$300m.</li>
<li>There is not much problem with HUTCHMED completing its performance guidance for the year 2024. Reasonable market value range for HUTCHMED is US$1.75-3.75 billion. Breakeven is expected in 2025.</li>
</ul>


Fruquintinib US sales continue to be the main performance driver. License-out expectations for surufatinib is low.Highlight for savolitinib is the combination with osimertinib for NSCLC, which would bring high growth.
Future playbook of HUTCHMED is “continued sharp reduction of expenses + milestones from Takeda based on fruquintinib overseas sales = rapid narrowng of losses”.2024 overseas market sales may exceed US$300m.
There is not much problem with HUTCHMED completing its performance guidance for the year 2024. Reasonable market value range for HUTCHMED is US$1.75-3.75 billion. Breakeven is expected in 2025.


Hutchmed China Ltd (13.HK/​​HCM.US) 24H1 - Fruquintinib's US Sales Beat; Break-Even Is Within Reach

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

<ul><li>HCM’s oncology/immunology product revenue reached US$128mn in 1H24 (+59.6% YoY), including US$43mn revenue recognised from fruquintinib’s sales outside China.</li><li>The consolidated revenue from oncology/immunology including R&amp;D services and Takeda collaboration revenue, reached US$169mn in 1H24, representing 48% of the midpoint of the FY24 guidance range of US$300-400mn.</li><li>In 2Q24, fruquintinib recorded strong sales in the US market, +53% QoQ to JPY11.9bn (or c. US$80mn), up from JPY7.8bn (or c. US$52mn) in 1Q24. </li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

HCM’s oncology/immunology product revenue reached US$128mn in 1H24 (+59.6% YoY), including US$43mn revenue recognised from fruquintinib’s sales outside China.The consolidated revenue from oncology/immunology including R&amp;D services and Takeda collaboration revenue, reached US$169mn in 1H24, representing 48% of the midpoint of the FY24 guidance range of US$300-400mn.In 2Q24, fruquintinib recorded strong sales in the US market, +53% QoQ to JPY11.9bn (or c. US$80mn), up from JPY7.8bn (or c. US$52mn) in 1Q24. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Hutchmed (13 HK) - Fruquintinib’s Overseas Sales Beat

<ul>
<li>Takeda’s sales team is fully prepared for the launch of fruquintinib in EU. 2024 full-year overseas sales may once again beat the expectations. High growth is expected from 2024 to 2026.</li>
<li>Peak sales of fruquintinib + savolitinib + surufatinib that recorded in HUTCHMED’s revenue is expected to be over US$750 million.Without considering other revenue, market value would reach about US$4.5 billion.</li>
<li>HUTCHMED’s pipeline lacks blockbuster products and the indications are small. With the rise of PROTAC, small molecule drugs would face challenges, which would test the management's resilience in the future.</li>
</ul>


Takeda’s sales team is fully prepared for the launch of fruquintinib in EU. 2024 full-year overseas sales may once again beat the expectations. High growth is expected from 2024 to 2026.
Peak sales of fruquintinib + savolitinib + surufatinib that recorded in HUTCHMED’s revenue is expected to be over US$750 million.Without considering other revenue, market value would reach about US$4.5 billion.
HUTCHMED’s pipeline lacks blockbuster products and the indications are small. With the rise of PROTAC, small molecule drugs would face challenges, which would test the management's resilience in the future.


Hutchmed China Ltd (13.HK/​​HCM.US) - Time to Reassess Valuation Prospects Despite the Pain Points

Hong Kong

HUTCHMED (China) Limited develops, manufactures, and sells pharmaceutical products. The Company offers drugs for oncology and autoimmune diseases treatment. HUTCHMED (China) markets its products worldwide.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Hutchmed China Ltd (13 HK)