Hutchmed (china) Investors - HCM

Hutchmed (china) Investors - HCM

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Stock Name Stock Symbol Market Stock Type
Hutchmed (china) Limited HCM London Ordinary Share
  Price Change Price Change % Stock Price Last Trade
-15.00 -2.59% 565.00 16:20:29
Open Price Low Price High Price Close Price Previous Close
585.00 561.00 588.00 565.00 580.00
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Top Investor Posts

sportii: Agree with your assessments. I am assuming there will be some ‘pressure̵7; on the LT holders to sell, perhaps until the results day which is on 28/7. Having seen the cornerstone investors putting huge sums into this company during the recent weeks and months, I too feel like staying here for bit longer.
dbadvn: HM cashed up through to cash break even and will be flooded with cash over the next 2-3 years That's why the bigger investors came on board ( and HK listing of course ). These guys are looking for 2-3 times their original investment over 3 - 5 years and they do their homework. So I'm staying along for the ride. Now a 14 bagger for me ....!!!
nahoon: Yet another publication warning US investors about Chinese-listed stocks: (It's from Barrons. I don't like to infringe copyright but can't stand R Murdoch and his role in spreading fake news, so don't feel too bad about the copy and paste.) Anyway, I'm just really glad we're now listed in HK.... The giant “caution”; sign for investors who own Chinese stocks has been blinking for months. It’s about to become a blaring beacon of warning. Individual investors who still own, or are considering owning, individual shares of U.S.-listed Chinese stocks need to heed this warning. Barron’s has been writing about the challenges that face Chinese companies on multiple fronts: Beijing has steadily intensified the regulatory scrutiny of its largest technology companies, while U.S.-China tensions escalate and prompt investment restrictions and legislation that create further market ramifications. Yes, the case for investing in China is strong, especially over the long run. China’s rapid economic growth is generally appealing, and has led to a burgeoning middle class that has, in turn, allowed many nascent industries to blossom. Plus, many of China’s homegrown technology companies benefit from government investment, and U.S.-China tensions. But as Barron’s wrote earlier this month, the way to navigate this landscape is by hiring a tour guide in the form of a mutual fund or exchange-traded fund manager that can manage growing complexities. Each week makes that case even stronger. Owning individual shares of Chinese companies listed in the U.S.—whether they’re traded over the counter (rather than on a major exchange) or as American Depositary Receipts (ADRs)—could increasingly become a risky proposition. Institutional investors who have the option of owning shares on a Hong Kong or mainland China stock exchange are well on their way to that transition—which could add pressure to U.S.-listed shares and eventually cause liquidity problems. The ADR-heavy Invesco Golden Dragon exchange-traded fund (PGJ) is down 13% in the last three months. The iShares MSCI China (MCHI), which also owns Hong Kong-listed shares, is down 4%, and the iShares MSCI China A-shares (CNYA), which focuses on China-listed companies, is up 7%. The latest cloud looming over U.S.-listed Chinese companies is uncertainty around how U.S. regulators will enforce last year’s Holding Foreign Companies Accountable Act, which requires foreign companies to adhere to U.S. auditing standards in order to trade on U.S. exchanges. The Chinese government has long prevented Chinese companies from providing the necessary information to comply with U.S. auditing requirements. The process toward enforcement is underway; the feedback period for a Public Company Accounting Oversight Board (PCAOB) proposal closes this week, and policy watchers expect a rule to be released soon. A PCAOB spokeswoman declined to comment. The rule will pave the way for the Securities and Exchange Commission to enforce the legislation. Currently there is a three year-window for compliance; the Senate last month passed a bill that would accelerate the timeline to just two years—another indication of the bipartisan support for China measures. Despite policy makers’ urgency, policy watchers note a lot of outstanding questions. There are some 248 Chinese companies listed on U.S. exchanges with a combined market value of more than $2 trillion—so the process of delisting could be messy and painful. “If a delisting is imminent, the stock price is going to plummet and those who control the company can buy out public investors for a bargain, go private, and relist in Asia at a much higher valuation and make a ton of money—at Americans’ expense,” says Jesse Fried, a professor at Harvard Law School who has been researching regulation of Chinese firms trading in the United States. There’s also no precedent for the type of mass delisting that could unwind in a worse-case scenario—a factor that could lead to an elusive compromise between the two nations. “Despite the ongoing, heightened tensions between the U.S. and China, this could be the last salvo bringing both sides back to the table to work out some deal where there will be just enough access to audit personnel and work papers so that the nuclear option is avoided and the PCAOB will be able to meet its core obligations under the Sarbanes-Oxley Act,” says Shas Das, counsel at King & Spalding, who was the PCAOB’s chief negotiator with Chinese regulators between 2011 and 2015. Past negotiations yielded some cooperation and access to audit work papers but not consistently, he adds. Investors would be ill-advised to wait around to see if some compromise materializes, especially as U.S.-China tensions continue to ratchet higher. On Thursday, the Senate passed a bill to ban imported products from China’s Xinjiang region amid allegations of forced-labor practices, and the U.S. has been adding Chinese companies to a blacklist, cutting them off from U.S. investment. Investors got a painful glimpse at the havoc these measures can cause when widely held China Mobile was delisted in January by the New York Stock Exchange, following an executive order from President Donald Trump banning investment in companies the U.S. said had ties to China’s military. Institutional investors were able to convert into Hong Kong-listed shares, but many retail investors have been stuck in limbo—even now, many investors cannot execute a sale at their current broker, and some are being told to seek out foreign brokers. Others have run into dead-ends with no clarity on who to reach out to for assistance, and face being stuck with a loss. The SEC didn’t respond to a request for comment.
sportii: The management had many opportunities, viz, announcement of Chinese approval for two of their drug candidates, marketing of Fruquintinib / Surufatinib , news of partnerships with other pharmas, announcement of major investments by big institutional investors etc., for timing their Asian listing. Shame, they could not exploit the favourable market conditions. Hopefully, something good will be announced tomorrow in the investors conference.
steeplejack: I don't think that the management will be too bothered about retail investors (companies in general aren't really fussed about private clients)but they will be concerned about disaffecting recent institutional investors.So,i think things will turn in due course but i confess to having lightened recently out of pure frustration and will need very good cause to buy back.
nerdofsteel: steeple - nice story about Oxford and to your last point, that is also my frustration. The share price may well have got ahead of itself 4 or 5 years ago but the opportunity cost here for most investors including many potential institutional ones, is too high. If you are managing a Fund there's no point in having zero growth in a position in your portfolio for 5 years, followed by a big uplift, surely as a Fund Manager you would rather have more predictable steady growth in value of your holdings. If I managed a Fund and HCM was on my Watchlist I'd avoid it for that reason alone. I am certain that over say a 10 year period this will end up as a $20bn+ mcap Company but the issue is, you could probably match that performance by investing in a basket of FAANG stocks without the risk or the sheer pain of seeing the Company languish for long periods. I also think an Asian listing will provide some much needed interest. If you look at Beigene and Innovent you can see how Asian Investors value these types of Biopharmas!
nerdofsteel: It seems that early investors have made a lot of money and continue to take profits at the expense of later stage investors. I only assume and hope an Asian listing will give the valuation an uplift to a more reasonable level. Failing that, I can only assume (and hope yet again!) that when 2024 comes and the company finally generates free cashflow the Company will get a valuation more aligned with other Chinese Biotechs. If you look at Beigene and Innovent you will see how poorly the market values HUTCHMED.
sportii: Not sure the company gives any importance to investors’ interests. Its glaringly true that the market valuation is very very low. Is there another pharma company of this magnitude with such low market valuation? Over the last 5/6 years, on 4-5 occasions, the share price climbed up on a steady pace, backed up by genuinely solid reasons(successful clinical trials, extending operational activities to the USA, enviable pipeline, triple hundred millions of investments by two major funds, drugs getting approved by authorities and subsequent marketing etc., etc.). However, on every occasion, share price failed to maintain the higher valuation longer than few weeks due to various (some times without any) reasons. For example, 6-8 weeks ago, AIM share price was > £5.30 and NYSE ADRs > $37. One fine day, following the announcement of reasonably satisfactory annual results, more than a million ADRs got traded (?sold) which caused severe drop in the share price Surprisingly, the very following day, a million ADRs got (?)bought, with no improvement in the sp! Presently, share price is languishing at £4 (and ADRs $27). The company keeps the news of Asian listing in the circulation as a hope for the investors. Is it a carrot hanging at a distance? Personally, I feel appreciating Hutchmed for the great work of research and development of newer therapies for oncology and immunology which, undoubtedly, will be useful to millions of people. But, as an investor I remain seriously sceptical about poor show in improving market valuation. (PS: no intention of recommending either to buy or sell. Do your own research)
nerdofsteel: I agree that attracting Asian investors is key here. There appears very little appetite from UK investors who have historically never understood Biopharma, especially Hutchmed. The U.S. Investors seem dis-interested too. I remain invested and see the enormous potential of the Company whilst also recognising the huge progress.
dbadvn: Follow up on call with CH. Tried to cover all your questions , but may have missed a few , anyway in no particular order. 1. Asian listing/ share price/cash flow Share price was probably ahead of the market at end of 2017 . This was followed by 2018 setback of AZN cancelling the Savvanah ( ?) ph3 study .( which turned out to actually be wrong ). 2019 clumsy consolidation by Huchison ( learned lesson , will not sell into market again , only to large 3rd party if at all ). Very recent falls just part of Asian Biotech sell off in general . Even CH feels capitalisation should be around 8-10bn, pipeline not being correctly valued / recognised. Asian listing very much at forefront and cannot say more, But later on had conversation on lining up large investors implying that listing will be within next 9 months. Conditions are aligning. Cash in next 2years will come from large investors , sale of OCI business, improved profits as new drugs get to market . Did not rule out placing but not say would be needed either. Also made the point that large investors ( Fidelity etc) were very pleased with results and progress . Selling down has been by early investors who have lightened their positions and mainly by Far East groups ( Mitsui). 2. AZN Relationship / JUnshi deal etc Had to really hold Azn feet to the fire but they are now responding ( Eli Lilly much worse , very relieved to be out of that deal ) especially in China. Assuming Savo approval By Q3 they will have 2000 reps selling ( what? - did not understand this ) . Should bring in $250m at 30% royalty in 2022. Azn/ Junshi not of particular concern , not really competition as different drug market . Tagrisso/Savo combo outside of China now moving ahead at good pace. 3. Inmagene deal. Need to concentrate of Oncology development Immunology is a very different market . Requires a completely different team and a long term approach ( long term ongoing treatment so drugs must have low / no toxicity , large placebo effect ) Inmagene only have options up to Ind stage so not given too much away but saved the expenditure and the distraction . Not v clear on savings but probably North of $200m) depending on success of asset. Inmagene execs are ex HCM but almost every Biotech in China has ex HCM execs as they have been around so long. Team is very well connected to industry bodies in China , 4 Patient access programme in US/Can ? Not possible without full approval. In China non approved drugs can be used at Doctor's discretion , "off label", but not allowed to actively market a drug before approval ( hence large conferences = pseudo marketing) 5. Seroquel - no mention sorry. 6. Leveraging sales by doing deals with Multinationals. Being approached all the time to sell on behalf of Multinatiuonal in China , and sell licence to Multinational outside China. Open minded , if the deal is right then may do it but so far experience with Eli Lilly and Azn has not really encouraged them in this direction. Knows Beigene CEO very well ( partnered with Surafatinib). This was a fantastic deal for Beigene especially as they were behind in the market compared to Merck/ Pfizer/ Roche. Still it was a one time plug , gave away huge forward revenue stream . 7 Future. Getting more and more excited by 689 , extraordinary results ( also large market). 523 and 306 also coming along better than expected . 453 - back burner due to toxicity. 8 Overall - CH recognises investor frustration but insists that barring extraordinary events next 12 months should be a "very exciting time " for investors. Thats it. D
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