Edison Issues Re-initiation on Hutchison China MediTech

LONDON, May 27, 2016 /PRNewswire/ --

Hutchison China MediTech (Chi-Med) (HCM) is an innovative biopharma company focused on the highly lucrative global oncology and immunology markets. HCM has built a substantial pipeline of potential first-in-class or best-in-class tyrosine kinase inhibitor (TKI) drugs, some of which are in development with strategic partners. HCM's profitable Chinese healthcare business continues to benefit from the fast-growing domestic market. We expect progress of the mid-to-late-stage pipeline during 2016-17 (including US and China regulatory filings) to catapult the company into the international spotlight. We re-initiate with a value of $2.3bn, or £25.8 share.

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Our sum-of-the-parts valuation uses an rNPV model for the IP unit and earnings-based multiples for the profitable CP unit. IP is valued at $1,712m; placing CP's 2016e share of net profit on a 22.5x rating gives $657m (722p/share). Adding in net cash and netting out unallocated costs results in a value of $2.3bn (£25.75/share). Approval(s), clinical data and/or deals should increase our risk-adjusted valuation.

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All reports published by Edison are available to download free of charge from its website: http://www.edisoninvestmentresearch.com

About Edison: Edison is an international equity research firm with a team of over 110 analysts, investment and roadshow professionals and works with both large and smaller capitalised companies, blue chip institutional investors, wealth managers, private equity and corporate finance houses to support their capital markets activity. Edison provides services to more than 420 retained corporate and investor clients from offices in London, New York, Frankfurt, Sydney and Wellington. Edison is authorised and regulated by the Financial Conduct Authority.

Edison is not an adviser or broker-dealer and does not provide investment advice. Edison's reports are not solicitations to buy or sell any securities.

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Contact details:
Dr Susie Jana, Edison Investment Research, +44-(0)20-3077-5736, [email protected]

SOURCE Edison Investment Research

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