20250321-招银国际-和黄医药-00013.HK-Expecting_sustainable_profitability_5页_1mb

Summary of Hutchmed (13 HK) Financial Performance and Outlook

Core Content

Hutchmed (13 HK) has delivered a strong financial performance in FY24, with a top-line beat driven by robust overseas sales of fruquintinib. The company has achieved sustainable profitability ahead of schedule, with a net profit of US$38mn, surpassing its original target of reaching profitability by 2025. This success is attributed to reduced R&D and SG&A expenses, along with a one-off gain from the divestiture of non-core business in Shanghai Hutchison.

Main Financial Highlights

• Revenue: US$630mn in FY24, with a YoY growth of -24.8%. The company's FY25E revenue is projected at US$684mn, up 8.5% YoY.
• Net Profit: US$38mn in FY24, US$340.9mn in FY25E, and US$326mn in FY27E.
• EPS (Reported): US$4.41 in FY24, US$39.06 in FY25E, and US$37.40 in FY27E.
• R&D Expenses: Reduced by 30% YoY to US$212mn in FY24, and expected to continue decreasing in FY25E.
• Cash Position: Strong cash reserves of US$836mn at the end of FY24, offering flexibility for M&A and in-licensing opportunities.

Key Product Performance

• Fruquintinib (FRUZAQLA): Generated US$291mn in overseas sales in its first full year on the market, with US$111mn recognized as Hutchmed's revenue. The company expects continued strong momentum in overseas sales due to increased penetration in 3L CRC in the US, expanding reimbursement coverage, and commercialization in the EU and Japan.
• Savolitinib: Shows promising results from the SAVANNAH Ph2 trial, with a 55% ORR and 7.5-month mPFS in EGFR-TKI resistant MET+ NSCLC patients. The trial is expected to support global approval, and the company anticipates the first ATTC drug candidate to enter the clinic in H2 2025.

Financial Outlook and Valuation

• DCF Valuation: Based on a WACC of 13.19% and a terminal growth rate of 2.0%, the DCF per share is estimated at HK$34.03, down from the previous target price of HK$35.61.
• Target Price: HK$34.03, with a potential upside of 42.4% from the current price of HK$23.90.
• Equity Value: Estimated at HK$29,662mn, with a market cap of HK$20,831.3mn.
• Profitability: ROE improved significantly in FY24, reaching 36.7%, with operating margins turning positive in FY25E.

Shareholding and Market Performance

• Shareholding Structure: CK Hutchison Holdings owns 38.2%, and Deutsche Bank Trust owns 12.6%.
• Share Performance: The stock has shown mixed performance over different time frames, with a 1-month gain of 4.1% and a 6-month decline of -9.5%.
• Price Performance: The 12-month price performance is visualized in an image, indicating a historical trend.

Analyst Recommendations

• Maintain BUY: The company is recommended as a BUY with a target price of HK$34.03.
• Sensitivity Analysis: The valuation is sensitive to changes in terminal growth rates and WACC, with the DCF per share varying between HK$33.31 and HK$39.03 depending on these factors.

Risk and Disclaimer

• The report is subject to various risks, including market volatility and the uncertainty of future performance.
• The analyst certifies that the views expressed are based on personal analysis and not influenced by compensation or trading activities.
• The report is not intended as investment advice and should be used at the recipient's own risk. It is distributed solely to certain investors and may not be shared with others without consent.

Conclusion

Hutchmed is demonstrating strong growth in its oncology and immunology segment, particularly in overseas markets. The company is on track to achieve its 2025 oncology business target and is developing an innovative ATTC platform. Despite mixed share performance, the financial outlook remains positive, with a focus on sustainable profitability and strategic expansion.