研究报告全文：MN2Mar2023CMBInternationalGlobalMarketsEquityResearchCompanyUpdateHutchmed13HKExploitglobalmarketopportunitiesHCMcontinuedtoproveitsstrongcommercialcapabilitiesbyachievingremarkableTargetPriceHK374963YoYgrowthinoncologyproductsalesinFY22reachingUS1246mndrivenPreviousTPHK3606byitsthreecommercialdrugsHCMtargetstogrowtheoncologyproductsalesbyUpDownside373highdouble-digitinFY23whilethemanagementexpectsUS450-550mnCurrentPriceHK2730consolidatedoncologyrevenueinFY23includingpartialrecognitionofUS400mnupfrontpaymentfromTakedaTheRDexpensesinFY22wereUS3869mnChinaHealthcare29YoYAsofend-2022HCMhadastrongcashpositionofUS6310mnTheJillWUCFACompanytargetstoturnprofitablein202585239000842jillwucmbicomhkEyesonfruquintinibsfillingforCRCintheUSandGCinChinaWithAndyWANGincreasingnewCRCpatientstreated28kin2H2214kin1H2212kin2H2185236576288thein-marketsalesoffruquintinibinFY22grewby32YoYtoUS935mnandywangcmbicomhkresultinginUS699mnrevenuebookedbyHCMFruquintinibhasbecomeamarketleaderfor3LCRCinChinawitha44patientsharein4Q22InJanStockDataHCMout-licensedtheex-ChinarightsoffruquintinibtoTakedaandiseligibletoMktCapHKmn27300Avg3mthstoHKmn260receiveUS400mnupfrontpaymentanduptoUS730mnmilestones52wHighLowHK42801176paymentsTheMRCTFRESCO-2trialhasdemonstratedsuperiorefficacyandTotalIssuedSharesmn1000safetyintreatinglate-lineCRCpatientsthanotherapprovedproductsCMBISourceFactSetreportlinkHCMtargetstocompletetheBLArollingsubmissionin1H23intheShareholdingStructureUSwithEUandJapantofollowWearepositivetowardstheoverseasCKHutchisonHoldings385approvalsforCRCMeanwhilefruquintinibshowedpositivePFSresultsoftheTheCapitalGroup112Ph3FRUTIGAtrialin2LGCwhiletheOSco-primaryendpointwasnotmetSourceBloombergHCMplanstofilethesBLAforfruquintinibin2LGCbasedontheFRUTIGAdataSharePerformanceinChinain1H23GivenramucirumabtheonlyapprovedIOdrugforthe2LGCAbsoluteRelativeinChinadidnotachievesignificanceinOSimprovementeitherinitsRAINBOW-1-mth-102-39AsiatriallinkWethinkitislikelyfruquintinibcanbeapprovedinChinafor2L3-mth288170GCWelookforwardtothedatareleaseoftheFRUTIGAtrialWealsoexpect6-mth391322thereadoutoffruquintinibPD-1in2LEMCandRCCin1H23SourceFactSetNRDLinclusiontofurtherdrivesalesgrowthofsavolitinibThein-market12-mthPricePerformancesalesofsavolitinibincreased159YoYtoUS412mninFY22withUS223mnrevenueattributabletoHCMSinceMar2023savolitinibwillbecoveredbyNRDLwhichwillfurtherfacilitatesalesgrowthHCMwillcontinuetheenrolmentofthePh2SAVANNAHstudyandevaluatethepotentialofUSacceleratedapprovalbasedonthistrialWealsoexpectHCMtoreleasedataofsavolitinibspotentialregistrationalPh2trialforGCin1H23NextwaveofinnovativedrugcommercializationThepivotaltrialESLIM-01SourceFactSetofsovleplenibSykin2LITPwasfullyenrolledinDec2022andHCMexpectsthedatareadoutandpotentialNDAin2H23ForamdizalisibPI3KthePh2btrialin2LFLjustcompletedenrolmentinFebandHCMexpectsthereadoutandNDAin2H23aswellMaintainBUYWelikeHCMgivenitsstrongproductsalesgrowthmomentuminChinaandbigpotentialofcommercialapprovalsofkeyassetsinoverseasregionsWerevisedourTPfromHK3606toHK3749basedonDCFvaluationWACC951terminalgrowthrate2EarningsSummaryYE31DecFY21AFY22AFY23EFY24EFY25ERevenueUSmn3564268168941066YoYgrowth56219791496192NetprofitUSmn167036041389653337EPSReportedUS025043016008004RDexpensesUSmn299387390376352CAPEXUSmn1637151010SourceCompanydataCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE1MOREREPORTSFROMBLOOMBERGRESPCMBRGOORhttpwwwcmbicomhk2Mar2023Figure1Risk-adjustedDCFvaluationDCFValuationinUSmn2023E2024E2025E2026E2027E2028E2029E2030E2031E2032E2033E2034E2035EEBIT2091343254197353524628685706710727743Taxrate00015151515151515151515EBIT1-taxrate2091343246167300446534583600603618632DA99910101010101010101010-Changeinworkingcapital5611841766657514737252433-Capex15101010101010101010101010FCFF22119650591234388482536563578594599Terminalvalue8129PresentvalueofenterpriseUSmn3786NetdebtUSmn397EquityvalueUSmn4183EquityvalueHKmn32421Noofoutstandingsharesmn865DCFpershareHK3749Terminalgrowthrate20WACC951CostofEquity120CostofDebt45EquityBeta090RiskFreeRate25MarketRiskPremium105TargetDebttoAssetratio300EffectiveCorporateTaxRate150SourceCMBIGMestimatesFigure2SensitivityanalysisHKWACC851901951100110514005921520346204137373135054764859434839193554Terminalgrowthrate300455141193749342831482504330393935993303304220041393780346731922948SourceCMBIGMestimatesFigure3CMBIGMestimatesrevisionNewOldDiffUSmnFY23EFY24EFY25EFY23EFY24EFY25EFY23EFY24EFY25ERevenue8168941066516680680583257GrossProfit342370451177283283943160OperatingProfit20913432305124124NANANANetprofit1396633299119119NANANAEPSUS016008004035014014NANANAGrossMargin419541314234342741604160000ppt000ppt-045pptSourceCMBIGMestimatesFigure4CMBIGMestimatesvsconsensusCMBIGMConsensusDiffUSmnFY23EFY24EFY25EFY23EFY24EFY25EFY23EFY24EFY25ERevenue8168941066669739917222116Grossprofit3423704513173154468171Operatingprofit20913432219211175NANANANetprofit139663377124109NANANAEPSUS016008004019021020NANANAGrossmargin419541314234474642704868-551ppt-139ppt-634pptSourceBloombergCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE22Mar2023FinancialSummaryINCOMESTATEMENT2020A2021A2022A2023E2024E2025EYE31DecUSmnRevenue2283564268168941066Costofgoodssold189258311474525615Grossprofit3998115342370451Operatingexpenses236426523552504483Sellingexpense113844808389Adminexpense508992824543RDexpense175299387390376352Operatingprofit19732840820913432Otherincome522000Otherexpense01314000GainlossonfinancialassetsatFVTPL2191095Othergainslosses01210000Pre-taxprofit19021641019912526Incometax5120000Others796150606060Minorityinterest10280000Netprofit1161673601396534BALANCESHEET2020A2021A2022A2023E2024E2025EYE31DecUSmnCurrentassets5311212840619522504Cashequivalents236378313403216171Accountreceivables48849892177194Inventories203657525867FinancialassetsatFVTPL200634318181818Othercurrentassets288154545454Non-currentassets193161190256317377PPE244176828383Deferredincometax2915151515InvestmentinJVsassos1407674134194254Othernon-currentassets283324242424Totalassets72413731029875839881Currentliabilities158312691338367376Short-termborrowings0270000Accountpayables324171558493Taxpayable1161111Othercurrentliabilities126228619282282282Non-currentliabilities472139393939Long-termborrowings27018181818Obligationsunderfinanceleases675555Deferredincome000000Othernon-currentliabilities131415151515Totalliabilities205333729377406415Sharecapital738686868686Capitalsurplus82215051497149714971497Retainedearnings416610971111111771143Otherreserves462222Totalshareholdersequity484987610471405439Minorityinterest355327272728Totalequityandliabilities5191040637498433466PLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE32Mar2023CASHFLOW2020A2021A2022A2023E2024E2025EYE31DecUSmnOperatingProfitbeforetaxation19021641019912526Depreciationamortization679999Taxpaid5120000Changeinworkingcapital29335756118Others971676000Netcashfromoperations6220426919517735InvestingCapitalexpenditure81637151010Acquisitionofsubsidiariesinvestments000000Netproceedsfromdisposalofshort-term10443531630000investmentsOthers1414517000Netcashfrominvesting1253062972851010FinancingDividendpaid11026000Netborrowings019000Proceedsfromshareissues3197170000Sharerepurchases132748000Others8300000Netcashfromfinancing29665083000NetchangeincashCashatthebeginningoftheyear121236378313403216Exchangedifference629000Cashattheendoftheyear236378313403216171GROWTH2020A2021A2022A2023E2024E2025EYE31DecRevenue11356219791496192Grossprofit1181481178197079222PROFITABILITY2020A2021A2022A2023E2024E2025EYE31DecGrossprofitmargin173275270420413423Operatingmargin86392295625615030ReturnonequityROE29922745125714980GEARINGLIQUIDITYACTIVITIES2020A2021A2022A2023E2024E2025EYE31DecNetdebttoequityx081010080504Currentratiox343912181413Receivableturnoverdays705661772780780780Inventoryturnoverdays348392542400400400Payableturnoverdays538514659650650650VALUATION2020A2021A2022A2023E2024E2025EYE31DecPEnanananana905PBna5642607064SourceCompanydataCMBIGMestimatesNoteThecalculationofnetcashincludesfinancialassetsPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE42Mar2023DisclosuresDisclaimersAnalystCertificationTheresearchanalystwhoisprimaryresponsibleforthecontentofthisresearchreportinwholeorinpartcertifiesthatwithrespecttothesecuritiesorissuerthattheanalystcoveredinthisreport1alloftheviewsexpressedaccuratelyreflecthisorherpersonalviewsaboutthesubjectsecuritiesorissuerand2nopartofhisorhercompensationwasisorwillbedirectlyorindirectlyrelatedtothespecificviewsexpressedbythatanalystinthisreportBesidestheanalystconfirmsthatneithertheanalystnorhisherassociatesasdefinedinthecodeofconductissuedbyTheHongKongSecuritiesandFuturesCommission1havedealtinortradedinthestockscoveredinthisresearchreportwithin30calendardayspriortothedateofissueofthisreport2willdealinortradeinthestockscoveredinthisresearchreport3businessdaysafterthedateofissueofthisreport3serveasanofficerofanyoftheHongKonglistedcompaniescoveredinthisreportand4haveanyfinancialinterestsintheHongKonglistedcompaniescoveredinthisreportCMBIGMRatingsBUYStockwithpotentialreturnofover15overnext12monthsHOLDStockwithpotentialreturnof15to-10overnext12monthsSELLStockwithpotentiallossofover10overnext12monthsNOTRATEDStockisnotratedbyCMBIGMOUTPERFORMIndustryexpectedtooutperformtherelevantbroadmarketbenchmarkovernext12monthsMARKET-PERFORMIndustryexpectedtoperformin-linewiththerelevantbroadmarketbenchmarkovernext12monthsUNDERPERFORMIndustryexpectedtounderperformtherelevantbroadmarketbenchmarkovernext12monthsCMBInternationalGlobalMarketsLimitedAddress45FChampionTower3GardenRoadHongKongTel85239000888Fax85239000800CMBInternationalGlobalMarketsLimitedCMBIGMisawhollyownedsubsidiaryofCMBInternationalCapitalCorporationLimitedawhollyownedsubsidiaryofChinaMerchantsBankImportantDisclosuresTherearerisksinvolvedintransactinginanysecuritiesTheinformationcontainedinthisreportmaynotbesuitableforthepurposesofallinvestorsCMBIGMdoesnotprovideindividuallytailoredinvestmentadviceThisreporthasbeenpreparedwithoutregardtotheindividualinvestmentobjectivesfinancialpositionorspecialrequirementsPastperformancehasnoindicationoffutureperformanceandactualeventsmaydiffermateriallyfromthatwhichiscontainedinthereportThevalueofandreturnsfromanyinvestmentsareuncertainandarenotguaranteedandmayfluctuateasaresultoftheirdependenceontheperformanceofunderlyingassetsorothervariablemarketfactorsCMBIGMrecommendsthatinvestorsshouldindependentlyevaluateparticularinvestmentsandstrategiesandencouragesinvestorstoconsultwithaprofessionalfinancialadvisorinordertomaketheirowninvestmentdecisionsThisreportoranyinformationcontainedhereinhavebeenpreparedbytheCMBIGMsolelyforthepurposeofsupplyinginformationtotheclientsofCMBIGMoritsaffiliatestowhomitisdistributedThisreportisnotandshouldnotbeconstruedasanofferorsolicitationtobuyorsellanysecurityoranyinterestinsecuritiesorenterintoanytransactionNeitherCMBIGMnoranyofitsaffiliatesshareholdersagentsconsultantsdirectorsofficersoremployeesshallbeliableforanylossdamageorexpensewhatsoeverwhetherdirectorconsequentialincurredinrelyingontheinformationcontainedinthisreportAnyonemakinguseoftheinformationcontainedinthisreportdoessoentirelyattheirownriskTheinformationandcontentscontainedinthisreportarebasedontheanalysesandinterpretationsofinformationbelievedtobepubliclyavailableandreliableCMBIGMhasexertedeveryeffortinitscapacitytoensurebutnottoguaranteetheiraccuracycompletenesstimelinessorcorrectnessCMBIGMprovidestheinformationadvicesandforecastsonanASISbasisTheinformationandcontentsaresubjecttochangewithoutnoticeCMBIGMmayissueotherpublicationshavinginformationandorconclusionsdifferentfromthisreportThesepublicationsreflectdifferentassumptionpoint-of-viewandanalyticalmethodswhencompilingCMBIGMmaymakeinvestmentdecisionsortakeproprietarypositionsthatareinconsistentwiththerecommendationsorviewsinthisreportCMBIGMmayhaveapositionmakemarketsoractasprincipalorengageintransactionsinsecuritiesofcompaniesreferredtointhisreportforitselfandoronbehalfofitsclientsfromtimetotimeInvestorsshouldassumethatCMBIGMdoesorseekstohaveinvestmentbankingorotherbusinessrelationshipswiththecompaniesinthisreportAsaresultrecipientsshouldbeawarethatCMBIGMmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreportandCMBISwillnotassumeanyresponsibilityinrespectthereofThisreportisfortheuseofintendedrecipientsonlyandthispublicationmaynotbereproducedreprintedsoldredistributedorpublishedinwholeorinpartforanypurposewithoutpriorwrittenconsentofCMBIGMAdditionalinformationonrecommendedsecuritiesisavailableuponrequestForrecipientsofthisdocumentintheUnitedKingdomThisreporthasbeenprovidedonlytopersonsIfallingwithinArticle195oftheFinancialServicesandMarketsAct2000FinancialPromotionOrder2005asamendedfromtimetotimeTheOrderorIIarepersonsfallingwithinArticle492atodHighNetWorthCompaniesUnincorporatedAssociationsetcoftheOrderandmaynotbeprovidedtoanyotherpersonwithoutthepriorwrittenconsentofCMBIGMForrecipientsofthisdocumentintheUnitedStatesCMBIGMisnotaregisteredbroker-dealerintheUnitedStatesAsaresultCMBIGMisnotsubjecttoUSrulesregardingthepreparationofresearchreportsandtheindependenceofresearchanalystsTheresearchanalystwhoisprimaryresponsibleforthecontentofthisresearchreportisnotregisteredorqualifiedasaresearchanalystwiththeFinancialIndustryRegulatoryAuthorityFINRATheanalystisnotsubjecttoapplicablerestrictionsunderFINRARulesintendedtoensurethattheanalystisnotaffectedbypotentialconflictsofinterestthatcouldbearuponthereliabilityoftheresearchreportThisreportisintendedfordistributionintheUnitedStatessolelytomajorUSinstitutionalinvestorsasdefinedinRule15a-6undertheUSSecuritiesExchangeActof1934asamendedandmaynotbefurnishedtoanyotherpersonintheUnitedStatesEachmajorUSinstitutionalinvestorthatreceivesacopyofthisreportbyitsacceptancehereofrepresentsandagreesthatitshallnotdistributeorprovidethisreporttoanyotherpersonAnyUSrecipientofthisreportwishingtoeffectanytransactiontobuyorsellsecuritiesbasedontheinformationprovidedinthisreportshoulddosoonlythroughaUS-registeredbroker-dealerForrecipientsofthisdocumentinSingaporeThisreportisdistributedinSingaporebyCMBISingaporePteLimitedCMBISGCompanyRegnNo201731928DanExemptFinancialAdviserasdefinedintheFinancialAdvisersActCap110ofSingaporeandregulatedbytheMonetaryAuthorityofSingaporeCMBISGmaydistributereportsproducedbyitsrespectiveforeignentitiesaffiliatesorotherforeignresearchhousespursuanttoanarrangementunderRegulation32CoftheFinancialAdvisersRegulationsWherethereportisdistributedinSingaporetoapersonwhoisnotanAccreditedInvestorExpertInvestororanInstitutionalInvestorasdefinedintheSecuritiesandFuturesActCap289ofSingaporeCMBISGacceptslegalresponsibilityforthecontentsofthereporttosuchpersonsonlytotheextentrequiredbylawSingaporerecipientsshouldcontactCMBISGat6563504400formattersarisingfromorinconnectionwiththereportPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE5