Positive outlook for Hutchison China MediTech, say analysts

Analysts at Panmure Gordon & Co say they remain buyers of Hutchison China MediTech (LSE: HCM), which is majority owned by China’s Chi-Med, following the strong performance in fiscal year2012, with the UK-based company’s shares appreciating some 31%.

Although they are not making any changes to forecasts at this stage, they note the good cash generation of the China health care business in first-half 2012 (some $15 million) and point to a number of possible earnings kickers in the next 18 months which may trigger upgrades, and have a share price target of £6.00.

In FY2012, the company’s deal with Nestle on HMPL-004 should ensure that some of the costs associated with MediPharma are paid for by the joint venture although the company’s maturing oncology portfolio still requires funding but should also provide opportunities this year.