Primary Recommendation

Hutchison China Meditech - Great secrecy shrouds R&D division

July 2010

Investing in shares may lose you all or some of your money. Past performance is no indication of future performance. Some of the shares recommended here may be small company shares, which can be relatively illiquid and hard to trade and this makes such shares more risky than other investments.

There is a strong argument for saying that Hutchison China Meditech (HCM), a supplier of medicines in China, is the most exciting Chinese company to be listed on AIM. In 2005, when Hutchison's present chief executive, Christian Hogg (an ex Procter & Gamble executive in China) arrived, sales were only US$37.2m but by last year they had grown to US$119m. That might sound no great shakes for a business operating in China but because two of the three businesses which make up its medicines division are partly owned joint ventures (and therefore proportionally accounted for) actual sales have in fact grown to US$300m. But ignoring that, in the last four years, attributable turnover and profit has more than doubled and grown twenty-one fold ...

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With small companies there is an above average degree of risk compared to buying blue chips. Please be aware that we have not assessed the suitability of any of these investments for you. The newsletter simply states a personal view and diarises the editor’s investment decisions. Please speak to your stockbroker or other qualified individual to ascertain whether any of these companies mentioned would form useful additions to your own portfolios. Past performance is no indication of future success.

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