Bank of America Securities Upgrades Hansoh Pharmaceutical to 'Buy' with Target Price Raised to HK$20.8

Bank of America Securities released a research report stating that it willHansoh Pharma(03692) The target price has been raised by 26.8% from HKD 16.4 to HKD 20.8, and the investment rating has been upgraded from "Underperform" to "Buy".

The report mentioned that the above adjustments mainly include: 1) The adverse impact of the volume-based procurement (VBP) of generic drugs gradually weakened due to the improvement in revenue structure, with the combined revenue contribution from innovative drugs and collaborative products accounting for more than 65% of total revenue in 2023; 2) Accelerating product commercialization, such as Ameile; 3) Solid progress in overseas business, BD activities, and widely recognized ADC R&D capabilities; 4) A strong chronic disease pipeline that may benefit from the growing demand driven by an aging population.

The bank stated that it has raised its revenue forecasts for Hansoh Pharma by 0.6%, 1%, and 3.1% for the years 2024, 2025, and 2026 respectively, while lowering capital expenditures from RMB 392 million (hereinafter the same) to RMB 298 million for 2027 and beyond. Innovative drugs have become the main revenue contributor for Hansoh Pharma, with new drug and collaborative product revenues in 2023 increasing by 37.1% year-on-year to RMB 6.9 billion, surpassing other large pharmaceutical companies. This indicates solid progress in the development and commercialization of innovative drugs. Supportive policies for innovative drugs and the implementation of VBP have significantly restricted the generic drug market, and innovative drugs are expected to continue being the primary growth driver in the pharmaceutical industry.

Editor: Shi Lijun