Haitong International Maintains 'Outperform' Rating on Hansoh Pharmaceutical (03692.HK) with Target Price of HK$45.94

According to the Zhicheng Finance APP, Haitong International released a research report stating that it has raised its revenue forecast for Hansoh Pharma (03692) for FY26/FY27 to 17 billion/19 billion yuan (originally 16 billion/17.7 billion yuan), and increased its net profit attributable to shareholders forecast to 5.9 billion/6.6 billion yuan (originally 4.7 billion/5.2 billion yuan), to reflect 1) continuous improvement in the sales expense ratio; 2) steady growth in external licensing income, which is expected to become regular and continuously contribute to profit growth. The bank used the Discounted Cash Flow (DCF) model and cash flow from FY27-FY35 for valuation. Based on WACC of 7.5%, and a perpetual growth rate of 3.0% (both unchanged), the corresponding target price is HKD 45.94, and it maintains an "Outperform" rating.

Haitong International's main points of view are as follows:

Hansoh Pharma Announces 25-Year Performance

The proportion of innovative drug and collaboration revenue continued to increase to 82%. In 2025, the company achieved revenue of 15 billion yuan (+23%, all figures year-over-year), including innovative drug revenue of 10.2 billion yuan (+30%), generic drug revenue of 2.7 billion yuan (-4%), and collaboration revenue of 2.1 billion yuan (+35%). Additionally, the company has approximately 1.2 billion yuan in short-term contract liabilities for which collaboration revenue has not yet been recognized. Gross margin was 90.0%, a decrease of 1 percentage point year-over-year. R&D expenses were 3.4 billion yuan (+24%), and sales expenses were 4.1 billion yuan (+7%). Benefiting from improved sales expense ratio, operating profit margin increased by 4 percentage points to 36%. The company achieved net profit attributable to shareholders of 5.56 billion yuan (+27%). Overall performance met expectations.

Management Guidance

Total revenue for 2026 is expected to achieve double-digit growth, with product revenue projected to grow at a double-digit rate and collaboration revenue also anticipated to achieve double-digit growth (excluding potential out-licensing project revenue).

As of 1Q26, Hansoh Pharma has received three approvals for New Drug Applications (NDAs):

1) In January 2026, Aumolertinib in combination with chemotherapy was approved as a first-line treatment for patients with locally advanced or metastatic EGFR-mutated non-small cell lung cancer (NSCLC).

2) Aumolertinib Approved in Europe for Monotherapy in 1L, 2L EGFRm NSCLC.

3) Inebilizumab (CD19) is approved for the treatment of generalized myasthenia gravis.

The Company has two other NDAs under review:

1) Almonertinib combined with Dameritinib (cMET) small molecule for the treatment of locally advanced or metastatic NSCLC with MET amplification after EGFR TKI therapy.

2) HS-10365 (RET) is used for the treatment of adult patients with locally advanced or metastatic NSCLC who are RET gene fusion-positive.

The bank expects that these two indications are likely to be approved by 2027.

Management expects to file multiple NDA applications this year:

1) HS-20093 (B7H3 ADC) for 2L small cell lung cancer and 2L+ osteosarcoma indications.

2) HS-20094 (GLP-1/GIP) for the indication of obesity or overweight.

3) SHR6508 for secondary hyperparathyroidism in adult patients with chronic kidney disease undergoing hemodialysis.

4) HS-10734 (TYK2) for the indication of psoriasis.

Management expects to launch 9 Phase III clinical trials this year, with a focus on:

1) HS-10382 (BCR-ABL) for the indication of Chronic Myeloid Leukemia (CML).

2) HS-10506 (OX2R) Indication for Insomnia

3) HS-10380 (D3, D2/5-HT2A) for the indication of schizophrenia.

4) HS-10370 (KRASG12C) for the treatment of 1LG12C mutant NSCLC indication

Rich Clinical Data Catalyst in 2026

The bank expects the company to release clinical data in 2026, including: Phase III data for B7H3ADC and B7H4ADC, Phase III clinical data for TYK2 inhibitors, and Phase II clinical data for orexin 2 receptor (OX2R) antagonists. In addition, the bank suggests continued attention to the company's plans for publishing data from its early clinical pipelines, including fourth-generation EGFR-TKI, EGFR/cMET-ADC, and oral GLP-1.

Risk Warning:Risks such as drug sales falling short of expectations, new drug R&D risks, intensified industry competition risks, exchange rate risks, and policy risks.