CICC Maintains 'Outperform' Rating on Hansoh Pharmaceutical (03692.HK), Raises Target Price to HK$45

According to the Zhongtong Finance APP, CICC issued a research report stating that due to the high growth of Almonertinib and the increase in BD-related payments boosting performance, it raised the profit forecast for Hansoh Pharma (03692) by 4.8%/3.4% for 2025/2026 to RMB 4.617 billion/RMB 4.841 billion. The current share price corresponds to 45.8x/43.1x 2025/2026 P/E. Maintaining an Outperform rating, and based on the SOTP valuation method, considering the upward revision of the profit forecast and the overall valuation level shift for innovative drugs in Hong Kong stocks, the target price was raised by 93.1% to HKD 45.00, corresponding to 53.1x/50.0x 2025/2026 P/E (15.9% upside).

CICC's main viewpoints are as follows:

1H25 Performance Exceeds the Bank's Expectations

The company announced its 1H25 performance: revenue of RMB 7.434 billion, a year-on-year increase of 14.3%; net profit attributable to shareholders of RMB 3.135 billion, a year-on-year increase of 15.0%. The performance exceeded the bank's expectations, mainly due to milestone payments from the company's collaboration with GSK.

The Proportion of Revenue from Innovative Drugs Continues to Increase

1H25 Hansoh Pharma's innovative drug and collaboration product revenue reached RMB 6.145 billion (YoY +22.1%), accounting for 82.7% (+5.3pct YoY) of total revenue. Collaboration revenue was RMB 1.656 billion, primarily from the upfront payment for licensing oral GLP-1 to Merck and milestone payments from GSK. Additionally, in 6M25, the company licensed overseas rights of HS-20094, a GLP-1/GIP receptor agonist, to Regeneron, with an upfront payment of USD 80 million and milestone payments of USD 1.93 billion, which will boost 2H25 performance. Excluding collaboration revenue, sales revenue was RMB 5.777 billion (YoY +13.2%).

By segment: Oncology business revenue was RMB 4.53 billion (+21.3% YoY), mainly due to the high growth of Ameile and milestone payments from the GSK collaboration; the company expects Ameile's full-year sales to reach RMB 6 billion. Anti-infective business revenue was RMB 740 million (+4.8% YoY); CNS business revenue was RMB 770 million (+4.8% YoY); metabolic diseases business revenue was RMB 1.4 billion (YoY -0.2%), primarily due to upfront payments from the oral GLP-1 licensing agreement with Merck. In terms of expenses: gross margin was 91.1%, flat year-over-year, selling expenses were RMB 1.82 billion (+5.7% YoY), administrative expenses were RMB 340 million (+135% YoY), and R&D expenses were RMB 1.44 billion (+20.4% YoY).

Rapid Progress in the R&D Pipeline

The core product of Hansoh Pharma, Almonertinib (Ameile), has been approved for four indications in China. Additionally, the combination of Almonertinib with chemotherapy for first-line (1L) treatment of non-small cell lung cancer (NSCLC) is still in the New Drug Application (NDA) phase. The company expects it to be approved for marketing in the second half of 2025 (2H25) and suggests paying attention to the National Reimbursement Drug List (NRDL) negotiations in the second half of the year. HS-20093 (B7H3 ADC) has initiated a Phase III clinical trial in China in the second half of 2024 (2H24) as a monotherapy for second-line (2L) small cell lung cancer (SCLC). Its partner, GSK, plans to initiate pivotal clinical studies by the end of 2025. HS-20089 (B7H4 ADC) has started a Phase III clinical trial in China in the first half of 2025 (1H25) for the treatment of ovarian cancer. HS-20094 (GLP-1/GIP dual-target) initiated a Phase III clinical trial in the second half of 2024 (2H24) for the treatment of obesity or overweight. HS-10374 (TYK2) initiated a Phase III clinical trial in the second half of 2024 (2H24) for the treatment of psoriasis. Regarding early-stage projects, the company received clinical approval for eight innovative drug pipelines in the first half of 2025 (1H25), with representative products including EGFR/c-Met ADC, KRAS G12D, and HS-20108 (ADC). In terms of external collaborations, the company plans to continue accelerating the progress of licensed-in projects and the overseas licensing of its proprietary pipelines.

Risk Warning:Product commercialization falls short of expectations; intensified competitive landscape; clinical data underperforms.