HAITONG INT'L: Maintains a "outperform" rating on CSPC PHARMA (01093), with a target price of HKD 13.07.

HAITONG INT'L released a research report stating that the main business income and profits of CSPC PHARMA (01093) have bottomed out, and are expected to return to an upward cycle by 2026. In 2027, the company is expected to benefit from the volume increase of innovative products in oncology and metabolism, with the potential for accelerated revenue growth from pharmaceuticals. CSPC PHARMA's current potential clinical milestone income is $5.8 billion (approximately 40.6 billion RMB), and is expected to gradually increase the company's profits over the next 3-5 years. The bank believes that upfront payments and milestone income will bring sustained recurring revenue to the company, and has raised its forecast for licensing revenue after 2027. The bank used a discounted cash flow (DCF) model and cash flows for FY27-FY35 for valuation. Based on a WACC of 7.9% and a perpetual growth rate of 2.5% (both unchanged), the corresponding target price is HK$13.07, and the bank maintains an "outperform" rating. HAITONG INT'L's main points are as follows: The company's research and development capabilities have been repeatedly recognized, and the bank is optimistic about the normalization of milestone income to solidify the company's fundamentals. In the past two years, CSPC PHARMA has completed 7 external cooperation transactions, involving a total upfront payment of $1.71 billion and a potential milestone total of over $30 billion. The company has partnered with global top pharmaceutical company AstraZeneca three times, demonstrating the global influence and value of CSPC PHARMA's research and development platform. The bank believes that the potential research and development milestones of nearly $6 billion will gradually increase CSPC PHARMA's profits over the next 3-5 years, becoming an important part of the company's normalized income. The bank is optimistic that CSPC PHARMA can continue to share economic benefits throughout the drug lifecycle through sales milestones and net sales splits, earning the global value of innovative drugs. In addition, the bank has confidence in CSPC PHARMA's research and development platform, and sees potential for its cell therapy, ADC, siRNA, mRNA, and other technology platforms and product pipelines to be licensed externally. CSPC PHARMA's small nucleic acid platform has a wide layout, and there are expectations for external licensing opportunities. After conducting research, the bank found that CSPC PHARMA's small nucleic acid platform covers hot liver-in target points such as PCSK9, AGT, Lp(a), ANGPTL3, FXI, covering indications such as hyperlipidemia, hypertension, and anticoagulation, and is ahead of domestic peers. In terms of liver-extracellular delivery, CSPC PHARMA has applied for a liposome delivery patent; in addition, the company has also applied for two patents for SOD1-siRNA (treatment of amyotrophic lateral sclerosis) and Ang2/VEGF-A-siRNA (treatment of ocular diseases). The bank believes that this means that CSPC PHARMA may have mastered nervous system delivery and ocular delivery technologies, as well as dual-target small nucleic acid technologies. Based on its pipeline and patent thickness, the bank believes that CSPC PHARMA's small nucleic acid platform layout is at the forefront among domestic pharmaceutical companies, and sees potential for external licensing opportunities. CSPC PHARMA's dual antibody and ADC pipeline still have potential for overseas expansion. SYS6010 (EGFR-ADC) has accumulated clinical data on thousands of people at home and abroad, and the bank believes that this product has the best potential in terms of effectiveness and safety in its class. In January 2026, CSPC PHARMA initiated a Phase III clinical trial in China for SYS6010 used in combination with osimertinib as first-line treatment for non-small cell lung cancer (NSCLC), and will advance global Phase III clinical trials (3LEGFRm NSCLC and 2LEGFRwt NSCLC) and domestic Phase I/II clinical trials for first-line treatment of EGFRwt NSCLC within the year. The bank recommends paying close attention to the data on EGFR wild-type NSCLC and front-line lung cancer treatment for SYS6010. With the accumulation of more domestic and international data, the bank believes that there is great potential for its subsequent overseas expansion. In addition, the company is actively laying out PD-1/IL-15 fusion protein and targeting points such as HER3, B7H3, and DLL3 in the ADC pipeline, and the bank also sees potential for external licensing opportunities for these early pipelines. Laying out cutting-edge cell therapy technology, CSPC PHARMA's in vivo CAR-T has received the first clinical approval in China. On January 29, CSPC PHARMA announced that SYS6055 injection has obtained clinical approval in China for the treatment of relapsed/refractory aggressive B-cell lymphoma. SYS6055 is the first in vivo CAR-T product approved for clinical use in China, producing CD19-targeted CAR-T cells directly in the body through a lentiviral vector to specifically recognize and eliminate target cells, achieving therapeutic goals. The bank believes that compared to traditional CAR-T products, this product has potential advantages in terms of cost, accessibility, and immediacy. Preclinical studies have shown that the product can generate CAR-T cells specifically in the body, with significant anti-tumor effects and good safety. The bank notes that in February 2026, Lilly acquired in vivo CAR-T company Orna Therapeutics for a total of $2.4 billion, which may indicate that MNCs are gradually laying out related tracks. The bank advises increasing attention to CSPC PHARMA's in vivo CAR-T product line. Valuation The bank has adjusted the company's FY25/FY26/FY27 revenue forecasts to 26.7/28.9/30.6 billion RMB (previous revenue forecasts for FY25/FY26 were 27.3/30.1 billion RMB). Considering that the upfront payments for licensing revenue in 2024 and 2025 of $510 million (approximately 3.57 billion RMB) will be recognized in batches (as of 9M25, only 1.54 billion RMB has been recognized), this adjustment mainly targets the amount of upfront licensing revenue recognition. At the same time, the bank has adjusted the FY25/FY26/FY27 net profit forecast to 4.4/4.6/5.3 billion RMB (previous profit forecasts for FY25/FY26 were 5.0/5.1 billion RMB). Risk Warning: Risks related to new drug research and development, risks related to drug approval, risks of commercialization falling short of expectations, increased competition risks, and policy risks.