HAITONG INT'L: Maintains a "outperform" rating on HANSOH PHARMA (03692) with a target price of HKD 45.94.

HAITONG INT'L released a research report stating that it has raised the revenue forecast for HANSOH PHARMA (03692) for FY26/FY27 to 17/19 billion yuan respectively (originally 16/17.7 billion yuan), and the net profit forecast for the parent company to 5.9/6.6 billion yuan respectively (originally 4.7/5.2 billion yuan), reflecting 1) continuous improvement in the sales expense ratio; 2) steady increase in external licensing income and the potential for normalization, continuously contributing to profit growth. The bank uses a discounted cash flow (DCF) model and cash flow from FY27-FY35 for valuation. Based on a WACC of 7.5% and a perpetual growth rate of 3.0% (both unchanged), the corresponding target price is 45.94 Hong Kong dollars, and the "Outperform the Market" rating is maintained. HAITONG INT'L's main points include: HANSOH PHARMA's 25-year performance The proportion of innovative drugs and collaboration revenue has continued to increase to 82%. The company achieved revenue of 15 billion yuan in 25 years, a 23% increase year-on-year, with innovative drug revenue reaching 10.2 billion yuan (30% increase) and generic drug revenue at 2.7 billion yuan (a 4% decrease). Collaboration revenue was 2.1 billion yuan (a 35% increase), and additionally, the company has around 1.2 billion yuan in short-term contract liabilities yet to be confirmed as collaboration revenue. The gross profit margin was 90.0%, a 1 percentage point decrease year-on-year, with research and development expenses at 3.4 billion yuan (24% increase) and sales expenses at 4.1 billion yuan (7% increase). Benefiting from improvements in the sales expense ratio, the operating profit margin increased by 4 percentage points to 36%. The company achieved a net profit attributable to the parent of 5.56 billion yuan, a 27% increase. Overall performance met expectations. Guidance from management The company expects total revenue to achieve double-digit growth in 2026, with product revenue and collaboration revenue both expected to achieve double-digit growth (excluding potential external licensing project revenue). As of 1Q26, HANSOH PHARMA has received approval for three New Drug Applications (NDAs): 1) In January 2026, osimertinib in combination with chemotherapy was approved for first-line treatment in locally advanced or metastatic EGFRm non-small cell lung cancer (NSCLC) patients. 2) Osimertinib in Europe was approved for monotherapy in 1L and 2LEGFRmNSCLC. 3) Inenelizumab (CD19) was approved for treating generalized myasthenia gravis. The company also has two NDAs under review: 1) Osimertinib in combination with dematinib (cMET) small molecule for treating locally advanced or metastatic NSCLC with MET amplification after EGFRTKI treatment. 2) HS-10365 (RET) for treating RET gene fusion-positive locally advanced or metastatic NSCLC in adult patients. The bank expects these two indications to be approved in 2027. Management expects to submit multiple NDAs this year: 1) HS-20093 (B7H3ADC) for 2L small cell lung cancer and 2L+ osteosarcoma indications. 2) HS-20094 (GLP-1/GIP) for obesity or overweight indications. 3) SHR6508 for secondary hyperparathyroidism in chronic kidney disease adult patients undergoing hemodialysis. 4) HS-10734 (TYK2) for psoriasis indications. Management also plans to initiate nine Phase III clinical trials this year, focusing on: 1) HS-10382 (BCR-ABL) for chronic myeloid leukemia (CML) indications. 2) HS-10506 (OX2R) for insomnia indications. 3) HS-10380 (D3, D2/5-HT2A) for schizophrenia indications. 4) HS-10370 (KRASG12C) for treating 1LG12C mutation NSCLC indications. Catalysts for clinical data in 2026 are rich The bank expects the company's clinical data to be read out 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 continuing to monitor the company's data release plan for fourth-generation EGFRTKI and EGFR/cMETADC, oral GLP-1, and other early clinical pipeline data. Risk factors: Risks associated with drug sales falling short of expectations, risks associated with new drug research and development, risks of intensified industry competition, exchange rate risks, policy risks, etc.