Core Insights - The company reported a revenue increase to approximately $594.5 million for the year ending December 31, 2024, representing a 6.1% growth from about $560.5 million in 2023, driven by enhanced brand influence in the European and American markets and the introduction of new services and products [1] - The company achieved a significant profit turnaround, moving from a loss of approximately $355.1 million in 2023 to a profit of about $2.9 billion in 2024, largely due to the demerger of its cell therapy business [1] - Adjusted net profit from continuing operations grew by 2.9% to approximately $59.8 million [1] Revenue Composition - Life sciences services and products accounted for 75.8% of total revenue, biopharmaceutical development services made up 14.8%, and industrial synthetic biology products represented 9.0% [1] Expense Analysis - Sales and distribution expenses increased by 10.0% to approximately $88.1 million, attributed to increased marketing efforts and investment in commercial talent [1] - Administrative expenses rose by 7.1% to about $114.4 million, mainly due to capacity expansion and enhanced administrative functions [1] - Research and development expenses grew by 2.1% to approximately $53.8 million [2]

Financial Data and Key Metrics Changes - The group's revenue increased by 6.1% year over year to approximately $590 million [38] - The net profit recorded was around $2.9 billion, primarily due to a one-time investment gain from the deconsolidation of Legend [38] - Adjusted net profit from continuing operations remained stable at approximately $59.8 million [38] - The Life Science Group's revenue was approximately $455 million, representing a 10.2% year-over-year growth [38] - Adjusted operating profit for the Life Science Group was about $90.4 million, reflecting a 15.5% increase year over year [39] Business Line Data and Key Metrics Changes - The Protein segment, representing about 25% of Life Sciences revenue, achieved nearly 50% revenue growth in 2024 [6][22] - ProBio's revenue was $95 million, experiencing a decline of about 13.2% year over year [39] - Bestime's revenue grew by about 24.6% to $53.7 million, achieving an adjusted operating profit of approximately $2.1 million [39][44] Market Data and Key Metrics Changes - Revenue from industrial customers increased largely due to the development of more multinational companies [40] - Revenue from China accounted for about 19% of Bestime's revenue, indicating a strong market presence [34] - The addressable market for protein regions is over $4.5 billion, with growing demand driven by antibody drug discovery and AI-driven protein engineering [22] Company Strategy and Development Direction - The company aims for full-year revenue growth for the Life Science business to be around 10% to 15% in 2025 [49] - ProBio is targeting a revenue growth of 15% to 20% for 2025, excluding the impact of the Lenovo deal [49] - Bestime is targeting constant currency revenue growth of 20% to 25% with a gross margin around 45% [49] Management's Comments on Operating Environment and Future Outlook - Management noted a strong recovery in the second half of 2024, driven by robust demand from AI-related applications and antibody drug research [40] - The company is confident in maintaining growth trends due to continuous R&D investment and expansion into overseas markets [56] - Management expressed optimism about improving profitability in the coming years despite short-term margin pressures [64] Other Important Information - The company has over 250 patents and more than 480 patents in the application process, positioning it as a global leader in the industry [11] - The company joined the United Nations Global Compact, solidifying its commitment to sustainability [12] - A new facility for Bestime is under construction, representing a total investment of RMB 800 million, slated for completion by 2027 [37] Q&A Session Summary Question: Order trend and outlook for 2025 - Management expects faster growth in Europe and the U.S., with moderate growth in China and Asia Pacific [54] Question: Net margin outlook for Life Science segments - Life Science business is targeting growth of 10% to 15% with flat gross margin [55] Question: Impact of global tariffs - Management believes tariffs will not significantly impact business results, focusing on quality and delivery speed [62][63] Question: Gross profit margin for Life Science Group - Short-term profit margins may decrease due to local production expansion, but long-term profitability is expected to improve [64] Question: CapEx guidance for 2025 - Overall CapEx spending will be roughly flat compared to 2024, with increases in specific segments like Bestime [76]

Financial Performance - The adjusted net profit for the continuing operations was approximately $59.8 million, an increase of 2.9% compared to approximately $58.1 million in the previous period[7]. - The revenue from continuing operations was approximately $594.5 million, representing a 6.1% increase from approximately $560.5 million in the prior year[6]. - The gross profit for continuing operations was approximately $272.1 million, remaining stable compared to the previous year[6]. - The company reported a profit of approximately $2.9 billion for the reporting period, compared to a loss of approximately $355.1 million in the previous period[6]. - The loss from continuing operations was approximately $173.8 million, compared to a profit of approximately $162.9 million in the prior year[6]. - The company achieved a significant gain of approximately $3.2 billion from the merger with Legend, which contributed to the overall profit[9]. - The basic earnings per share for the year was 139.63 cents, compared to a loss of 4.53 cents in the previous year[10]. - The total comprehensive income for the year was approximately $2.79 billion, compared to a loss of approximately $335.6 million in the previous year[12]. - The company reported a pre-tax loss of $170,797,000 for the year ended December 31, 2024, compared to a profit of $168,885,000 in 2023[31]. - The company reported a significant profit increase due to the revenue from the deconsolidated cell therapy business, with profits rising to approximately $2.9 billion from a loss of approximately $355.1 million in the previous year[76]. Revenue Breakdown - Revenue for the period was $186,522 thousand, with a net loss of $(71,524) thousand[56]. - Revenue from the life sciences services and products segment accounted for 75.8% of total revenue, while biopharmaceutical development services and industrial synthetic products accounted for 14.8% and 9.0%, respectively[76]. - Revenue from the life sciences services and products segment was approximately $454.9 million, a 10.2% increase from approximately $412.9 million in the previous year[79]. - Revenue from biopharmaceutical development services was approximately $95.0 million, a decrease of 13.2% from approximately $109.5 million in the previous period[82]. - Revenue from industrial synthetic biological products increased by 24.6% to approximately $53.7 million, up from approximately $43.1 million in the previous period[85]. Expenses and Liabilities - The company incurred research and development expenses of approximately $53.8 million, an increase from approximately $52.7 million in the previous year[9]. - The total administrative expenses for 2024 were $114,375,000, an increase from $106,820,000 in 2023, indicating a rise of approximately 7%[25]. - Selling and distribution expenses rose by 10.0% to approximately $88.1 million, primarily due to increased marketing efforts and investment in commercial talent[91]. - The financing costs rose to $8,032,000 in 2024 from $5,739,000 in 2023, marking an increase of approximately 40%[33]. - The company incurred a fair value loss on preferred shares amounting to $123,581,000 in 2024, compared to a gain of $129,207,000 in 2023[25]. Cash Flow and Assets - Net cash flow from operating activities improved to $75,647 thousand in 2024 from a negative $286,911 thousand in 2023[17]. - Investment activities resulted in a net cash outflow of $1,456,363 thousand in 2024, compared to $357,728 thousand in 2023, indicating increased investment[17]. - Total current liabilities decreased from $494,811 thousand in 2023 to $307,342 thousand in 2024, a reduction of approximately 38%[16]. - Cash and cash equivalents decreased dramatically from $1,446,403 thousand in 2023 to $131,990 thousand in 2024, a decline of about 90.9%[17]. - The company reported a cash outflow from operating activities of $61,955,000 for the nine months ended September 30, 2024, compared to an outflow of $393,276,000 for the entire year of 2023, showing a significant reduction in cash burn[42]. Equity and Assets - Total equity increased from $2,044,354 thousand in 2023 to $4,323,362 thousand in 2024, reflecting a growth of approximately 111.1%[16]. - The company reported a significant reduction in trade receivables from $217,443 thousand in 2023 to $116,291 thousand in 2024, a decrease of about 46.6%[14]. - The company’s total liabilities decreased from $1,342,948 thousand in 2023 to $954,907 thousand in 2024, indicating a reduction of approximately 29%[16]. - The total assets as of September 30, 2024, amounted to $1,735,825,000, a decrease from $1,848,609,000 as of December 31, 2023[38]. - The group’s property, plant, and equipment decreased by 14.8% to approximately $518.0 million, primarily due to the deconsolidation of Legend and impairment losses[108]. Strategic Initiatives - The company plans to continue focusing on market expansion and new product development to drive future growth[9]. - The company plans to invest in R&D to accelerate innovation in antibody drug development, AI drug development, and other advanced therapies[80]. - The company aims to enhance global production capacity and provide localized supply chain solutions in the U.S., Singapore, and mainland China[80]. - The company is diversifying its global production footprint and supply chain partners to mitigate risks associated with geopolitical factors and international trade agreements[142]. - The company continues to seek potential partnerships to advance its cell therapy pipeline and explore new business opportunities[154]. Governance and Compliance - The company is committed to maintaining high standards of corporate governance to enhance shareholder value and responsibility[165]. - The audit committee, consisting of four independent non-executive directors, is responsible for reviewing and supervising the company's financial reporting system and risk management[168]. - The company has adopted a self-developed "Standard Code for Securities Transactions by Directors and Relevant Persons," ensuring compliance with the standards set out in the listing rules[167]. - The company will continue to review and strengthen its corporate governance practices to ensure compliance with the corporate governance code[166]. Workforce and Employee Investment - Employee compensation expenses totaled approximately $264.7 million, accounting for about 44.5% of total revenue, reflecting a commitment to talent investment[156]. - The workforce consists of approximately 5,568 employees, with 53.6% in production and 11.2% in sales and marketing[156].

Investment Rating - The report maintains a "Buy" rating for King’s Ray Bio (1548 HK) with a target price of HKD 28.75, indicating a potential upside of 140% from the current price of HKD 11.98 [2][3]. Core Insights - King’s Ray Bio is expected to achieve a significant increase in net profit in 2024, primarily driven by a one-time unrealized gain of approximately USD 3.2 billion from the sale of Legend Biotech, which exceeds previous estimates of USD 2-3 billion [1]. - The company is projected to fully enter the profit zone starting in 2024, with a recovery in the GCT (Gene Cell Therapy) business expected to continue through 2025-2026, leading to a revenue growth rate of around 20% for non-cellular business [1]. - The improvement in the company's fundamentals, coupled with a recovery in investor sentiment, is anticipated to drive valuation recovery, as geopolitical factors and favorable policies for innovative drug payments are expected to enhance investment sentiment in the CXO sector [1]. Summary by Sections Financial Performance - The report highlights that the adjusted net profit for non-cellular business in 2024 will remain stable compared to 2023, with no significant changes expected [1]. - The tax losses from Legend Biotech prior to its merger will be accounted for in non-continuing operations, while post-merger, it will be accounted for using the equity method [1]. Market Outlook - The report notes a strong recovery trend in new orders for protein/antibody drugs and GCT, with first-half 2024 new orders recovering to 13 and 24 respectively, compared to 10 and 21 in the first half of 2023 [1]. - The sentiment in the market is improving, with King’s Ray's stock price rising 34% from its year-to-date low, significantly outperforming the Hang Seng Medical Index and the Hang Seng Index, both of which increased by 19% [1].

Investment Rating - The report maintains a "Buy" rating for King’s Ray Bio (1548 HK) with a target price of HKD 28.75, indicating a potential upside of 140% from the current price of HKD 11.98 [2][3]. Core Insights - King’s Ray Bio is expected to achieve a significant increase in net profit in 2024, primarily driven by a one-time unrealized gain of approximately USD 3.2 billion from the sale of Legend Biotech, which exceeds previous estimates of USD 2-3 billion [1]. - The company is projected to fully enter the profit zone starting in 2024, with a recovery in the GCT (Gene Cell Therapy) business expected to continue through 2025-2026, leading to a revenue growth rate of around 20% for non-cellular business [1]. - The improvement in the company's fundamentals, coupled with a recovery in investor sentiment, is anticipated to drive valuation recovery, as geopolitical factors and favorable policies for innovative drug payments are expected to enhance investment sentiment in the CXO sector [1]. Summary by Sections Financial Performance - The report highlights that the adjusted net profit for non-cellular business in 2024 will remain stable compared to 2023, with no significant changes expected [1]. - The tax loss from Legend Biotech prior to its merger will be accounted for in non-continuing operations, while post-merger, it will be accounted for using the equity method [1]. Market Outlook - The report notes a strong recovery trend in new orders for protein/antibody drugs and GCT, with first-half 2024 new orders recovering to 13 and 24 respectively, compared to 10 and 21 in the first half of 2023 [1]. - The sentiment in the market is improving, with the company's stock price rising 34% from its low this year, outperforming the Hang Seng Medical Index and the Hang Seng Index, both of which increased by 19% [1].

Investment Rating - The report assigns a "Buy" rating to the company with a target price of HKD 28.75, indicating a potential upside of 123.2% from the current closing price of HKD 12.88 [1][4]. Core Insights - The recent decision to deconsolidate Legend Biotech and treat it as an associate company is expected to have a positive one-time profit impact, clarifying the company's profit trajectory [1]. - The accounting treatment change will result in a non-cash tax-exempt gain estimated between USD 2 billion to USD 3 billion, reflecting the fair market value of the investment in Legend Biotech [1]. - The company anticipates achieving profitability starting in 2024, driven by a clearer reflection of its non-cell therapy business performance and a recovery in revenue growth [1]. Financial Forecasts - Revenue projections for 2024-2026 have been adjusted to USD 1.056 billion, USD 709 million, and USD 842 million, respectively, with a significant increase in net profit forecasted for 2024 at USD 2.293 billion [2][3][6]. - The gross profit for 2024 is expected to be USD 567 million, with a gross margin of 53.7% [3][6]. - The net profit margin is projected to improve significantly, reaching 217.2% in 2024, indicating a strong recovery from previous losses [6]. Market Performance - The company's stock has experienced a year-to-date decline of 35.15%, with a 52-week high of HKD 24.45 and a low of HKD 8.23 [2][4]. - The market capitalization stands at approximately HKD 27,050.70 million, with an average daily trading volume of 27.76 million shares [2][4]. Valuation Metrics - The price-to-earnings (P/E) ratio for 2024 is projected at 1.5, indicating a low valuation relative to expected earnings [2][6]. - The book value per share is expected to rise to USD 1.70 by 2024, with a price-to-book (P/B) ratio of 0.98 [2][6]. Conclusion - The report highlights a significant turnaround potential for the company following the deconsolidation of Legend Biotech, with expectations of improved financial performance and a clear path to profitability starting in 2024 [1][3][6].

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 23.95 [3][9] Core Views - CARVYKTI achieved Q3 2024 sales of USD 286 million, a 54% quarter-on-quarter increase, with cumulative sales for the first three quarters reaching USD 629 million [3] - The company is expected to achieve full-year sales of over USD 900 million for CARVYKTI, driven by new capacity ramp-up and rapid commercialization of 2-4L indications [3] - The SOTP valuation for the company is HKD 51 billion, with non-cell therapy business valued at HKD 26.45 billion and cell therapy business at HKD 24.54 billion [9] Cell Therapy Business - CARVYKTI sales in Q1/Q2/Q3 2024 were USD 157 million, USD 186 million, and USD 286 million, respectively, showing significant growth compared to TECVAYLI [4] - The company expects to support an annual capacity of 10,000 cases by the end of 2025, with new capacities from Belgium and collaborations with Novartis [4] - R&D expenses for the cell therapy division are expected to peak in 2024, with most costs for CARTITUDE-5 likely completed this year [4] Non-Cell Therapy Business - Life sciences revenue is expected to grow by 10-15% annually, with operating profit growing faster than revenue [5] - CDMO revenue is projected to decline by 10-15% due to investment pressures and market competition [5] - Synthetic biology revenue is forecasted to grow by 25-35%, with adjusted operating margins stable at 4-5% [5] Financial Forecasts - Revenue for 2024E/2025E/2026E is projected at USD 1.166 billion, USD 1.82 billion, and USD 3.02 billion, respectively [6] - Net profit attributable to shareholders is expected to be USD -118.4 million, USD 146.38 million, and USD 595.54 million for 2024E/2025E/2026E [6] - EPS for 2024E/2025E/2026E is forecasted at USD -0.06, USD 0.07, and USD 0.28, respectively [6] Valuation Methodology - The non-cell therapy business is valued at HKD 26.45 billion based on a 2025E PS of 5.00x, a 20% discount to comparable companies [10] - The cell therapy business is valued at HKD 24.54 billion, based on a 20% discount to the Nasdaq-listed Legend Biotech's market capitalization [12]

Company Overview and Operations - The company's professional team consists of 7,284 members as of June 30, 2024[3] - The company operates in over 100 countries and regions globally[3] - The company has established four major platforms: Life Science Services and Products, Biologics CDMO, Industrial Synthetic Products, and Global Cell Therapy[3] - The company's CDMO platform provides end-to-end services for biologics discovery, development, and commercial production[3] - Legend Biotech, a subsidiary, focuses on developing novel cell therapies for oncology and other indications, with its lead candidate cilta-cel co-developed with Janssen for multiple myeloma[3] - Bestzyme, another subsidiary, leverages enzyme engineering for products in feed, alcohol, food, and home care industries[4] - The company's Life Science Services and Products division offers gene synthesis, oligonucleotide synthesis, peptide synthesis, protein production, antibody development, and life science equipment[3] - The company's mission is to use biotechnology to improve human and environmental health, with a focus on customer needs and long-term development[3] - The company aims to optimize operational processes for high-quality end-to-end delivery and enhance strategic collaboration with business partners[3] - The company's global presence includes legal entities in China, the US, Hong Kong, Japan, Singapore, the Netherlands, Ireland, the UK, South Korea, Belgium, Spain, and Australia[3] - The company has 7,284 employees as of June 30, 2024, with 53.0% in production, 8.7% in sales and marketing, 14.9% in administration, 11.8% in R&D, and 11.6% in management[56] - The company is focusing on accelerating the clinical and commercial development of CARVYKTI and enhancing production capacity for frontline patient treatment[53] - The company is exploring new opportunities in synthetic biology, aiming to serve a wide range of industrial applications with potential health and environmental benefits[53] - The company plans to continue leveraging investigator-initiated trials (IIT) in China for cost-effective clinical data generation and may use IIT data for U.S. clinical trials when beneficial[53] - The company has over 100,000 internationally peer-reviewed academic journal articles citing its services and products as of June 30, 2024[52] - The company acquired a plasmid and viral vector production facility in the United States to address customer concerns about supply chain risks and data storage/protection[52] - The company secured its first 2000L-scale GMP order for antibody production and a viral vector production order to support a CAR-T product's Biologics License Application submission[52] - The company is focusing on differentiated services and solutions to gain market share and accelerate growth in the CDMO industry[52] - The company is mitigating geopolitical risks by diversifying its global production footprint and supply chain partnerships[47] Financial Performance - Revenue increased by 43.5% to $561.4 million, with non-cell therapy revenue slightly decreasing by 0.2% to $281.1 million and cell therapy revenue significantly increasing by 156.0% to $280.3 million[9] - Gross profit surged by 75.4% to $307.0 million, with non-cell therapy gross profit slightly decreasing by 0.9% to $133.5 million and cell therapy gross profit significantly increasing by 323.4% to $175.3 million[9] - Net loss narrowed to $215.6 million from $245.8 million in the previous period, with adjusted net loss improving to $69.0 million from $162.0 million[9] - Life science services and products revenue increased by 9.6% to $222.4 million, with adjusted gross profit rising by 8.5% to $119.9 million and adjusted operating profit increasing by 23.8% to $47.8 million[13] - Cell therapy segment accounted for 49.9% of total revenue, with external revenue reaching $280.3 million, a significant increase from $109.5 million in the previous period[11] - Adjusted gross margin for life science services and products remained stable, driven by platform innovation, automation upgrades, and improved production efficiency in Singapore, China, and the US[13] - Adjusted operating loss for the cell therapy segment improved to $119.4 million from $205.9 million, reflecting better cost management and operational efficiency[12] - Non-cell therapy segment's adjusted net profit decreased by 13.1% to $29.2 million, while the cell therapy segment's adjusted net loss improved to $98.3 million from $195.7 million[9] - The company's overall adjusted net loss improved significantly, driven by better performance in the cell therapy segment and cost control measures[9] - Revenue from biopharmaceutical development services decreased to $40.4 million from $65.1 million, reflecting a shift in focus towards higher-margin cell therapy operations[12] - Biologics development services revenue decreased by 37.9% to $40.4 million, with adjusted gross profit down 69.7% to $5.9 million, and adjusted gross margin dropping from 30.0% to 14.7%[14] - Industrial synthetic biology products revenue increased by 43.4% to $26.1 million, with adjusted gross profit up 52.8% to $11.0 million, and adjusted gross margin rising from 39.4% to 42.2%[15] - Cell therapy revenue surged by 155.7% to $280.5 million, driven by CARVYKTI sales and milestone payments from Janssen and Novartis agreements[16] - Total group revenue increased by 43.5% to $561.4 million, primarily due to growth in life sciences and industrial synthetic biology products, as well as CARVYKTI sales and milestone payments[18] - Group gross profit rose by 75.4% to $307.0 million, with adjusted gross profit increasing by 73.3%[19] - Sales and distribution expenses increased by 19.5% to $97.3 million, mainly due to cilta-cel sales costs and preparation for second-line indications[20] - Administrative expenses grew by 12.9% to $120.2 million, driven by capacity expansion and enhanced administrative functions[21] - R&D expenses increased by 14.0% to $236.4 million, primarily due to ongoing investments in cilta-cel and solid tumor projects[22] - Adjusted operating loss for cell therapy decreased to $119.4 million from $205.9 million, with adjusted R&D costs at $196.3 million[16] - Fair value loss of $113.5 million recorded due to changes in the fair value of Probio A and C class preferred shares and warrants[23] - The company's net loss for the reporting period was approximately $215.6 million, compared to $245.8 million in the previous period[27] - Cash and cash equivalents as of June 30, 2024, were approximately $399.3 million, down from $1.4 billion as of December 31, 2023[27] - Capital expenditures during the reporting period included $33.7 million for prepaid cooperative assets and $100.3 million for construction and purchase of property, plant, and equipment[28] - The company held significant investments in financial products with floating expected annual yields ranging from 2.5% to 5.9%[29] - As of June 30, 2024, the company's financial assets at fair value through profit or loss totaled $195.29 million, up from $137.51 million as of December 31, 2023[30] - Income tax expenses increased from approximately $1.1 million in the previous period to $10.0 million in the current reporting period, primarily due to valuation allowances on deferred tax assets from CDMO business[26] - The company had $231.0 million in available but unused bank credit facilities as of June 30, 2024[27] - The equity portion of Probio Class B preferred shares was valued at approximately $1.6 million, while the liability portion was valued at approximately $40.1 million as of June 30, 2024[25] - The company's investment in credit-linked notes with J.P. Morgan Structured Products B.V. yielded a fair value increase from $17,000,000 to $17,852,000, reflecting a 5.01% gain[32] - The company's investment in non-principal guaranteed floating income products with China Merchants Bank showed a fair value increase from RMB 90,000,000 to RMB 13,016,000, reflecting a 3.07% gain[32] - The company's investment in Yuanming Prudence SPC — Healthcare Fund I resulted in a fair value increase from $261,000 to $294,000, reflecting a 12.64% gain[33] - The company's investment in Ruifu Medical Health Fund resulted in a fair value decrease from $9,370,000 to $8,152,000, reflecting a 12.99% loss[33] - The company recorded investment income of approximately $1.3 million from financial assets measured at fair value through profit or loss during the reporting period[34] - The company recorded a fair value gain of approximately $1.7 million from financial assets measured at fair value through profit or loss during the reporting period[34] - The company's investment in 7G BIOVENTURES I, L.P. resulted in a fair value decrease from $3,000,000 to $2,474,000, reflecting a 17.53% loss[33] - The company's investment in Fund B resulted in a fair value increase from $3,785,000 to $3,967,000, reflecting a 4.81% gain[33] - The company's investment in AffyXell Therapeutics Co., Ltd. resulted in a fair value decrease from $810,000 to $710,000, reflecting a 12.35% loss[33] - The company's investment in Shenzhen Aimabio Technology Co., Ltd. resulted in a fair value increase from $1,123,000 to $1,614,000, reflecting a 43.72% gain[33] - GS China borrowed a short-term interest-bearing loan of RMB 47.0 million (approximately USD 6.6 million) from Citibank with a fixed annual interest rate of 2.4%[36] - GS China, Nanjing Probio, and Jiangsu Probio borrowed short-term interest-bearing loans totaling RMB 174.1 million (approximately USD 24.4 million) from China Merchants Bank with fixed annual interest rates ranging from 2.38% to 2.6%[36] - Jiangsu Probio borrowed long-term interest-bearing loans totaling RMB 96.1 million (approximately USD 13.5 million) from China Construction Bank and Jiangsu Bank, with floating annual interest rates based on LPR, secured by leased land[36] - Legend received a prepayment of USD 250.0 million from a partner, with interest totaling USD 41.6 million, based on 12-month SOFR plus a spread adjustment[36] - The group's current ratio was approximately 4.2, and the debt-to-asset ratio was approximately 45.2% as of June 30, 2024[39] - The group plans to expand production capacity globally, including in the US, Singapore, and mainland China, to meet strong customer demand[41] - The group plans to expand CARVYKTI production capacity in North America and Europe following anticipated FDA and EC approvals for second-line treatment of MM[42] - The company has no outstanding foreign currency forward or option contracts as of June 30, 2024[43] - The company has approximately $170.8 million in financial products exposed to fair value interest rate risk, excluding floating-rate bank balances and fixed-rate time deposits[44] - A 50 basis point increase or decrease in interest rates would result in a $0.4 million decrease or increase in pre-tax loss, respectively, based on fair value interest rate risk sensitivity analysis[45] - A 50 basis point increase or decrease in interest rates would result in a $0.7 million increase or decrease in pre-tax loss, respectively, based on cash flow interest rate risk sensitivity analysis[45] - The company's trade and other receivables are subject to independent credit assessments, with quarterly reviews of prepayment requirements and credit limits[46] - The company's CARVYKTI product generated approximately $343 million in net trade sales during the reporting period[51] - Revenue increased to $561.371 million in 2024, up 43.5% from $391.311 million in 2023[109] - Gross profit rose to $306.986 million in 2024, a 75.4% increase from $175.048 million in 2023[109] - Net loss for the period improved to $215.631 million in 2024, compared to $245.757 million in 2023[109] - Research and development expenses increased to $236.384 million in 2024, up 14% from $207.331 million in 2023[109] - Total non-current assets grew to $1,117.544 million in 2024, up from $1,034.191 million in 2023[113] - Cash and cash equivalents decreased to $399.297 million in 2024, down from $1,446.403 million in 2023[113] - Total current liabilities increased to $532.997 million in 2024, up from $494.811 million in 2023[113] - Total equity decreased to $1,824.207 million in 2024, down from $2,044.354 million in 2023[115] - Exchange differences on translation of foreign operations resulted in a loss of $63.054 million in 2024, compared to $15.777 million in 2023[111] - Total comprehensive loss for the period was $278.685 million in 2024, compared to $261.534 million in 2023[111] - The company reported a net loss of $175.115 million for the six months ended June 30, 2024, compared to a net loss of $93.581 million for the same period in 2023[117][119] - Total comprehensive income for the period was a loss of $207.5 million, primarily driven by the net loss and foreign exchange translation differences of $32.385 million[117] - The company's total equity decreased from $2.044 billion as of January 1, 2024, to $1.824 billion as of June 30, 2024, mainly due to the period's net loss and foreign exchange translation differences[117] - Cash flow from operating activities improved significantly, with a net inflow of $79.855 million for the six months ended June 30, 2024, compared to a net outflow of $187.168 million for the same period in 2023[120] - The company recognized a fair value loss of $113.509 million on preferred shares and warrants during the six months ended June 30, 2024[120] - Share-based compensation expenses increased to $53.349 million for the six months ended June 30, 2024, compared to $38.859 million for the same period in 2023[120] - The company's trade receivables and other receivables decreased by $61.38 million during the six months ended June 30, 2024, indicating improved collections[120] - Inventory levels increased by $26.739 million during the six months ended June 30, 2024, reflecting higher production or slower sales[120] - The company's contract liabilities increased by $23.708 million during the six months ended June 30, 2024, suggesting higher advance payments from customers[120] - Investment activities used a net cash flow of $1,133,054 thousand, compared to $454,543 thousand in the same period last year[121] - Financing activities generated a net cash flow of $5,565 thousand, significantly lower than $1,020,019 thousand in the previous year[121] - Cash and cash equivalents decreased by $1,047,634 thousand, ending at $399,297 thousand[121] - The company adopted revised Hong Kong Financial Reporting Standards, including HKFRS 16 and HKAS 1 amendments, with no material financial impact[124][126] - The company operates in five reportable segments: Life Science Services & Products, Biologics Development Services, Industrial Synthetic Biology Products, Cell Therapy, and Management Services[127] - Total revenue for the six months ended June 30, 2024, reached $561.371 million, compared to $391.311 million in the same period in 2023, representing a significant increase[132] - Revenue from external customers in the Life Sciences Services and Products segment was $217.722 million, while the Biologics Development Services segment contributed $37.132 million[129] - The Cell Therapy segment generated the highest revenue from external customers at $280.320 million, followed by the Life Sciences Services and Products segment at $217.722 million[129] - Gross profit for the Life Sciences Services and Products segment was $118.945 million, while the Cell Therapy segment recorded a gross profit of $175.324 million[129] - R&D expenses for the Cell Therapy segment were the highest at $213.590 million, reflecting significant investment in new technologies and product development[129] - The company reported a pre-tax loss of $205.588 million, primarily driven by losses in the Cell Therapy and Experience Management segments[129] - Revenue from customer contracts increased to $389.455 million in 2024 from $296.583 million in 2023, while revenue from partner contracts rose to $171.735 million from $94.432 million[132] - The Biologics Development Services segment saw a decrease in revenue from external customers, dropping to $37.132 million in 2024 from $64.652 million in 2023[129][131] - The Industrial Synthetic Biology Products segment recorded a modest increase in revenue from external customers, rising to $26.109 million in 2024 from $18.113 million in 2023[129][131] - The company's total gross profit for the six months ended June 30, 2024, was $306.986 million, compared to $175.048 million in the same period in 2023[129][131] - Other income and gains totaled $112.565 million for the six months ended June 30, 2024, a significant increase from $31.301 million in the same period in 2023, driven by foreign exchange gains and fair value gains on financial assets[136] - Pretax loss for the period was impacted by a $37.480 million impairment provision for long-term assets, which was not present in the prior year[137] - Employee benefit expenses, including salaries and wages, increased to $255.673 million from $210.101 million year-over-year, reflecting higher compensation costs[137] - The company recorded a fair value gain of $113.509

Investment Rating - The report assigns a "Buy" rating for Kingsray Biotechnology (01548) as part of its initial coverage [2][4][6]. Core Insights - Kingsray Biotechnology has shown strong growth in its cell therapy segment, with external revenue reaching $280 million in the first half of 2024, a year-on-year increase of 156%. The CARVYKTY product is expected to continue rapid growth due to expanding indications and capacity release [3][4]. - The life sciences business is developing steadily, with revenue from life sciences services and products reaching $222.4 million, a 9.6% year-on-year increase. The adjusted gross margin remains stable at 54% [3][4]. - The company is projected to achieve revenues of $1.189 billion, $1.881 billion, and $2.950 billion for 2024, 2025, and 2026, respectively, with year-on-year growth rates of 42%, 58%, and 57% [4][5]. Summary by Sections Financial Performance - In the first half of 2024, Kingsray Biotechnology reported revenue of $561.4 million, a 43.5% increase year-on-year. The net loss was $216 million, a reduction of $30 million compared to the previous year [2][3]. - The cell therapy division's revenue accounted for 49.9% of total revenue, with CARVYKTY generating net sales of $343 million [3][4]. Growth Potential - The CARVYKTY product has received approvals for use in specific patient populations, which is expected to significantly increase the addressable market. The production capacity is also set to ramp up with new facilities coming online [3][4]. - The report highlights the strong growth in the enzyme business, with revenue from the feed enzyme segment increasing by approximately 42% and industrial enzyme revenue growing by about 39% [3][4]. Valuation Metrics - The projected earnings per share (EPS) for 2024 is expected to be -$0.08, improving to $0.02 in 2025 and $0.11 in 2026. The price-to-earnings (P/E) ratio is projected to be 103.70 in 2025 and 13.78 in 2026 [5][6].

Investment Rating - The report maintains a "Buy" rating for the company, citing the potential for continued growth in its cell therapy business and expected improvements across other segments in the second half of the year [3][5] Core Views - The company reported H1 2024 revenue of $561 million, a 43.5% YoY increase, driven by strong performance in the cell therapy segment, which grew 156.0% YoY to $281 million [2] - Non-cell therapy revenue remained flat at $281 million, while the company narrowed its net loss to $216 million from $246 million in the same period last year [2] - The life sciences segment grew 10% YoY to $222 million, with protein-related revenue increasing 30% due to synergies between gene synthesis and protein/antibody businesses [3] - The CDMO segment saw a 38% YoY decline in revenue to $40.4 million, with adjusted gross margins dropping 15 percentage points to 14.7%, attributed to reduced capacity utilization and pricing pressures [3] - The cell therapy segment, led by subsidiary Legend Biotech, achieved $281 million in revenue, with CARVYKTI® sales reaching $343 million, an 81.5% YoY increase [3] Financial Projections - Revenue is projected to grow from $1.156 billion in 2024E to $3.057 billion in 2026E, with a CAGR of 37.7% from 2024E to 2026E [4] - Net profit is expected to improve significantly, from a loss of $256 million in 2024E to a profit of $350 million in 2026E [4] - EPS is forecasted to turn positive by 2025E, reaching $0.16 by 2026E [4] Business Segment Analysis - Life Sciences: Expected to grow 10%-15% YoY in 2024, with protein-related businesses driving growth [3] - CDMO: Revenue is projected to decline 10%-15% for the full year, but new order trends suggest a better second half [3] - Cell Therapy: CARVYKTI®'s approval for second-line treatment of multiple myeloma is expected to further expand its market potential [3] Valuation and Market Data - The company's current market cap is HKD 28.306 billion, with a share price of HKD 13.30 [5][6] - The stock has a 3-month turnover rate of 75.0% and has traded between HKD 7.43 and HKD 24.95 over the past year [6]