Investment Rating - The industry investment rating is "Overweight" (maintained) [5] Core Viewpoints - The report highlights the upcoming 85th Annual Scientific Sessions of the American Diabetes Association (ADA) from June 20-23, 2025, which is expected to showcase significant advancements in GLP-1 class drugs and weight management strategies [5][6] - The report emphasizes the increasing international recognition of China's innovations in the endocrine and metabolic fields, particularly in the GLP class drug sector, with notable achievements from companies like Innovent Biologics and Eli Lilly [7][8] - The report anticipates a substantial growth in China's GLP-1 weight loss drug market, projecting a market size exceeding 15 billion yuan by 2025, with penetration rates expected to rise from under 5% in 2023 to 18%-20% [8] Summary by Sections Recent Industry Performance - The industry has shown relative returns of 8.85% over the past month, 10.28% over the past three months, and 3.81% over the past year compared to the CSI 300 index [3] Investment Highlights - The report focuses on the catalysts from the ADA conference, particularly the advancements in GLP-1 class drugs, which are expected to drive investment opportunities [6][7] - Key companies mentioned include Eli Lilly, Novo Nordisk, and domestic firms like Boryung Pharmaceutical and Gan & Lee Pharmaceuticals, which are actively involved in GLP-1 drug development [7][8] Market Dynamics - The report notes the active business development transactions in the GLP class drug sector, indicating a high level of industry enthusiasm and potential for growth [7] - It also mentions the upcoming global diabetes-related conferences in 2025, which will further stimulate the market for GLP class drugs [8]

Summary of Key Points Core Viewpoint - The Hong Kong stock market experienced significant net inflows from northbound trading, with a total net buy of 13.76 billion HKD on June 11, 2023, indicating strong investor interest in certain stocks while others faced substantial sell-offs [1]. Group 1: Northbound Trading Activity - Northbound trading saw a net buy of 3 billion HKD through the Shanghai Stock Connect and 10.77 billion HKD through the Shenzhen Stock Connect [1]. - The most bought stocks included China Construction Bank (00939), Meituan-W (03690), and Innovent Biologics (01801) [1]. - The most sold stocks were Xiaomi Group-W (01810), Tencent (00700), and Alibaba-W (09988) [1]. Group 2: Stock-Specific Insights - Xiaomi Group-W had a net sell of 9.30 billion HKD, with total buy and sell amounts of 13.67 billion HKD and 22.97 billion HKD respectively [2]. - Tencent faced a net sell of 8.65 billion HKD, with total transactions amounting to 19.75 billion HKD [2]. - Alibaba-W experienced a net sell of 6.71 billion HKD, with total transactions of 17.53 billion HKD [2]. Group 3: Sector Analysis - The banking sector showed mixed results, with China Construction Bank receiving a net buy of 7.06 billion HKD, while China Bank faced a net sell of 3.1 billion HKD [4]. - Analysts suggest that declining deposit rates may drive funds into the stock market, supporting a potential recovery in bank valuations [4]. - The innovation drug sector showed varied performance, with Innovent Biologics and 3SBio receiving net buys, while CSPC Pharmaceutical Group faced a net sell [5]. Group 4: Company Developments - Meituan-W received a net buy of 3.69 billion HKD, bolstered by the launch of its AI Coding Agent product, which allows users to create websites and software tools without coding experience [5]. - China National Offshore Oil Corporation (00883) saw a net buy of 1.6 billion HKD, with positive outlooks on its operational performance and capital expenditure plans [6]. - Bilibili-W (09626) received a net buy of 416 million HKD, supported by new measures to promote the gaming industry [6]. Group 5: Market Sentiment - Tencent and Alibaba's significant net sells were attributed to concerns over capital expenditures and cloud revenue growth falling short of expectations, impacting market confidence in the AI sector [7]. - Xiaomi's net sell was linked to its commitment to enhancing the automotive supply chain in response to national directives [7].

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 95, representing a potential upside of 17% from the current price of HKD 81.1 [2][9][10] Core Insights - The report highlights positive updates on IBI363 and IBI343, with IBI363 showing an extended median progression-free survival (mPFS) of 9.3 months in the 3 mg/kg dose group for IO-treated squamous non-small cell lung cancer (sq-NSCLC), enhancing confidence in its development for lung squamous carcinoma [1][7][10] - The company is expected to initiate Phase 3 registration clinical trials for IBI363 in the 3L+ sq-NSCLC setting, with the 3 mg/kg dose likely to be used [7][10] - Financial projections indicate a significant increase in revenue and net profit over the next few years, with expected revenues of RMB 11.7 billion in 2025 and a net profit of RMB 433 million [9][10] Financial Projections - Revenue is projected to grow from RMB 6.2 billion in 2023 to RMB 15.8 billion by 2027, with a compound annual growth rate (CAGR) of 36.2% [9][10] - The adjusted net profit is expected to turn positive in 2025, reaching RMB 1.03 billion by 2025 and RMB 2.66 billion by 2027 [9][10] - The report anticipates peak sales for IBI363 in China to reach approximately RMB 2.5 billion and for IBI343 to reach around RMB 1.5 billion, both on a risk-adjusted basis [10]

Group 1 - The Hang Seng Index fell by 0.08% to close at 24,162.87 points on June 10, with a total net inflow of HKD 7.59 billion through the southbound trading channel [1] - The total trading volume for the southbound trading was HKD 124.87 billion, with a net buying amount of HKD 7.59 billion [1] - In the Shanghai-Hong Kong Stock Connect, the trading volume was HKD 79.04 billion with a net buying of HKD 4.80 billion, while in the Shenzhen-Hong Kong Stock Connect, the trading volume was HKD 45.83 billion with a net buying of HKD 2.80 billion [1] Group 2 - In the top ten active stocks for the Shanghai-Hong Kong Stock Connect, Meituan-W had the highest trading amount of HKD 3.32 billion, followed by Xiaomi Group-W and Tencent Holdings with trading amounts of HKD 2.97 billion and HKD 2.34 billion respectively [2] - In terms of net buying, the highest was for CSPC Pharmaceutical Group with a net buying amount of HKD 368 million, while Tencent Holdings had the highest net selling amount of HKD 1.04 billion [2] - In the Shenzhen-Hong Kong Stock Connect, Xiaomi Group-W led with a trading amount of HKD 1.72 billion, followed by Tencent Holdings and Meituan-W with trading amounts of HKD 1.64 billion and HKD 1.53 billion respectively [2]

Group 1 - Southbound funds net bought Hong Kong stocks worth 75.9 billion HKD on June 10, with notable net purchases in Meituan-W (9.85 billion HKD), CSPC Pharmaceutical Group (7.61 billion HKD), and Innovent Biologics (5.19 billion HKD) [1] - Tencent Holdings saw a significant net sell-off of 18.92 billion HKD, alongside other companies like Xiaomi Group-W (8.99 billion HKD) and Alibaba-W (7.71 billion HKD) [1] - Meituan has experienced 17 consecutive days of net buying, totaling 185.1264 billion HKD, while Tencent has faced 8 consecutive days of net selling, amounting to 99.4492 billion HKD [1] Group 2 - Tencent Holdings experienced a slight decline of 0.87% and repurchased 973,000 shares at a price range of 509-520 HKD per share, costing 500 million HKD [6] - Meituan's stock dropped by 2.7%, while JD.com's daily order volume for food delivery surpassed 25 million, capturing over 31% of the national market share [6] - Meituan launched its first AI Coding Agent product, NoCode, aimed at various applications including data analysis and product prototype design [7] Group 3 - Xiaomi Group's stock fell by 1.29%, and the company addressed rumors regarding a fatal accident during high-level driving training, stating that it would pursue legal action against those spreading false information [7]

Summary of Key Points Core Viewpoint - The Hong Kong stock market experienced significant net inflows from northbound trading, with a total net buy of HKD 75.9 billion on June 10, 2023, indicating strong investor interest in certain stocks while others faced net sell-offs [1]. Group 1: Net Buying and Selling Stocks - Meituan-W (03690) led the net buying with HKD 17.86 billion, showing a net inflow of HKD 2.52 billion [2]. - Stone Pharmaceutical Group (01093) received a net buy of HKD 10.28 billion, with a net inflow of HKD 3.68 billion [2]. - Tencent (00700) faced the highest net sell of HKD 18.91 billion, with a net outflow of HKD 10.44 billion [2][6]. - Xiaomi Group-W (01810) saw a net sell of HKD 8.99 billion, with a net outflow of HKD 3.72 billion [2][7]. Group 2: Notable Company Insights - Meituan's strong merchant base and user reviews are expected to enhance its local business profitability, with new ventures likely to reduce losses [4]. - Stone Pharmaceutical Group is anticipated to secure significant overseas licensing deals, potentially exceeding USD 50 billion each, which could boost its revenue from business development [4]. - Xinda Biopharmaceutical (01801) is projected to benefit from positive clinical data and aims to have five drugs in global Phase III trials by 2030 [5]. - Crystal Technology Holdings (02228) is expected to experience short-term growth driven by policy incentives and long-term growth through customer retention and pipeline development [5]. Group 3: Market Sentiment and Future Outlook - The market's confidence in AI and cloud services has been shaken due to lower-than-expected capital expenditures and cloud revenue growth, but long-term potential remains positive as these technologies integrate into core business operations [6].

Group 1 - The Hang Seng Index rose by 0.33%, gaining 79 points to reach 24,261 points, while the Hang Seng Tech Index fell by 0.33% [1] - Insurance funds continue to increase holdings in Chinese bank stocks, with institutions indicating significant valuation recovery potential for Hong Kong bank stocks [1] - Bank of Communications (01988) rose by 3.47%, China Everbright Bank (06818) increased by 1.86%, and Industrial and Commercial Bank of China (01398) gained 1.68% [1] - Three-Synch Pharmaceutical (01530) surged over 11% to a new high after reaching a significant licensing agreement with Pfizer, with strong ASCO data performance [1] - Innovent Biologics (01801) rose over 3.42%, with a year-to-date increase of over 120%, as Morgan Stanley anticipates further clinical catalysts to boost stock performance [1] - InnoCare Pharma-B (09606) increased by 13%, recently disclosing clinical data for DB-1310, attracting attention from international pharmaceutical giants [1] - China Rare Earth (00769) surged over 17%, following a 60% increase in trading volume, with positive signals for rare earth exports [1] - Pop Mart International (09992) rose by 2.47%, continuing to set historical highs, with its Labubu brand gaining global popularity [1] - Airline stocks continued their recent upward trend, benefiting from falling oil prices and the appreciation of the Renminbi, with institutions optimistic about airline profitability [1] - Air China (00753) rose by 4.5%, China Eastern Airlines (00670) increased by 4.42%, China Southern Airlines (01055) gained 4.18%, and BOC Aviation (02588) rose by 3.42% [1] Group 2 - Zhi Zi Cheng Technology (09911) rose over 7%, approaching historical highs, as the company plans to establish its global headquarters in Hong Kong, with institutions optimistic about future profit margin improvement [2] - Dekang Agriculture and Animal Husbandry (02419) increased by 4.97% to a new high, with the company reporting sales of 869,400 pigs in May, drawing market attention to industry capacity regulation progress [2] - Shide Global (00487) surged nearly 140%, as Australia’s Crown Resorts expressed interest in acquiring the property where the Sixteen Piers Casino is located [2]

Summary of Conference Call Notes Industry Overview - The conference focuses on the innovative pharmaceutical sector, particularly the PD-(L)1 Plus treatment landscape, which is becoming a competitive area for overseas pharmaceutical companies [1][2]. Key Insights and Arguments - **Market Performance**: The pharmaceutical sector has shown strong performance recently, with significant volatility in innovative drugs. The core stocks have remained relatively stable during adjustments, driven by short-term trading dynamics [3]. - **Investment Outlook**: There is a strong bullish sentiment towards the innovative drug market, supported by solid underlying logic and clear industry trends. Key innovative drug targets, especially those with BD expectations or PD-1 Plus logic, are expected to perform well even during market corrections [3]. - **Investment Strategy**: Four main investment lines are recommended: Chinese supermarkets, generic drug opportunities, re-evaluation of small-cap pipelines, and large overseas pharmaceuticals. The strategy includes a combination of buying and random rotation for explosive growth [3]. - **Focus Areas**: Attention is drawn to the PD-1 Plus logic, particularly the potential upgrade from PD-1/VEGF to PD-1/IL-2. Upcoming opportunities related to the ADA conference in late June and advancements in medical technology (brain-computer interfaces, rehabilitation robots, AI in healthcare) are highlighted [3]. - **2025 Outlook**: Optimism prevails for the pharmaceutical sector, with expectations of a structural bull market. Focus areas include innovative drugs, new technologies, and industry restructuring [3]. Clinical Data Insights - **Sinda's PD-1/IL-2 (IBI363) Data**: - In non-small cell lung cancer (wild-type), the 1-1.5 mg/kg group showed an ORR of 25.9% and a median OS of 15.3 months, while the 3 mg/kg group had an ORR of 36.7% and a median PFS of 9.3 months, suggesting a potential median OS of 20-25+ months [3]. - In lung adenocarcinoma (wild-type), the low-dose group (0.6/1.5 mg/kg) had an ORR of 13.08% and a median PFS of 2.7 months, while the high-dose group (3 mg/kg) showed an ORR of 24% and a median PFS of 5.6 months, with a potential median OS of 25-30 months [3]. - The data indicates a high OS/PFS ratio, particularly in lung adenocarcinoma, which is rare and suggests a potential to limit metastatic tumors [3][4]. Competitive Landscape - **PD-1 Plus Market**: The PD-(L)1 market is substantial, estimated at around $40 billion, and is undergoing innovation. Major multinational corporations are actively investing in PD-1 Plus, contributing to rising upfront payments in business development [6]. - **Key Companies to Watch**: Notable companies in the PD-1 Plus space include Sinda, Hengrui, BeiGene, Kangfang Biotech, Rongchang Biotech, Aosaikang, and Zhimeng Junshi [6]. Sector-Specific Updates - **Innovative Drugs**: The index for innovative drugs rose by 0.34% last week, with a positive long-term outlook driven by clinical data and business development catalysts [6]. - **Generic Drugs**: The index increased by 1.69%, outperforming the pharmaceutical index. Key events include the approval of a compound release tablet by Shenda and the acceptance of a conditional listing application for a hemophilia drug [6]. - **Traditional Chinese Medicine & Pharmacies**: The Chinese medicine index rose by 0.39%, while pharmacies increased by 1.67%, with a focus on policy impacts and operational strategies [6]. - **Medical Devices**: The medical device index rose by 1.11%, with attention on equipment updates and market recovery [6]. - **Life Sciences**: The life sciences sector saw an average increase of 1.47%, with a focus on operational recovery and investment trends [6]. Additional Considerations - **Stock Selection**: Emphasis on companies with clean shareholding structures, low stock prices, and positive future operational trends. Monitoring monthly operational data and overall consumption data is crucial [7].

Investment Rating - The report maintains an "OUTPERFORM" rating for Innovent Biologics with a target price of HK$90.10, up from a previous target of HK$62.50 [2][10]. Core Insights - Innovent Biologics showcased its strong oncology R&D capabilities at the 2025 ASCO Annual Meeting, with eight studies selected for oral presentation, highlighting the efficacy and safety of IBI363 and IBI343 in various cancer types [3][15]. - The data presented for IBI363 in IO-pretreated advanced non-small cell lung cancer (NSCLC) and colorectal cancer (CRC) supports its potential as a backbone therapy for future immuno-oncology treatments [4][16]. Financial Summary - Revenue projections for Innovent Biologics are set at RMB 11.86 billion for 2025, with a growth rate of 26% compared to the previous year [10][13]. - The company is expected to turn profitable in 2025, achieving a net profit of RMB 384 million, with further growth anticipated in subsequent years [10][13]. Clinical Data Highlights - IBI363 monotherapy demonstrated a median progression-free survival (mPFS) of 9.3 months in advanced NSCLC patients, outperforming standard therapies [5][19]. - In patients with MSS-type colorectal cancer, IBI363 showed a median overall survival (mOS) of 16.1 months, significantly longer than the typical 9-10 months seen with current treatments [8][20]. - The efficacy of IBI363 in treating acral and mucosal melanoma was also notable, with a confirmed objective response rate (ORR) of 23.3% in IO-refractory patients [9][22]. Valuation and Estimates - The report employs a DCF model for valuation, estimating a share price of HK$90.10 based on projected cash flows from 2026 to 2037 [10][12]. - The gross profit margin is expected to remain high, around 84% in the coming years, indicating strong operational efficiency [10][13].

Investment Rating - The investment rating for the industry is "Positive" and is maintained [9] Core Insights - CEACAM5 is a member of the immunoglobulin superfamily adhesion molecules, highly expressed in various malignancies such as colorectal cancer, gastrointestinal cancer, and lung cancer, playing a significant role in tumor occurrence, invasion, and metastasis [2][6][18] - With the first clinical trial of SAR408701 by Sanofi entering Phase III, CEACAM5 ADC has become a popular development direction for targeted therapy drugs [2][28] - Currently, there are 8 CEACAM5-targeted ADCs in development globally, with 6 having entered clinical stages, showcasing a trend of diverse technological pathways and distinctive mechanisms among major pharmaceutical companies [2][8] Summary by Sections CEACAM5 as a Target - CEACAM5 is recognized as a high-expression tumor target, with its drug development potential accelerating due to the emergence of various therapeutic approaches, including ADCs, monoclonal antibodies, bispecific antibodies, CAR-T cell therapies, and therapeutic vaccines [6][28] CEACAM5 ADC Development - The heat around CEACAM5 ADC is rising, with the design of effective connections being key to overcoming challenges related to its weak internalization capacity [7][32] - The development focus is shifting towards optimizing linkers and payload systems to enhance stability and ensure precise release in the tumor microenvironment [7][32] Competitive Landscape - Major pharmaceutical companies are actively positioning themselves in the CEACAM5 ADC space, with notable developments from Sanofi, Merck, Innovent, and BeiGene, each showcasing unique design strategies and therapeutic potentials [8][50][58][61] - Sanofi's SAR408701, despite facing setbacks, continues to explore its potential in other cancer types, while Merck's M9140 is the first to utilize a topoisomerase I inhibitor in this context [8][50] Investment Perspective - The report suggests that the ongoing innovation in drug development, particularly in the context of CEACAM5-targeted therapies, presents significant investment opportunities, especially for companies with strong cash flows and innovative capabilities [64]