Investment Rating - The report maintains a "Buy" rating for the company, Sihuan Pharmaceutical (02096), with a target price of HKD 14.3, and continues to recommend it as a key focus in the industry [1]. Core Insights - The report has raised the profit forecast for the company for the years 2025-2027 by 6-11% and is optimistic about the potential for more overseas transactions in the short term, particularly focusing on targets such as CDH6 and CDH17, which have recently garnered significant attention [1]. - At the ASCO 2025 conference, the company's oncology pipeline showcased 18 research studies. Key studies to watch include: 1. The final analysis of overall survival (OS) in a Phase III study of Suviscita monoclonal antibody for platinum-resistant ovarian cancer, with median OS of 15.3 months for the treatment group compared to 14 months for the control group, with approval expected within the year [1]. 2. The results of an Ib phase study on SIM0270 combined with Palbociclib for second-line or higher ER+/HER2- breast cancer, showing an overall response rate (ORR) of 41.5% and clinical benefit rate (CBR) of 82.5%, with rates of 87.5% and 100% respectively in baseline ESR1 mutation patients. The company is currently conducting a Phase III study to evaluate the efficacy of SIM0270 combined with Everolimus in CDK4/6 inhibitor-treated ER+/HER2- breast cancer [1].

ASCO 2025 大会公布多项重要临床数据：ASCO 2025 大会上，公司肿瘤管线共有18 项研究获展示，涵 盖苏维西塔单抗、SIM0270（口服SERD）、科赛拉等重点品种。我们建议重点关注：1）苏维西塔单抗 治疗铂耐药卵巢癌III 期研究的OS 最终分析，治疗组和对照组的中位OS 分别达到15.3 个月/14.0 个月 （HR 0.768，95% CI 0.595-0.991，P=0.0304），该适应症正处于上市审评阶段，我们预计将于年内获 批。考虑到贝伐珠在该适应症上并未取得统计学显著的OS 改善（III 期AURELIA 研究），我们认为该 结果进一步验证苏维西塔相比贝伐珠的me-better 潜质。2）SIM0270 + 哌柏西利治疗二线级以上 ER+/HER- 乳腺癌的Ib 期研究结果，ORR 和CBR 分别达到41.5%/82.5%，在基线ESR1 突变患者中则达 到87.5%/100%。目前公司正在开展一项III 期研究，评估SIM0270 +依维莫司治疗CDK4/6 抑制剂经治 ER+/HER2- 乳腺癌的疗效。此外，公司曾在4 月的AACR 大会上公布了多款处于临床早期/临床前ADC ...

Investment Rating - The report assigns a "Buy" rating to the company, indicating an expected total return over the next 12 months that exceeds the relevant industry average [6][13]. Core Views - The target price for the company has been raised to HKD 14.30, reflecting a potential upside of 17.2% from the current closing price of HKD 12.20 [1][2]. - Recent data presented at the ASCO conference has enhanced the company's product sales and overseas potential, leading to an optimistic outlook for its innovative platform [2][6]. - The report highlights significant clinical data for key products, including Suvisertan monoclonal antibody and oral SERD, which are expected to drive more overseas transactions and improve market recognition [2][6]. Financial Forecasts - Revenue projections for 2025 have been updated to RMB 7,737 million, a 1% increase from previous estimates, with further growth expected to RMB 9,028 million in 2026 and RMB 10,311 million in 2027 [5][11]. - Gross profit for 2025 is forecasted at RMB 6,267 million, reflecting a gross margin of 81.0%, which is an improvement from previous estimates [5][11]. - Adjusted net profit for 2025 is projected to be RMB 1,291 million, representing a 6% increase from prior forecasts [5][11]. Stock Performance - The stock has shown a year-to-date increase of 71.83%, outperforming the Hang Seng Index [4]. - The stock's 52-week high is HKD 12.84, while the low is HKD 5.19, indicating significant volatility and growth potential [4]. Valuation Model - The DCF valuation model estimates the equity value of the company at RMB 32,312 million, translating to a per-share value of HKD 14.30, based on a WACC of 9.4% [7][11].

Investment Rating - The report assigns a "Buy" rating to the company, indicating an expected total return over the next 12 months that exceeds the relevant industry [6][13]. Core Views - The target price for the company has been raised to HKD 14.30, reflecting a potential upside of 17.2% from the current price of HKD 12.20 [1][2]. - Recent data presented at the ASCO conference has enhanced the company's product sales and overseas potential, leading to an optimistic outlook for its innovative platform [2][6]. - The report highlights significant clinical data for key products, including Suvisetumab and SIM0270, which are expected to drive future growth and market recognition [6]. Financial Forecasts - Revenue projections for 2025 have been updated to RMB 7,737 million, a 1% increase from previous estimates, with further growth expected in subsequent years [5][11]. - Gross profit for 2025 is forecasted at RMB 6,267 million, reflecting a gross margin of 81.0%, up from 79.3% previously [5][11]. - Adjusted net profit for 2025 is estimated at RMB 1,291 million, a 6% increase from prior forecasts, with net profit margins improving to 16.7% [5][11]. Stock Performance - The stock has shown a year-to-date increase of 71.83%, outperforming the Hang Seng Index [4]. - The stock's 52-week high is HKD 12.84, while the low is HKD 5.19, indicating significant volatility and growth potential [4]. Valuation Model - The DCF valuation model estimates the equity value of the company at RMB 32,312 million, translating to a per-share value of HKD 14.30 [7][11].

Core Viewpoint - The recent surge in the Hong Kong innovative drug sector, particularly for Xiansheng Pharmaceutical, is driven by favorable factors such as the cyclical resurgence of COVID-19 and record-breaking domestic innovative drug business development (BD) deals [1] Group 1: Stock Performance - Xiansheng Pharmaceutical's stock price has experienced a continuous rise since May 16, achieving a maximum increase of 28.33% by May 21, with a cumulative increase of nearly 50% year-to-date [1] - The stock has shown significant trading activity, with over 25 million shares traded on three consecutive days from May 19 to 21, indicating strong market interest [4] Group 2: Business Development Potential - The recent $60.5 billion BD deal between Innovent Biologics and Pfizer has spotlighted the potential of Chinese innovative drugs, with Xiansheng Pharmaceutical being a key player in this growth [2] - Xiansheng Pharmaceutical has developed multiple ADC (antibody-drug conjugate) candidates targeting various biomarkers, with products like SCR-A006 showing Best-in-Class potential [2] Group 3: International Expansion - Xiansheng Pharmaceutical has established a track record in international markets, with its first overseas deal for SIM0278 setting a record for domestic autoimmune drug BD at the time [3] - The company has secured a licensing agreement exceeding $1 billion for SIM0500 with AbbVie, currently undergoing clinical trials in the U.S. and China [3] Group 4: Innovation and R&D - The company has invested over 8.5 billion yuan in R&D over six years, developing over 60 innovative drug candidates across various therapeutic areas [5] - Three new drug molecules are in the NDA approval process, while four are in Phase III clinical trials, indicating a robust pipeline [5] - The anticipated launch of significant new drugs will further enhance the company's position in the global biopharmaceutical market [5]

Core Viewpoint - The sales of the COVID-19 drug Xianoxin from Xiansheng Pharmaceutical have significantly increased since May, with notable growth in both year-on-year and month-on-month comparisons, although specific figures have not been disclosed [1] Sales Performance - Sales growth in early April was primarily driven by regions such as Shanghai, Zhejiang, Beijing, and Jiangsu [1] - Sales in Guangdong began to rise in early May, contributing to a substantial overall increase in sales since then [1] - As of now, Xianoxin has reached 32 provinces, 371 cities, and over 3,700 medical institutions across the country [1] Market Context - The latest report from the Chinese Center for Disease Control and Prevention indicates an upward trend in the positive rate of COVID-19 tests from March 31 to May 4, with southern provinces showing higher positivity rates compared to northern provinces [1] - Some provinces that experienced an early increase in positivity rates are seeing a slowdown in the growth of the epidemic [1]

Group 1 - The Hong Kong stock market opened lower on May 19, with the Hang Seng Index down 0.73% and the Hang Seng Tech Index down 1.58% [1] - The Hong Kong Innovative Drug ETF (159567) rose by 0.58% with a turnover rate of 8.02% and a trading volume exceeding 1.15 billion yuan, indicating active trading [1] - The innovative drug ETF closely tracks the Hong Kong Stock Connect Innovative Drug Index, reflecting the performance characteristics of biotech companies listed in Hong Kong [1] Group 2 - The pharmaceutical sector has shown a strong rebound this year, with several pharmaceutical funds reporting net value increases exceeding 30% [1] - Institutions are focusing on investment opportunities in AI healthcare, brain-computer interfaces, and innovative drugs following a period of deep adjustment in the pharmaceutical sector [1] - Guojin Securities emphasizes that innovative drugs and certain semi-innovative drugs remain key investment areas, with upcoming policy changes and data releases expected to catalyze stock price movements [1] Group 3 - Guoxin Securities highlights the rapid growth phase of the innovative drug sector, driven by commercialization and external licensing, which is accelerating revenue growth and profitability [2] - The traditional Chinese medicine sector faces short-term pressure but retains long-term branding and innovation potential [2] - The medical device sector is under short-term pressure due to slow policy implementation and inventory issues, but there are expectations for recovery driven by improved bidding processes [2]

Financial Performance - The group's revenue for the year ended December 31, 2024, was RMB 6.635 billion, an increase of 0.4% compared to RMB 6.608 billion in 2023[8]. - The profit attributable to equity shareholders was RMB 733 million, an increase of 2.6% from RMB 715 million in 2023[8]. - Adjusted profit attributable to equity shareholders was RMB 1.018 billion, a significant increase of 41.6% from RMB 719 million in 2023[8]. - Revenue from the neuroscience segment was RMB 2.174 billion, accounting for 32.8% of total revenue, representing a growth of 10.4% from RMB 1.969 billion in 2023[112]. - Revenue from the autoimmune segment was RMB 1.811 billion, making up 27.3% of total revenue, with a significant increase of 28.0% from RMB 1.415 billion in 2023[112]. - Revenue from the oncology segment was RMB 1.298 billion, which accounted for 19.6% of total revenue, showing a decline of 17.6% from RMB 1.576 billion in 2023[112]. - Total R&D expenditure for the year was RMB 1.523 billion, a decrease of 22.3% from RMB 1.960 billion in 2023, with R&D expenditure accounting for 23.0% of revenue, down from 29.7% in 2023[115]. - The net cash generated from operating activities for the year ended December 31, 2024, was RMB 1.391 billion, a substantial increase from RMB 151 million in 2023[119]. - As of December 31, 2024, the company had cash and cash equivalents of RMB 1.943 billion, down from RMB 2.007 billion in 2023[119]. - The current ratio as of December 31, 2024, was 200.4%, slightly down from 209.9% in 2023, while the debt-to-asset ratio increased to 38.6% from 33.5%[120]. Product Development and Pipeline - The group has eight innovative drugs approved for sale and has over 60 innovative drug candidates in its pipeline, with 16 undergoing registration clinical trials[9]. - The company has entered a critical phase for its R&D pipeline, with three new drug molecules in Phase III clinical trials[19]. - The company has made significant progress in clinical trials, with a Phase III trial for Enzashu® achieving its primary endpoint and NDA submitted to NMPA on March 11, 2024[25]. - The company has over 60 innovative drug candidates in its pipeline, with three in the NDA approval process and four in Phase III clinical trials[30]. - The company has received approval for 11 new INDs, including SIM0501 for advanced malignant solid tumors expected in January 2024 and SIM0505 for advanced solid tumors expected in December 2024 in the US and January 2025 in China[23]. - The company has established a partnership with Shenzhen Tajiri Biopharmaceutical Co., Ltd. for the exclusive commercialization rights of TGRX-326 in mainland China, enhancing its lung cancer product portfolio[25]. - The company plans to submit multiple innovative drug applications within the year, including new drugs for ovarian cancer and insomnia, which are expected to drive strong performance growth[12]. - The company is focusing on four key areas: neuroscience, oncology, autoimmune diseases, and anti-infection, while deepening international cooperation to promote more globally innovative drugs[12]. Market and Commercialization - The marketing network covers over 3,000 tertiary hospitals and approximately 17,000 other hospitals and medical institutions across China[9]. - The overseas licensing transaction value for Chinese innovative drugs exceeded $15 billion in 2024, representing a 45% year-on-year increase[13]. - Two products, Kexaila® and Enlituzumab®, were successfully included in the National Reimbursement Drug List (NRDL) in 2024, significantly enhancing patient accessibility and market penetration[16]. - The company has accelerated the clinical entry of its self-developed pipeline, with multiple products entering the key POC data phase[20]. - The company aims to enhance production capacity and efficiency under its "Innovation 2.0" strategy, with a new production base completed in 12 months, exceeding industry averages[28]. Employee and Corporate Governance - As of December 31, 2024, the group had a total of 6,584 full-time employees, with employee costs amounting to RMB 2.127 billion[129]. - The company has established a training academy to provide regular training for employees, including onboarding and skills training[129]. - The company’s employee compensation includes basic salary, performance bonuses, and long-term incentives, with a focus on attracting and retaining talent[129]. - The board approved the grant of a total of 3,828,000 restricted share units on March 21, 2024, and 2,968,100 restricted share units on August 22, 2024, to eligible participants[130]. - The company has appointed independent non-executive directors who have confirmed their independence according to the listing rules[194]. - All executive directors have service contracts with the company, while independent non-executive directors have signed appointment letters for a term of three years[193]. Risks and Challenges - The pharmaceutical industry is highly competitive, and failure to effectively compete may lead to decreased sales, price reductions, and loss of market share[158]. - The company may face challenges in maintaining sales volume, pricing levels, and profit margins for its key products due to various factors[158]. - The development of in-progress products is time-consuming and costly, with uncertain outcomes, which may hinder timely regulatory approvals and commercialization[160]. - The company relies on third parties for oversight and support of in-progress products, and any failure by these parties could delay regulatory approvals[160]. - The company may face increased operational costs or inability to fulfill customer orders due to failure to maintain optimal inventory levels[161]. - The company is exposed to risks related to the quality and production processes of third-party manufactured products, which may not consistently meet necessary quality standards[160]. Shareholder and Financial Activities - The company declared a final dividend of RMB 0.16 per share for the year ended December 31, 2024, totaling approximately RMB 397.81 million[135]. - The company raised RMB 970 million through a capital increase agreement, which will result in approximately 11.45% of the enlarged issued share capital being held by new investors[127]. - The company repurchased a total of 130,402,000 shares at a total cost of HKD 753,736,820 during the period from January 1, 2024, to December 31, 2024[146]. - The board believes that the share repurchase demonstrates confidence in the company's business prospects and will ultimately create value for shareholders[147]. - The company has not made any changes to its main business operations during the reporting year[134].

Investment Rating - The investment rating for the company is "Buy" [4] Core Views - The company is expected to see rapid growth in adjusted profits in 2024, with business development (BD) achievements highlighting its innovative capabilities, leading to potential valuation increases [1][2] - The company reported a revenue of 6.635 billion RMB in 2024, a year-over-year increase of 0.4%, and an adjusted net profit of approximately 1.018 billion RMB, reflecting a year-over-year growth of 41.6% [1][2] - The innovative drug segment is projected to continue its upward trend, with revenues from innovative drugs reaching 4.928 billion RMB in 2024, accounting for 74.3% of total revenue [2] Summary by Sections Performance - In 2024, the company achieved a group revenue of 6.635 billion RMB and a net profit of 733 million RMB, with an adjusted net profit of approximately 1.018 billion RMB [1] - The company has made significant progress with multiple innovative drugs, including the approval of two new drugs and the acceptance of three new drug NDAs [1] Innovation - The revenue from innovative drugs is expected to grow, driven by existing products and new launches, maintaining a high growth rate [2] - The partnership with AbbVie for the licensing of a new candidate drug demonstrates the strength of the company's innovation platform [2] Earnings Forecast and Valuation - The earnings per share (EPS) forecast for 2025-2027 is projected to be 0.43, 0.55, and 0.63 RMB, respectively, with a price-to-earnings (P/E) ratio of 19 times based on the closing price on April 24, 2025 [3] - The company is expected to maintain rapid growth in performance driven by both existing and new innovative drug products [3]

Core Viewpoint - The biopharmaceutical industry is crucial for national economy and people's livelihood, with leading domestic companies increasing R&D efforts and transitioning from generic drugs to innovative drugs [1] Group 1: Company Performance and Strategy - In 2024, the revenue from innovative drugs for the company is expected to account for 74.3%, contributing 4.928 billion yuan, making it the core engine of performance [2] - The company maintains a stable R&D expense ratio of 20% to 30% of revenue, with 1.523 billion yuan spent in the previous year, representing 23% of revenue, indicating a strong commitment to R&D investment [2] - The company has nearly 60 self-developed projects in its pipeline, focusing on clinical value and molecular differentiation to determine which products advance to late-stage clinical development [2][3] Group 2: Internationalization and Collaboration - The company emphasizes internationalization as a key direction for innovative drug development, facing challenges such as differing clinical and market needs, regulatory requirements, and the need for sustainable funding [4] - The company has successfully licensed overseas rights for its self-developed therapies, with total agreements exceeding 1.6 billion USD, showcasing international recognition of its innovative drug development capabilities [4][7] Group 3: AI Integration in Drug Development - The company recognizes the potential of AI technology to enhance various aspects of the pharmaceutical industry, focusing on early-stage molecular generation, clinical research efficiency, and organizational management [5] - The company is exploring private AI deployment and has established an "AI+ department" to accelerate AI application in drug development [5] Group 4: Research Initiatives and Funding - The "Xiansheng All-Heavy Exploration Plan" was launched with a total investment of 2 billion yuan over five years, aimed at addressing the urgent clinical needs in neurology and oncology through interdisciplinary collaboration and innovative research [6][7] - The plan is supported by a scientific advisory committee composed of 11 academicians, ensuring the research's foresight and feasibility [7]