翰森制药：Strong sales growth of innovative drugs

Investment Rating - The report maintains a "BUY" rating for Hansoh Pharma, with a target price of HK$24.11, reflecting a 17.0% upside from the current price of HK$20.60 [2][3]. Core Insights - Hansoh Pharma demonstrated strong sales growth in innovative drugs, reporting RMB6.51 billion in revenue for 1H24, with RMB5.10 billion from product sales, marking a 13.8% year-over-year increase [2]. - The company continues to expand its innovative drug pipeline, particularly with aumolertinib, which is expected to drive significant revenue growth [2]. - Cost efficiency has improved, as indicated by a decrease in selling and administrative expense ratios [2]. Revenue and Profitability - For FY24E, total revenue is expected to increase by 21% year-over-year to RMB12.23 billion, with organic revenue growth projected at 14.3% [2][3]. - Net profit is anticipated to rise by 33.3% to RMB4.37 billion in FY24E, before decreasing by 25.1% in FY25E [2][3]. - The gross profit margin is projected to remain strong at 90.16% for FY24E [9]. Product Sales and Pipeline - Innovative drugs accounted for 77% of total revenue in 1H24, with a 31.6% year-over-year growth in sales from these products [2]. - Aumolertinib is set to expand its indications, with expected approvals by mid-2025, potentially becoming the first domestic EGFR-TKI for new indications [2]. - The company is also advancing other innovative drugs, including HS-20093 and HS-20089, with ongoing clinical trials [2]. Financial Metrics - The report outlines a significant increase in R&D expenses, which rose by 29% year-over-year to RMB1.20 billion, representing 23.4% of product sales [2]. - The earnings summary indicates a projected EPS of RMB0.74 for FY24E, with a P/E ratio of 25.6 [3][8]. - The company's market capitalization is reported at HK$122.27 billion, with an average turnover of HK$66.3 million over the past three months [4].