ASK PHARM(SZ:002755) Huafu Securities·2024-11-15 13:53Investment Rating - The report initiates coverage on Aosaikang with a "Buy" rating [5][7]. Core Views - Aosaikang is experiencing a turning point in operations, with a forecasted return to profitability in the first half of 2024 due to the clearance of centralized procurement and the launch of new products [5][20]. - The company is transitioning towards innovation, with significant progress in drug development, particularly in the areas of third-generation EGFR inhibitors and Claudin18.2 [5][17]. Summary by Sections 1. Company Overview - Aosaikang, a leader in the digestive field, has faced challenges since 2019 due to centralized procurement and the COVID-19 pandemic, leading to a significant decline in revenue [17][20]. - The company is now poised for recovery, with innovative drugs expected to contribute positively to future performance [5][17]. 2. Traditional Business - The digestive business has been significantly impacted by centralized procurement, with revenue dropping from 33.7 billion in 2019 to 3 billion in 2023 [5][31]. - New products, such as Right Lansoprazole, are expected to drive revenue growth in the digestive segment [33]. - The oncology segment has seen a revenue decline from 10.2 billion in 2019 to 6.2 billion in 2023, but its revenue share is increasing due to the sharper decline in the digestive segment [35]. 3. Innovative Transformation - Aosaikang has partnered with Innovent to commercialize third-generation EGFR inhibitors, which are expected to achieve rapid market penetration [5][17]. - The company is advancing in the development of Claudin18.2 and IL-15 prodrugs, which are seen as promising therapeutic targets in oncology [5][3]. 4. Financial Forecast and Investment Recommendations - Revenue projections for Aosaikang are 16.7 billion, 19 billion, and 23.4 billion for 2024, 2025, and 2026, respectively, indicating a recovery trajectory [5][6]. - The company’s price-to-sales (P/S) ratio is below the average of comparable companies, suggesting potential undervaluation [5].