Investment Rating - The report initiates coverage on Viva Biotech (1873.HK) with a "Buy" rating and a target price of HKD 3.5, indicating a potential upside of 133% from the current price of HKD 1.5 [1]. Core Insights - Viva Biotech is positioned as a leader in the structure-based drug discovery (SBDD) market and is expanding into the Contract Development and Manufacturing Organization (CDMO) sector, creating a comprehensive research and production platform [1][8]. - The company has established itself as a global leader in SBDD, leveraging advanced technologies and AI to enhance drug design and development efficiency [8][12]. - The integration of AI into the research and production processes is expected to significantly accelerate the discovery of new drug targets and mechanisms, creating additional market opportunities [1][12]. - The company has successfully attracted strategic investors, which enhances its valuation potential and operational capabilities [1][17]. Summary by Sections Section 1: Global Leader in Structure-Based Drug Discovery - Viva Biotech is a leading provider of SBDD services, offering a one-stop solution from early-stage drug development to commercial production [8]. - The company utilizes advanced technologies such as X-ray crystallography, Cryo-EM, and DNA-encoded library technology to support its drug discovery services [8][9]. Section 2: Focus on SBDD and CDMO - The acquisition of Langhua Pharmaceutical in 2020 allowed Viva Biotech to enter the CDMO market, providing a full-service platform from clinical development to commercial production [9][59]. - The CDMO sector is experiencing significant growth, with projections indicating a market size of USD 231 billion by 2030, with China’s share increasing to 23.9% [59][60]. Section 3: AI Empowerment Across the Value Chain - The company is enhancing its capabilities by integrating AI into its drug discovery processes, which is expected to lead to faster and more efficient drug development [12][28]. - Viva Biotech has developed a proprietary AI drug design platform that will cover all aspects of preclinical drug research [12]. Section 4: Strategic Investments and Valuation - The introduction of strategic investors such as Temasek and Honghui Fund has provided significant capital, enhancing the company's operational and governance structure [17]. - The current valuation of the company is considered low compared to historical levels, indicating substantial room for valuation recovery [1][17]. Section 5: Profit Forecast and Valuation - The company’s revenue is projected to grow from RMB 2,156 million in 2023 to RMB 3,355 million by 2028, with a compound annual growth rate (CAGR) of approximately 14% [2]. - Net profit is expected to increase significantly, from a loss of RMB 100 million in 2023 to RMB 471 million by 2028, reflecting a strong turnaround [2].
维亚生物：AI驱动药物研发革命，开启全球一体化CRDMO业务新增长篇章-20250424