Investment Rating - The report assigns a "Buy" rating for CSPC Pharma with a 12-month price target of HK$8.74, indicating an upside potential of 14.7% from the current price of HK$7.62 [13][14]. Core Insights - The report highlights that CSPC Pharma experienced a revenue decline of 22% in Q1, primarily due to a high base in Q1 2024, ongoing pressure from volume-based procurement (VBP), and a 12.5% price cut for NBP injection [1]. - Despite the revenue miss, earnings showed resilience, supported by out-licensing income and significant expense cuts, particularly in selling expenses [1]. - Management has revised its guidance for 2025, focusing on sequential improvement rather than positive sales growth, and plans to pursue three more business development (BD) deals with a potential total deal size exceeding US$5 billion [2][8]. Summary by Sections Revenue and Earnings Performance - CSPC Pharma's sales in Q1 declined by 22% year-on-year, with finished drug sales down 27% year-on-year [1]. - Earnings for Q1 were reported at Rmb1.5 billion, an 8% decrease year-on-year, but were bolstered by Rmb718 million from out-licensing [1]. - Core earnings, excluding BD income, are estimated to have declined by approximately 45% year-on-year [1]. Business Development and Licensing - The company is actively negotiating three potential BD deals, with one expected to close in June, focusing on SYS6010 (EGFR ADC) and other technology collaborations [2]. - In Q1, CSPC Pharma booked US$40 million from the AZ deal and US$60 million from the BeOne deal, with expectations of over Rmb1 billion in additional income from new deals throughout the year [2]. Clinical Development and Pipeline - SYS6010 is prioritized for clinical development, with ongoing phase 3 studies for NSCLC and plans for further trials in various solid tumors [3][7]. - The company is preparing for pivotal studies outside China and aims to apply for breakthrough designation for certain assets [7]. Shareholder Returns and Incentives - CSPC Pharma plans to utilize operational cash flow for R&D and higher dividends, with a share buyback target of up to HK$5 billion over the next 24 months [8]. - A share-based incentive program is set to cover 200-300 key staff, with additional coverage planned for the second half of 2025 [8]. Financial Projections - Earnings estimates have been revised down by 7.7% for 2025 due to lower-than-expected finished drug sales, but the price target has increased from HK$7.84 to HK$8.74 [9]. - Revenue projections for 2025 are set at Rmb30.1 billion, with expectations of gradual recovery in subsequent years [14].
高盛：石药集团-业绩回顾 - 第一季度表现疲软，但最糟糕时刻或已过去；预计还有三项业务拓展交易和更高股息；推荐买入