BOCOM International·2025-06-19 02:04Investment Rating - The report assigns a "Buy" rating to multiple pharmaceutical companies, including AstraZeneca, Hansoh Pharmaceutical, and Innovent Biologics, among others, while maintaining a "Neutral" rating for companies like Heng Rui Medicine and CSPC Pharmaceutical [2][15]. Core Insights - The Hong Kong prescription drug sector has shown a remarkable performance, with an average market capitalization-weighted increase of 65% year-to-date, surpassing the Hang Seng Medical Index and Hang Seng Index by 55% and 19%, respectively [4]. - Key market drivers include significant business development (BD) transactions, with 63 cross-border deals completed this year, of which 9 involved prescription drug companies, accounting for 37% of disclosed transaction values exceeding $1 billion [4][14]. - The report highlights that the average forward P/E ratio for the Hong Kong prescription drug sector is slightly above the past five-year average, indicating that core business valuations remain attractive despite higher apparent valuation levels [4][12]. Summary by Sections Valuation Overview - The report provides a detailed valuation table for various companies, indicating projected earnings per share (EPS) and price-to-earnings (P/E) ratios for FY25E and FY26E [2][12]. - For instance, Hansoh Pharmaceutical is projected to have a P/E of 33.0 for FY25E, while AstraZeneca is expected to have a target price of 93.30 [2][12]. Market Trends - The report includes a year-on-year trend analysis, showing the prescription drug sector's performance relative to the Hang Seng Index, indicating a strong upward trend [3][4]. - The report notes that the sector's performance is driven by improved earnings expectations and innovative product launches, which are expected to continue to support stock price recoveries [4][10]. Company Recommendations - The report recommends focusing on companies with strong short-term earnings growth and long-term innovation potential, specifically highlighting companies like Xiansheng Pharmaceutical and suggesting attention to Hansoh, China National Pharmaceutical, and Tonghua Dongbao [4][15]. - Target prices for certain companies have been adjusted, with Hansoh and China National Pharmaceutical seeing upward revisions, while the rating for Kelun Pharmaceutical has been downgraded to Neutral [4][15]. Financial Projections - Financial forecasts for key companies indicate robust revenue growth, with Hansoh Pharmaceutical expected to achieve revenues of 14,499 million RMB in 2025, reflecting a CAGR of 18.3% from 2024 to 2026 [18][20]. - The report also highlights the expected increase in net profit margins, with Hansoh's net profit projected to reach 4,695 million RMB in 2025, up from 4,372 million RMB in 2024 [18][20].