Investment Rating - The report initiates coverage with an OUTPERFORM rating, setting a target price of HK$13.40 based on a current price of HK$8.06 [2]. Core Insights - The company is focused on precision therapy with small molecules in oncology and is expected to achieve profitability in 2024, driven by significant revenue growth from licensing agreements [3][4]. - The core pipeline, particularly Pimicotinib, shows potential for best-in-class status with expected global peak sales exceeding USD 2 billion [4][19]. - The company has a robust pipeline targeting FGFR mutations, with potential to address a significant patient population across various cancers [14][39]. Financial Projections - Revenue projections for FY24 to FY27 are Rmb 504 million, Rmb 595 million, Rmb 420 million, and Rmb 560 million respectively, with net profit expected to reach Rmb 28 million in FY24 and Rmb 76 million in FY25 [2][8]. - The company anticipates milestone payments and royalties from its collaborations, contributing to its financial growth [10][14]. Pipeline Development - The company has advanced clinical programs, including Pimicotinib for TGCT and cGvHD, with promising clinical data indicating high objective response rates [28][33]. - The oral PD-L1 inhibitor ABSK043 is positioned to capture a share of the PD-(L)1 market, which was valued at USD 52 billion in 2023 [6][14]. - The early-stage pipeline includes over 15 preclinical candidates, demonstrating a commitment to innovation and sustained R&D investment [7][16]. Management Team - The management team has extensive experience in drug development and commercialization, with backgrounds in leading pharmaceutical companies [11][13]. - The founder and CEO, Dr. Xu, has nearly 30 years of experience in drug development, enhancing the company's strategic direction [11][13]. Market Opportunity - The global market for CSF-1R inhibitors is expanding, with significant unmet medical needs in conditions like TGCT and cGvHD, where the company’s products are positioned to provide effective solutions [19][25]. - The company’s focus on FGFR-targeted therapies addresses a large patient population, with an estimated 1.9 million cases annually across various cancers [39][40].