Investment Rating - The report maintains an "OUTPERFORM" rating for the company with a target price of HKD 17.90, up from a previous target of HKD 13.40 [2][14][32]. Core Insights - The company reported a revenue of RMB 612 million for H1 2025, a 23% year-on-year increase, primarily driven by an upfront payment from Merck of USD 85 million [20][21]. - The gross profit for the same period was RMB 610 million, with net profit reaching RMB 330 million, reflecting a 59% increase year-on-year [20][21]. - The company has a robust cash position of approximately RMB 2.3 billion, which supports its operations and planned R&D investments for the next 2-3 years without the need for external financing [22][23]. Financial Performance - Revenue projections for FY25-27 are revised to RMB 610 million, RMB 630 million, and RMB 630 million respectively, with corresponding net profit estimates of RMB 30 million, RMB 130 million, and RMB 350 million [14][32]. - The company’s revenue growth is projected at 2544% for FY25, followed by 21% for FY26, and 3% for FY27 [17]. Pipeline and Product Development - The company has a well-structured pipeline, including one asset at the NDA stage and several others in various clinical phases, indicating a clear strategy for market expansion [22][24]. - Lead assets ABSK021 and ABSK011 are expected to contribute significantly to revenue within the next 2-3 years, with ABSK021 showing a 54% overall response rate in a Phase III study [24][28]. - ABSK011 has demonstrated promising results in treating liver cancer, with an overall response rate of 44.8% in second-line patients [28][29]. Strategic Direction - The management aims to expand from early-stage small molecules into bispecific antibodies, antibody-drug conjugates (ADCs), and autoimmune diseases, targeting broader market opportunities [22][23]. - The company has repurchased approximately HKD 150 million worth of shares over the past two years, reflecting a commitment to shareholder returns [23]. Valuation - The valuation is based on a risk-adjusted discounted cash flow (DCF) model, with a WACC of 10.0% and a terminal growth rate of 3.5%, leading to a target price of HKD 17.90 per share [14][32].