Hansoh Pharmaceutical Group Co Ltd_ China BEST Conference Takeaways

Summary of Hansoh Pharmaceutical Group Co Ltd Conference Call Company Overview - Company: Hansoh Pharmaceutical Group Co Ltd - Ticker: 3692.HK - Industry: China Healthcare - Market Cap: RMB 90,484 million - Current Share Price: HK$16.22 - Price Target: HK$24.00, representing a 48% upside potential [5][5][5] Key Takeaways Sales and Financial Performance - Sales promotional activities have significantly recovered from the lows experienced in late 2023, with management maintaining a double-digit sales growth target for fiscal year 2024 (F24) [1][1][1] - A dividend payout of over 35% is projected for 2024, with potential sustainability into 2025 [1][1][1] Product and Pipeline Updates - Ameile: Contract extended with an approximate 8% price reduction [2][2][2] - Loxenatide: Experienced a higher price cut, referencing the price for semaglutide; noted for its high potency and low side effects for diabetes, but not suitable for obesity [2][2][2] - Pipeline Highlights: - HS-20093 (B7H3 ADC): Granted two Breakthrough Therapy Designations (BTDs) for second-line osteosarcoma and relapsed/refractory small cell lung cancer (r/r SCLC); pivotal trials to start in Q4 2025 [3][3][3] - HS-20089 (B7H4 ADC): Ongoing Phase 2 trials for ovarian and endometrial cancers in China; Phase 1 data expected in 2025 with pivotal trials planned for Q4 2025 [3][3][3] - HS-10374 (TYK2): In Phase 3 for psoriasis [3][3][3] - HS-20094 (GIP/GLP-1R): In Phase 3 for overweight, aiming for a launch in 2027 [3][3][3] - HS-10501 (oral GLP-1R): Recently entered Phase 1 for overweight [3][3][3] Financial Metrics - Fiscal Year Ending: December 2023 - Revenue (Rmb million): - 2023: 10,104 - 2024e: 12,149 - 2025e: 12,502 - 2026e: 14,782 [5][5][5] - EPS (Rmb): - 2023: 0.54 - 2024e: 0.68 - 2025e: 0.58 - 2026e: 0.70 [5][5][5] - EBITDA (Rmb million): - 2023: 3,101 - 2024e: 4,014 - 2025e: 3,036 - 2026e: 3,655 [5][5][5] Valuation Methodology - The price target is derived using a discounted cash flow methodology, assuming a WACC of 8.8% and a terminal growth rate of 3% [8][8][8] Risks Upside Risks - Earlier-than-expected product launches [10][10][10] - Increased pace of industry growth [10][10][10] Downside Risks - Continued industry slowdown and significant price cuts [10][10][10] - Unexpected competition in central nervous system (CNS) and oncology sectors [10][10][10] - Major pipeline failures [10][10][10] Conclusion Hansoh Pharmaceutical Group Co Ltd is positioned for growth with a strong sales recovery and a robust pipeline of products. The company maintains an attractive outlook with a significant upside potential in its stock price, supported by strategic product developments and a solid financial foundation. However, potential risks from market dynamics and competition should be monitored closely.