Haitong International has released a research report raising its revenue forecasts for HANSOH PHARMA (03692) for FY26 and FY27 to RMB 170 billion and RMB 190 billion, respectively, up from previous estimates of RMB 160 billion and RMB 177 billion. Net profit attributable to shareholders is projected to reach RMB 59 billion and RMB 66 billion for the same periods, compared to earlier forecasts of RMB 47 billion and RMB 52 billion. The revisions reflect: 1) continuous improvement in the sales expense ratio; and 2) steady growth in out-licensing revenue, which is expected to become a recurring source of profit growth. The valuation was conducted using a discounted cash flow model based on cash flows from FY27 to FY35. Assuming a weighted average cost of capital of 7.5% and a terminal growth rate of 3.0%, both unchanged, the corresponding target price is HK$45.94. An "Outperform" rating is maintained.
Key highlights from Haitong International's report include: HANSOH PHARMA reported record performance in 2025, with revenue from innovative drugs and collaboration agreements rising to 82% of total revenue. The company achieved total revenue of RMB 150 billion, a 23% year-on-year increase. Revenue from innovative drugs reached RMB 102 billion, up 30%, while revenue from generic drugs declined 4% to RMB 27 billion. Collaboration revenue grew 35% to RMB 21 billion. Additionally, the company has approximately RMB 1.2 billion in short-term contract liabilities yet to be recognized as collaboration revenue. Gross margin stood at 90.0%, down 1 percentage point year-on-year. R&D expenses increased 24% to RMB 34 billion, while sales expenses rose 7% to RMB 41 billion. Benefiting from an improved sales expense ratio, the operating profit margin increased by 4 percentage points to 36%. Net profit attributable to shareholders was RMB 55.6 billion, up 27%. Overall performance met expectations.
Management guidance for 2026 projects double-digit growth in total revenue, with both product revenue and collaboration revenue expected to increase at a double-digit rate, excluding potential income from future out-licensing projects. As of the first quarter of 2026, HANSOH PHARMA has secured approval for three new drug applications: 1) In January 2026, almonertinib in combination with chemotherapy was approved for first-line treatment of locally advanced or metastatic EGFR-mutant non-small cell lung cancer. 2) Almonertinib received approval in Europe as a monotherapy for first- and second-line treatment of EGFR-mutant NSCLC. 3) Inebilizumab was approved for the treatment of generalized myasthenia gravis. The company has two additional NDAs under review: 1) almonertinib combined with damelitinib for the treatment of locally advanced or metastatic NSCLC with MET amplification following EGFR TKI therapy; and 2) HS-10365 for the treatment of adult patients with RET fusion-positive locally advanced or metastatic NSCLC. These indications are expected to gain approval in 2027.
Management anticipates submitting multiple NDAs this year, including: 1) HS-20093 for second-line small cell lung cancer and second-line or later osteosarcoma; 2) HS-20094 for obesity or overweight; 3) SHR6508 for secondary hyperparathyroidism in adult chronic kidney disease patients on hemodialysis; and 4) HS-10734 for psoriasis. The company also plans to initiate nine Phase III clinical trials this year, focusing on: 1) HS-10382 for chronic myeloid leukemia; 2) HS-10506 for insomnia; 3) HS-10380 for schizophrenia; and 4) HS-10370 for first-line treatment of G12C-mutant NSCLC.
Haitong International expects a rich pipeline of clinical data readouts in 2026, including Phase III data for B7H3 ADC and B7H4 ADC, Phase III data for a TYK2 inhibitor, and Phase II data for an orexin receptor type 2 antagonist. Investors are also advised to monitor data publication plans for early-stage clinical pipelines, such as fourth-generation EGFR TKI, EGFR/cMET ADC, and oral GLP-1 therapies. Risks include weaker-than-expected drug sales, R&D setbacks, intensifying competition, currency fluctuations, and regulatory changes.
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