πππWhile the world chases hype in US biotech, $HENGRUI PHARMA(01276)$ has been quietly building a pharmaceutical empire. But after its Blockbuster IPO in Hong Kong, the silence is officially over.
Hengrui priced its IPO at HKD 44.05 per share, right at the top of its marketed range, raising about USD 1.27 billion. On Day 1, shares soared over 37%, opening at HKD 57.10 and peaking at HKD 60.20. This is a clear sign of strong investor confidence.
This wasn't just a win for Hengrui. It was a vote of confidence in Hong Kong's IPO market which has seen a resurgence in listings from high growth Chinese firms. The proceeds from the IPO are earmarked by Hengrui for accelerating clinical trials, expanding production and fueling global expansion.
With a market capitalisation of RMB 355 billion and a pipeline that spans oncology, cardiovascular and autoimmune diseases, Hengrui is no longer just a domestic player. It is a global contender.
Why Hengrui Deserves A Closer Look
1. Financial Strength Meets Innovation
Q1 25 Highlights
Revenue - RMB 7.21 billion, up 20.1% year over year.
Net Profit - RMB 1.88 billion, a 37.2% surge from Q1 24.
EPS - Up RMB 0.30, up 42.9% from RMB 0.21
Operating Profit - RMB 2.08 billion, a solid increase from RMB 1.64 billion last year.
Research & Development Powering Growth
R&D expenses jumped 25.6% to RMB 1.53 billion, showing Hengrui's continued commit to innovation.
Hengrui also recognised USD 75 million in licensing income from a deal with IDEAYA, boosting profitability.
Balance Sheet Snapshot
Total Assets - RMB 51.29 billion, up 2.3% from year end 2024.
Cash and Equivalent - RMB 24.09 billion
Total Liabilities - Down to RMB 3.74 billion, improving debt profile.
ROE - 4.08% up from 3.3% a year ago.
One Soft Spot - Net cash flow from operations dropped 55.8% to RMB 555 million, largely due to increased R&D and investment activity. The dip in cash flow reflects strategic reinvestment, not weakness.
Innovation - From Generics to Global Grade Breakthroughs
Hengrui has transformed itself from a generics manufacturer into a biotech innovator.
It now boasts over 90 innovative drugs in clinical development, more than 300 clinical trials globally and over 16 innovative drugs already in the market. One stand out area is Antibody drug conjugates (ADCs) which is the next generation cancer therapies.
Hengrui has 11 differentiated ADCs in clinical trials, 3 of which are already in Phase 3, putting Hengrui in direct competition with global oncology leaders.
Global Ambition
Licensing deals with Merck , international clinical trials and a dual listing in China and Hong Kong, will open the door to global capital inflow.
Risks?
Hengrui is subject to regulatory concerns including price controls, centralised drug procurement as well as global competition. With a P/E ratio near 50, Hengrui trades at a premium to its peers.
Concluding Thoughts
Hengrui is a high quality company with global ambition but it is not without risk. For investors, Hengrui is about balancing the upside of innovation with the realities of regulation, competition and execution.
Bottom line - Hengrui is firing on all cylinders - growing revenue, expanding margins and doubling down on innovation. It is a Biotech Titan with a global reach and it is only just started.
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