We initiate with a "Buy" rating and a TP at HK$10.00. We forecast 2025F-2027F EPS to be RMB0.293, RMB0.259 and RMB0.283, respectively. Our target price implies a premium 36.0x 2026F P/E, reflecting 1) the Company's pipeline product revenue contribution; 2) existing product catalysts; and 3) strong cost management.
　　Innovation Surge in China Biotech Changing the Industry Dynamics. The Chinese healthcare sector has experienced a significant rebound in investor sentiment over the past year. This rebound also reflects a broader re-rating of China’s healthcare sector as investors increasingly differentiate between companies with sustainable innovation pipelines and those reliant on short-term policy tailwinds. Sino Biopharm is particularly well-positioned to benefit from this confluence of rising innovation, deepening global engagement, and improved capital market sentiment. As one of China’s largest and most established pharmaceutical companies, it has the scale, financing capacity, and commercial infrastructure to both acquire promising domestic biotechs and accelerate their assets through late-stage development and commercialization.
　　Transforming from a domestic leading pharma company. In recent years, Sino Biopharm has significantly stepped up investment in business development (BD) activities to rapidly expand its innovative drug portfolio. In addition to potential out-licensing potential in near team, we see that the Company has many upcoming key catalysts as well as potential approvals in the near term that would contribute additional value to its innovative pipeline. The Company also has several major data readouts in near term that will help progress their innovative pipeline development. We forecast company revenue growth based each individual subsegment’s growth. Each subsegment is based on the Company’s core therapeutic areas, which includes oncology, liver disease, surgery/analgesia, cardio-cerebral vascular (CCV), respiratory, and other revenue. Oncology segment continues to be the Company’s core driver and will continue to account for a larger portion of total revenue. We used both a DCF approach and a market-based approach to value Sino Biopharm. We primarily rely on DCF valuation methodology, with market-based approach as a reference point for our analysis.
　　Catalysts: 1) Future BD opportunities both in-license and out-license deals. 2) Key data readouts of internal assets including for TQC3721, LM-108, TQB3616, and others. 3) Further integration with LaNova to bring additional early stage assets to the R&D pipeline.
　　Risks: 1) Regulatory risk, 2) Commercial risk, 3) Policy risk, 4) Integration risk,　and 5) IP risk