Investment positives
　　We initiate coverage of Abbisko Cayman Ltd. with an OUTPERFORM rating and a target price of HK$16, or a fair value of HK$11.2bn.
　　Why an OUTPERFORM rating?
One of largest FGFR franchises globally. Abbisko has built a distinctive franchise targeting fibroblast growth factor receptors （FGFR） with a family of anti-tumor target treatments, featuring broad spectrum and five differentiated drug candidates to address unmet medical needs. We expect this distinct franchise to generate risk- adjusted sales of up to Rmb3.47bn in 2035.
　　Differentiated early pipeline to capture next-wave opportunities
　　in oncology. Abbisko has been searching for drug candidates in precision medicine and immune-therapy since its establishment in 2016, and it has made solid progress. Apart from the FGFR franchise, Abbisko is enriching its precision medicine portfolio in the very early-stage pipeline. As for its immuno-oncology （I/O） pipeline, Abbisko has chosen less crowded fields and has a chance to take a leading position in these chosen targets, modalities and diseases, in our opinion.
　　Efficient R&D engine driven by science and led by seasoned
　　veterans. Abbisko has built a multidimensional, in-house discovery platform, and efficiently developed a rich pipeline and intellectual property portfolio. Abbisko's drug R&D capabilities are still growing, with an expanding talent pool.
　　How do we differ from the market? We expect greater proof of concept （PoC） data of FGFR inhibitors in more indications.
　　Potential catalysts: Clinical progress of ABSK011, ABSK091 and ABSK021.
　　Financials and valuation
　　Our 2021-2022 EPS forecast is Rmb-3.01 and Rmb-0.87. Based on our DCF model, we initiate coverage with an OUTPERFORM rating and TP of HK$16.00, offering 69% upside. Risks: Clinical trials fail to meet expectations; progress in pipeline misses expectations; commercial sales disappoint; price pressure from regulatory authorities and competitors; failure to protect intellectual property （IP） rights.