FY24 results in line. Hansoh's FY24 performance was in line with expectations, reporting revenue of RMB12.26bn (+21.3% YoY) and attributable net income of RMB4.37bn (+33.4% YoY). Product sales reached RMB10.69bn (+13.7% YoY). Sales of innovative drugs, excluding collaboration revenue, saw strong growth of +28.2% YoY, totaling RMB7.9bn. We believe the Company will meet its FY25E target for innovative drug sales to surpass RMB10.0bn (up over 25% YoY). FY24 saw improved cost efficiency, with SG&A as a percentage of product sales decreasing to 42% from 45% in FY23. R&D costs further increased 29% YoY to RMB2.70bn in FY24. The Company has consistently increased its dividend payout, with the payout ratio increasing from 35% in FY23 to 42.5% in FY24. We expect a stable payout ratio in FY25E and beyond.
　　Long life cycle of aumolertinib driven by indication expansion. Aumolertinib's FY2024 sales demonstrated robust growth, increasing by 29% YoY. As an early entrant in China's third-generation EGFR-TKI market, aumolertinib benefits from its inclusion in the NRDL for first-line and second- line indications. Hansoh is actively pursuing further indication expansion, with two anticipated NRDL additions in early 2026: adjuvant therapy after resection (sNDA submitted in Jul 2024) and maintenance therapy for locally advanced unresectable NSCLC (approved in Mar 2025). Aumolertinib is positioned to be the first domestic EGFR-TKI in these two indications. Furthermore, Hansoh is developing combination therapies such as aumolertinib + cMet inhibitor or EGFR/c-Met, to better solidify the leadership position of aumolertinib in NSCLC. Thus, we believe Hansoh is well- positioned to achieve its sales targets of RMB6.0bn in 2025 and over RMB8.0bn at peak.
　　Sustainable profit from overseas out-licensing deals. Following the successful out-licensing of two ADCs to GSK in late 2023, Hansoh further out-licensed one of its oral small molecule GLP-1R agonists to MSD through a blockbuster deal in late 2024. HS-20093 (B7-H3 ADC) is currently in Ph3 trial in China for 2L SCLC, with GSK planning to initiate global pivotal trials by 4Q25. HS-20089 (B7-H4 ADC), a leading candidate globally, has recently entered Ph3 trial in China for ovarian cancer. GSK's Ph1/2 trials for HS- 20089 is ongoing, with data readout expected this year and pivotal trials slated for 2026. Furthermore, HS-20094 (GLP-1/GIP dual agonist) has progressed to Ph3 trials for obesity, with potential approval anticipated in 2027. In 2024, Hansoh brought 6 in-house developed molecules into clinic, including 4th-Gen EGFR-TKI, GLP-1 oral drug, CDH6 ADC, and CDH17 ADC. We expect Hansoh to advance additional ADC assets, including an EGFR/cMet ADC, into clinical studies. Given the current global trend of big pharma actively seeking innovative drug assets in China, we believe that Hansoh, with its robust pipeline of innovative therapies, will continue to benefit from this industry movement. We expect overseas out-licensing of its pipeline assets to become a sustainable source of profit for the Company.
　　Maintain BUY. Excluding the impact of collaboration revenue, we expect Hansoh’s organic revenue to grow 16.3%/14.2% YoY in FY25E/26E. We expect Hansoh’s net profit to decrease 2.2% YoY in FY25E and increase 0.1% in FY26E. We maintain our DCF-based TP unchanged at HK$25.24 (WACC: 8.52%, terminal growth rate: 3.0%).