Hansoh Pharmaceutical
　　2024 results in line; exciting guidance of double-digit revenue growth with RMB6bn sales of Ameile in 2025
　　Hansoh reported in-line 2024 results with revenue up 21% to RMB12.3bn and net profit up 33% YoY to RMB4.4bn. Excluding the impact of collaboration revenue, innovative drugs-the company’s key driver- grew 28% YoY growth to RMB7.9bn, accounting for a record- high 74% of total revenue. The company provided exciting 2025 guidance, projecting innovative drugs revenue of RMB10bn (+25% YoY), driving double-digit growth in total revenue, and raising its 2025 sales target for Ameile to RMB6bn (vs. prior guidance of RMB6bn in 2026). Post results, we fine tuned our 2025-26 revenue forecasts, reflecting stronger Ameile growth partially offset by headwinds from the agomelatine centralised procurement in 2H25. We rolled over our DCF model and derived a new TP of HK$23.9 (WACC: 10.4% and terminal growth: 3.0% unchanged). Reiterate BUY rating.
　　Key Factors for Rating
　　2024 results in line with strong growth in innovative drugs: 2024 results were in line with our expectation with revenue up 21% YoY to RMB12.3bn and net profit surging 33% YoY to RMB4.4bn, thanks to robust growth of innovative drugs and collaboration revenue from GSK (RMB1.44bn). Owing to the collaboration revenue, gross margin improved by 1.2ppts to 91.0%. R&D expenses increased by 29% YoY to RMB2.7bn (including license-in expenses of RMB247m), accounting or 22.0% of total revenue (vs. 20.8% in 2023). Excluding the impact of collaboration revenue, sales of innovative drugs were RMB7.9bn, indicating a YoY growth of 28%, accounting for 74% of revenue. Meanwhile, generic drugs sales fell 14% YoY to RMB2.8bn.
　　Ameile poised for robust growth in 2025: as per management, Ameile continued its rapid sales ramp-up in 1L NSCLC, with YoY sales growth of 28.8% in 2024. Ameile only experienced price cut of 8% in 2024 NRDL renewal, and the management expects continued sales momentum in 2025 supported by its label expansion: Ameile has received sNDA approval for IIIB unresectable NSCLC maintenance therapy in March 2025 and is expected to be approved as adjuvant therapy by mid-2025, both of which are eligible for 2025 NRDL negotiation. Furthermore, Hansoh has submitted sNDA for almonertinib +chemo for 1L NSCLC treatment in 4Q24, with approval expected by YE25. In comparison, the phase III trials for furmonertinib and befotertinib in adjuvant therapy are still in the patient follow-up and patient recruitment stages, respectively, which means Ameile is 2 years ahead the domestic rival 3rd gen EGFR-TKIs, positioning it for sustained growth despite market competition.
　　Encouraging 2025 guidance: the company provided exciting 2025 guidance, projecting innovative drugs revenue of RMB10bn (+25% YoY), driving double- digit growth in total revenue, and raising its 2025 sales target for Ameile to RMB6bn with peak sale of RMB8bn (vs. prior guidance of RMB6bn in 2026), exceeding market expectation,. For generic drugs, the management expects the sales to stabilise at RMB2bn-2.5bn in 2025-26. Key generic product Ameining (Agomelatine) faces risks from centralised procurement in 2H25.
　　Key Risks for Rating
　　(i) Lower-than-expected price cut on GPO and NRDL inclusion, (ii) slower-than expected sales ramp-up of innovative drugs, (iii) failure in key clinical trial.
　　Valuation
　　Post results, we fine tuned our 2025-26 revenue forecasts, reflecting stronger Ameile growth partially offset by headwinds from the agomelatine centralised procurement in 2H25. We rolled over our DCF model and derived a new TP of HK$23.9 (WACC: 10.4% and terminal growth: 3.0% unchanged). Reiterate BUY rating.