HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Capital Markets

BrainAurora Medical Technology / Equity Capital Markets

<ul>
<li>Although DTx is considered a promising field, the industry is still in the early stages of trial and error development, and there is still a long distance from mature commercialization.</li>
<li>BrainAurora’s revenue YoY growth rate declined significantly. Considering the small revenue scale and slowdown in revenue growth, is it possible for BrainAurora to experience stagnant growth in the near future?</li>
<li>BrainAurora’s products haven’t been widely recognized in China’s hospitals/medical system, nor has it established a solid profit model.High valuation isn’t justified. We doubt if this field could bring good return.</li>
</ul>


Although DTx is considered a promising field, the industry is still in the early stages of trial and error development, and there is still a long distance from mature commercialization.
BrainAurora’s revenue YoY growth rate declined significantly. Considering the small revenue scale and slowdown in revenue growth, is it possible for BrainAurora to experience stagnant growth in the near future?
BrainAurora’s products haven’t been widely recognized in China’s hospitals/medical system, nor has it established a solid profit model.High valuation isn’t justified. We doubt if this field could bring good return.


Pre-IPO BrainAurora Medical Technology - Weak Growth Prospects Cannot Support High Valuation

Equity Bottom-Up

Hansoh Pharmaceutical Group  / Equity Bottom-Up

Hansoh Pharmaceutical Group Company Limited operates as a pharmaceutical company. The Company manufactures and sells anti-infectives, anti-neoplastic agents, diabetes drugs, and other products. Hansoh Pharmaceutical Group markets its products throughout China.

<ul>
<li>Hansoh’s 24H1 results beat the expectations. Product revenue (excluding BD cooperation revenue) would achieve double-digit growth in 2024 full year, among which revenue of Ameile would maintain 20%+ YoY growth.</li>
<li>Total product revenue would be about RMB14-14.5 billion in the future. Based on P/S of 5, market value is RMB70-72.5 billion, which is the lower end of market value range.</li>
<li>There is still certain gap in terms of R&amp;D capability/globalization outlook between Hansoh and those leading biotech in China. So, we think valuation of Hansoh would be lower than them.</li>
</ul>


Hansoh’s 24H1 results beat the expectations. Product revenue (excluding BD cooperation revenue) would achieve double-digit growth in 2024 full year, among which revenue of Ameile would maintain 20%+ YoY growth.
Total product revenue would be about RMB14-14.5 billion in the future. Based on P/S of 5, market value is RMB70-72.5 billion, which is the lower end of market value range.
There is still certain gap in terms of R&amp;D capability/globalization outlook between Hansoh and those leading biotech in China. So, we think valuation of Hansoh would be lower than them.


Hansoh Pharmaceutical Group (3692.HK) - Successful Business Transformation Opens up Valuation Upside

Ascentage Pharma Group Corp / Equity Bottom-Up

Ascentage Pharma Group International operates as a clinical-stage biotechnology company. The Company develops novel therapies for cancers, hepatitis B virus, age-related diseases, and more. Ascentage Pharma Group International conducts businesses in China, the United States, and other countries.

<ul>
<li>For full-year 2024, sales of olverembatinib is expected to reach about RMB240 million, and there is a possibility of exceeding expectations. RMB500 million sales of olverembatinib is expected in 2025.</li>
<li>Market value of US$1.25 – 1.9 billion is reasonable range for Ascentage if just considering olverembatinib alone. The peak sales of APG-2575 is expected to surpass olverembatinib in overseas markets. </li>
<li>The next big catalyst is the potential licensing cooperation with MNCs for APG-2575, if reaches, would push Ascentage’s market value to surpass HUTCHMED, as prospects of APG-2575 is basically guaranteed.</li>
</ul>


For full-year 2024, sales of olverembatinib is expected to reach about RMB240 million, and there is a possibility of exceeding expectations. RMB500 million sales of olverembatinib is expected in 2025.
Market value of US$1.25 – 1.9 billion is reasonable range for Ascentage if just considering olverembatinib alone. The peak sales of APG-2575 is expected to surpass olverembatinib in overseas markets. 
The next big catalyst is the potential licensing cooperation with MNCs for APG-2575, if reaches, would push Ascentage’s market value to surpass HUTCHMED, as prospects of APG-2575 is basically guaranteed.


Ascentage Pharma (6855.HK) - The Future Valuation Leap Is Worth Looking Forward To

HUTCHMED (China) Limited develops, manufactures, and sells pharmaceutical products. The Company offers drugs for oncology and autoimmune diseases treatment. HUTCHMED (China) markets its products worldwide.

<ul>
<li>HUTCHMED will receive a US$20 million milestone payment from its partner Takeda. In our view, peak sales of fruquintinib is expected to reach about US$700 million in overseas markets.</li>
<li>After the Head of AstraZeneca China has been detained by authorities, AstraZeneca's future commercialization would be affected, which will have a negative impact on savolitinib and HUTCHMED in short term.</li>
<li>Reasonable market value of HUTCHMED based on the three major products is about US$2.7-3.3 billion assuming P/S of 4. If market value is below US$2.5 billion, HUTCHMED is undervalued.</li>
</ul>


HUTCHMED will receive a US$20 million milestone payment from its partner Takeda. In our view, peak sales of fruquintinib is expected to reach about US$700 million in overseas markets.
After the Head of AstraZeneca China has been detained by authorities, AstraZeneca's future commercialization would be affected, which will have a negative impact on savolitinib and HUTCHMED in short term.
Reasonable market value of HUTCHMED based on the three major products is about US$2.7-3.3 billion assuming P/S of 4. If market value is below US$2.5 billion, HUTCHMED is undervalued.


Hutchmed China Ltd (13.HK/​​HCM.US) - The Fundamentals Remain Strong

Event-Driven

Shanghai Henlius Biotech, Inc develops and produces drugs. The Company develops and produces monoclonal antibody biosimilar drugs, bio betters, novel monoclonal antibodys, and other drugs. Shanghai Henlius Biotech throughout China.

<ul>
<li>On the surface, the 24Q3 results are not bad, but if take a close look, the real situation of Fosun Pharma is still not optimistic.</li>
<li>There are rumors that Fosun Pharma may have encountered funding issues, thus casting a shadow over the prospects of this privatization.</li>
<li>The motivation and underlying logic for Fosun Pharma to privatize Henlius are both solid.Potential risks currently on the table are funding issues and whether Pre-Condition approval process will go smoothly.</li>
</ul>


On the surface, the 24Q3 results are not bad, but if take a close look, the real situation of Fosun Pharma is still not optimistic.
There are rumors that Fosun Pharma may have encountered funding issues, thus casting a shadow over the prospects of this privatization.
The motivation and underlying logic for Fosun Pharma to privatize Henlius are both solid.Potential risks currently on the table are funding issues and whether Pre-Condition approval process will go smoothly.


Shanghai Henlius Biotech (2696.HK) Privatization Update - These Are the Potential Risks Behind

Over 15 years' experience in both finance and healthcare, covering clinic operations, investment and equity research in both China and overseas.