Citi in "Big Banks": Expects more innovative drugs from SINO BIOPHARM to be launched, target price raised to 10.8 yuan, rating "Buy"

Citi's research report pointed out that SINO BIOPHARM (01177.HK) achieved a net profit of RMB 3.4 billion in the first half of the year (a year-on-year increase of 140%) and revenue of RMB 17.6 billion (a year-on-year increase of 10.2%), with both profit and revenue exceeding market consensus and Citi's expectations. The management of SINO BIOPHARM is confident about the licensing potential of innovative candidate drugs, including TQC3721 (PDE3/4). Based on the positive progress in innovation, Citi raised the target price from HKD 8.8 to HKD 10.8.

Citi forecasts that in the second half of 2025, SINO BIOPHARM will account for USD 300 million in milestone payments (MSD-LaNova transaction) and includes sales forecasts for new candidate drugs in its model, including Zongertinib (Her2), M701 (CD3/EpCAM), TQB2101 (Her2/HER2 ADC), LM302 (CLDN18.2 ADC), and TQC2731 (TSLP).

As a result, the company’s revenue forecasts for the fiscal years 2025 to 2027 have been raised by 1%, 4%, and 9%, respectively, implying product sales growth of 12%, 8%, and 12% for the fiscal years 2025 to 2027; Citi also raised the company's earnings per share forecasts for the fiscal years 2025 to 2027 by 49%, 26%, and 37%, maintaining a "Buy" rating.

Citi believes that SINO BIOPHARM stands out among Chinese pharmaceutical companies due to its excellent R&D capabilities, strong large-scale manufacturing capabilities, and extensive sales network, and is expected to be a major beneficiary of the innovation trend in China's pharmaceutical manufacturing industry over the next 5 to 10 years. Citi is also optimistic about the growth prospects of SINO BIOPHARM, citing reasons such as: rapid growth of innovative drugs; stable growth of generic drugs; and increased overseas sales as the sales network expands