20260202-招银国际-石药集团-01093.HK-Landmark_BD_deal_to_drive_long-term_growth_6页_856kb

CSPC Pharmaceutical (1093 HK) Summary

Core Content and Key Highlights

CSPC Pharmaceutical Group Limited (1093 HK) is a biopharmaceutical company that has made significant strides in its business development strategy, particularly through its out-licensing deals. These partnerships have been instrumental in driving long-term growth and validating the company's innovative drug discovery and delivery platforms.

Main Points

• Landmark Deal with AstraZeneca: CSPC has signed a $18.5bn+ out-licensing agreement with AstraZeneca for eight weight management and type 2 diabetes programs, including SYH2082, a clinical-ready long-acting GLP1R/GIPR agonist. AstraZeneca has exclusive global rights (excluding Greater China), and CSPC will lead development through Phase I completion for the initial assets. The deal includes a $1.2bn upfront payment, potential milestones up to $17.3bn, and double-digit royalties.

• Sustainable Out-Licensing Income Stream: CSPC has a strong track record of business development, signing six out-licensing agreements since late 2024, covering a variety of therapeutic areas. These include an Lp(a) inhibitor, MAT2A inhibitor, ROR1 ADC, oral GLP-1, irinotecan liposome, and an AI-driven small molecule discovery platform. The company has a deep pipeline of differentiated candidates, such as B7-H3 ADC, PD-1/IL-15 bsAb, GFRAL mAb, and ActRII mAb, which are expected to contribute to a sustainable and recurring BD income stream.

• Sales Recovery in 3Q25: CSPC reported total revenue of RMB19.9bn for 9M25, with RMB1.54bn in BD income. Excluding BD, core revenue was RMB18.4bn, down 19% YoY. However, core revenue grew 4.2% QoQ in 3Q25, indicating a recovery across key therapeutic areas. The selling expense ratio decreased from 29.2% in 9M24 to 24.1% in 9M25, while R&D investment remained a priority, increasing by 7.9% YoY to RMB4.2bn. The company is expected to stabilize drug sales in 2026E and maintain a sustainable dividend payout.

• Earnings and Valuation: CSPC's earnings are expected to grow significantly due to BD deals. The target price (TP) was revised from HK$11.05 to HK$13.93, reflecting a 45.1% upside from the current price of HK$9.60. The DCF valuation shows an equity value of RMB142,835mn, with a terminal value of RMB189,350mn and a terminal growth rate of 3.0%. The WACC is 9.34%, and the DCF per share is HK$13.93.

• Risks: Potential delays in pipeline advancement and the negative impact of value-based purchasing (VBP) on commercial products are key risks to consider.

Financial Summary

Revenue and Growth

Net Profit and Growth

EPS and P/E

Earnings Forecast and Valuation

• DCF Valuation (RMB mn): 131,856 (2026E), with a terminal value of 189,350 (2031E).
• Terminal Growth Rate: 3.00%.
• WACC: 9.34%.
• Cost of Equity: 13.00%.
• Cost of Debt: 3.00%.
• DCF per Share (HK$): 13.93.

Shareholding and Market Data

• Market Cap (HK$ mn): 114,405.2
• Avg 3 mths t/o (HK$ mn): 1,042.9
• 52w High/Low (HK$): 11.48/4.46
• Total Issued Shares (mn): 11,917.2

Share Performance (12-mth)

Out-Licensing Deals

CMBIGM Ratings

• BUY: Stock with potential return of over 15% over next 12 months.
• OUTPERFORM: Industry expected to outperform the relevant broad market benchmark over next 12 months.
• MARKET-PERFORM: Industry expected to perform in-line with the relevant broad market benchmark over next 12 months.
• HOLD: Stock with potential return of +15% to -10% over next 12 months.
• SELL: Stock with potential loss of over 10% over next 12 months.
• NOT RATED: Stock is not rated by CMBIGM.

Analyst Certification

The research analyst certifies that the views expressed in the report accurately reflect their personal views and that there is no direct or indirect compensation related to the specific views. The analyst also confirms no trading in the stock covered within 30 days prior to the report's issue and no trading for 3 business days after.

Important Disclosures

• There are risks involved in trading securities.
• The information in the report is not suitable for all investors.
• CMBIGM does not provide individually tailored investment advice.
• Past performance does not indicate future performance.
• The value of investments is uncertain and may fluctuate.
• CMBIGM is not liable for any loss, damage, or expense incurred from relying on the report.
• The information is based on analyses and is provided on an "AS IS" basis, subject to change without notice.