HSBC Research raises CSPC Pharma's revenue and earnings forecast, target price adjusted to HKD 11

HSBC Research published a report stating that CSPC PHARMA (01093.HK) announced at the end of last month a research and licensing cooperation agreement with AstraZeneca (AZN.US). The two companies will engage in comprehensive strategic cooperation in the discovery of innovative peptide molecules and the development of long-acting delivery products. The total value of the transaction is as high as USD 18.5 billion, including a USD 1.2 billion upfront payment, up to USD 3.5 billion in potential research milestone payments, and up to USD 13.8 billion in potential sales milestone payments. Additionally, a sales commission of up to double-digit percentages is set for the net sales of licensed products each year.

HSBC Research indicated that CSPC's stock price has increased by about 9% year-to-date, having risen 14% before the announcement of the cooperation with AstraZeneca on January 30. The firm currently believes that its valuation remains attractive and anticipates more external licensing cooperation opportunities in the future in the EGFR ADC and research platform. Considering the upfront payment and slight improvement in last quarter's sales expectations, it has raised its revenue forecasts for 2025 to 2027 by 3% to 11%.

The bank also raised its net profit forecasts for CSPC for 2025 to 2027 by 7% to 18%, believing that the growth in external licensing revenue can offset the negative impact brought by the centralized procurement policy for pharmaceuticals. It maintains a "Buy" rating, raising the target price from HKD 9 to HKD 11