Nomura expects Hengrui Pharma's net profit to grow by 30% this year, lowering the target price to 87.49 yuan and continuing to recommend "buy."

Nomura expects Hengrui Pharma (01276.HK) to achieve a year-on-year revenue growth of 7% to RMB 8.3 billion in the fourth quarter of 2025, lower than the market expectation of RMB 9.5 billion. Among this, pharmaceutical sales are expected to grow by 14% year-on-year, with collaboration revenue recorded at RMB 843 million, mainly from the licensing agreement with GSK. During the period, the gross profit margin is expected to expand by 0.6 percentage points year-on-year to 86.5%, while the operating profit margin is expected to expand by 1.8 percentage points to 24.2%. Therefore, the bank estimates that the net profit attributable to shareholders will grow by 32% year-on-year to RMB 2.3 billion.

Looking ahead to 2026, the bank expects revenue to grow by 18% to RMB 37.2 billion, slightly higher than market expectations, with pharmaceutical sales growing by 9% year-on-year and external licensing revenue contributing RMB 6 billion. Additionally, with expected gross profit margin and operating profit margin expanding year-on-year to 87.3% and 30.1% respectively, net profit is expected to grow by 30% year-on-year to RMB 11.2 billion, exceeding market expectations by 13%.

The bank has lowered its revenue growth forecasts for Hengrui Pharma for 2025 and 2026 by 8.7% and 3.1% respectively, and profit growth forecasts by 18.7% and 2.6% respectively, mainly reflecting delays in the recognition of collaboration revenue in 2025. The target price has been reduced from HKD 94.54 to HKD 87.49, maintaining a "Buy" rating. (ss/)