小野制药（4528）：下调预期和目标价，重申持有；当前指引看似雄心勃勃

FY3/26EFY3/27EFY3/28E479,605.4516,793.1494,302.3494,040.4523,852.2533,262.8103,856.7131,472.4104,332.3106,746.7121,362.494,222.3 Stephen Barker * | Equity Analyst813 6830 3612 | sbarker@jefferies.comMiyabi Yamakita * | Equity Analyst+81 3 6830 3610 | myamakita@jefferies.com The Long View: Ono PharmaceuticalsInvestment Thesis / Where We DifferWe rate Ono a Hold because we think the stock is fully valued. In addition,we expect the company to have to announce a downward revision tocurrent-year profit guidance (IFRS base).Base Case,¥1600, +6%We expect a deceleration in sales of Opdivo tocap Ono's valuations. We also think the companywill need to cut guidance for current-year EPS(IFRS). We arrive at our ¥1,600 PT by applyinga target 12x to our estimate of FY3/26 EPS. Wederive our 12x target multiple from our estimateof the three-year historical aveage.Sustainability MattersTop Material Issue(s): 1) Business Model Resilience:Ono relies on R&D to replenish its portfolio ofmarketed products. R&D productivity is extremely hard to measure. Without a consistent rate of newproduct launches, Ono may struggle to grow revenues.2) Access & Affordability:The global pharmaindustry has attracted a lot of criticism for the high and rising price of new medicines, which can makeit hard or impossible for less wealthy people to access the best medicines.Company Target(s): 1)Aiming to reduce greenhouse emissions by 55% (cf: FY2017) by 2030 and tozero by 20502)Reduce water consumption 15% by 2030 (cf: 2017).Qs to Mgmt: 1)You changed the way that you hand money out to university doctors in the aftermathof two employees being arrested in January 2021, and has that had a negative impact on yourrelationship with the academic community?2)Is hiring younger people over the heads of their oldercolleagues having any sort of negative (or positive) impact on morale?ESG Sector Deep Dive:Japan Healthcare ESGPlease see important disclosure information on pages 5 - 10 of this report.This report is intended for Jefferies clients only. Unauthorized distribution is prohibited. Risk/Reward - 12 Month View30002800260024002200200018001600140012001000Upside Scenario,¥2000, +32%If investors get a bit more optimistic, then Onomight trade at P/E ratio of about 15x in FY3/26,in which case the stock might trade up to ¥2,000. Downside Scenario,¥1200, -21%If investors get a bit less optimistic about Ono,then it might trade down to a P/E ratio of about9x in FY3/26, in which case the stock might tradedown to ¥1,200.Catalysts•Ph2 on ONO-4059 at ASCO•Ph2 data on ONO-4578(gasrtic cancer,NCT06256328) in late FY3/26•Ph2 data on Sapablursen for polycythemiavera (NCT05143957) in late FY3/26. 2 Exhibit 1 - Ono sales.Products (¥m)OpdivoForxigaOrencia SCGlactivKyprolisParsvabivVelexbruOngentysQinlock (ripretinib) US/EU sales (4L, 2L GIST)Vimseltinib in TGCTOno-4059 (Velexbru)OtherTotal Product salesRoyaltiesOpdivo royaltyKeytruda royaltyOther royaltyTotal RoyaltyAdjustmentSalesSource: Jef est., company info.Please see important disclosure information on pages 5 - 10 of this report.This report is intended for Jefferies clients only. Unauthorized distribution is prohibited. Exhibit 2 - Ono financials.P&L(¥m)SalesGross ProfitsSG&A (ex-R&D)R&DEBITDACore OPOther Operating (net)OPNon-operating (net)Pre-tax ProfitTaxNet Profit to OwnersEPSBalance Sheet(¥m)CashTotal Current AssetsTotal non-current AssetsCurrent LiabilitiesNon current LiabilitiesEquityEquity and LiabilitiesCashflow(¥m)Operating cashflowInvestment cashflowFinancial cashflowChange in cashKey multiples/ratios(¥)Debt/Equity (%)Net Debt/Equity (%)Free Cash Flow/Yield (%)P/E (X)Price/sales (X)PBR (X)EV/Sales (X)EV/EBITDA (X)ROE (%)ROA (%)Dividend per share (¥)Dividend Yield (%)Payout ratio (%)Source: Jef est., FactSetPlease see important disclosure information on pages 5 - 10 of this report.This report is intended for Jefferies clients only. Unauthorized distribution is prohibited. Company DescriptionOno PharmaceuticalsONO PHARMACEUTICAL CO., LTD. manufactures and sells pharmaceutical products. The Company mainly researches and develops prescriptiondrugs.Company Valuation/RisksOno PharmaceuticalsValuations: We arrive at our ¥1,600 PT by applying a target 12x to our estimate of FY3/26 EPS.Risks:Upside risks: There is a risk that Opdivo grows more briskly than we expect, and the yen might weaken, boosting royalty income. In thiscase, sales and profits might be higher than we are expecting, and the stock might outperform. Downside risks: There is a risk that Opdivo growsmore slowly than expected.Analyst Certification:I, Stephen Barker, certify that all of the views expressed in this research report accurately reflect my personal views about the subject security(ies) andsubject company(ies). I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations orviews expressed in this research report.I, Miyabi Yamakita, certify that all of the views expre