恒瑞香港首次公开募股投资者问题解答

F24E56.712.342.221 May 202557.53/37.241,371.58356,841333,3176M11.56.25.205/2511501200125013001350140014501500 Jiangsu Hengrui Medicine Co LtdRatingOutperformPrice Target600276.CH56.00 CNYReported EPSF23AF24EF25E600276.CH (CNY)0.670.991.12FinancialsRevenues (M)Gross Profit (M)R&D (M)Net Earnings (M)Source: Bloomberg, Bernstein estimates and analysis.Hengrui HK IPO: Investor questions answeredAhead of Hengrui’s HK IPO on Friday, we summarize the top questions we have been gettingfrom investors and our views.Why do we think Hengrui could maintain 20%+ topline growth and 25%+ EPSgrowth?Hengrui’s innovative drugs are growingwell above market— sample hospitalsales show 9% YoY for all China’s innovative drugs in FY’24 and 17% for Hengrui’s,respectively. Five drugs launched between 2021-2023 have been the main growth drivers,and the newer drugs are yet to make their contribution, including seven approvals, and 12NDAs filed. Furthermore, with 300+ NMEs (new molecular entities) and 150+ assets atclinical stage,Hengrui’s pipeline dwarves those of peers.How much confidence do we have on the quality of Hengrui’s innovation? The qualityof Hengrui’s drugs has improved, as reflected byhigher market share(15-25% in MNC-dominated drug classes vs. the earlier 5-10%) andrecognition from MNC partners inoutbound deals.Some of the latest readouts, e.g., HER2 ADC and GLP-1s look favorableand on par with global top competitors.Could Hengrui defend its moat?Hengrui’s mature operations and healthy balance sheetbode well for maintaining its leadership. High R&D spending should be sustainable withCNY25 Bn net cash. Hengrui has also outperformed peers inEBIT margin expansionfrom2022 to 2024,curbing SG&A costsdespite accelerated growth.How would the H-shares trade?While H-share discounts of 10-30% are typical for dual-listed companies, biotech H-shares have done well recently. By P/S, Hengrui (11X) is on parwith Hansoh H-shares (10X) and well below biotechs Akeso and Kelun Biotech H-shares(17-34X). We think the discount would likely be minimal, and 36-56 P/E would imply HK$45+ per share.(Continued on the next page)Investment ImplicationsWe maintain Hengrui at OutperformSee the Disclosure Appendix of this report for required disclosures, analyst certifications and otherimportant information. Alternatively, visit our Global Research Disclosure Website.First Published: 21 May 2025 20:50 UTC Completion Date: 21 May 2025 13:46 UTC F23AF24EF25ECAGR22,82027,18230,27615.2%19,29523,26825,97516.0%(4,954)(5,807)(6,308)12.8%4,2786,2557,13729.2%Close DateASIAXFYEDiv YieldEV (CNY) (M)PerformanceAbsolute (%)ASIAX (%)Relative (%)CNY60CNY55CNY50CNY45CNY40 DETAILSCaveats:1) As previously noted, there are still three Gx drugs accounting for c. 25% of sales at risk of future VBP, andHengrui may therefore experience bumpy quarters in the coming 2-3 years when these are hit. 2) Despite Hengrui’s sprawlingportfolio and pipeline, it still lacks a “superstar” product that has clear global blockbuster potential, unlike biotechs BeiGene(zanubrutinib), Akeso (AK112), or Kelun Biotech (SKB264) (Kelun Biotech is not covered).QUICK FACTS OF THE IPOLast week, Hengrui submitted its prospectus document (link) to HKEX regarding its HK IPO plan. It originally planned to issue224.5 million shares with pricing range within HK$41.45-44.05 per share. According to Bloomberg news today (link), Hengruipriced its Hong Kong stock offering at the top of the range (HK$44.05 per share) to raise around HK$9.9 billion (US$1.3 billionequivalent), having sold all the 224.5 million shares. According to deal terms seen by Bloomberg, Hengrui won’t exercise theoption to increase the size of its IPO this time. The final IPO pricing implies a discount of c.25% compared to Hengrui’s A-shareclosing price on Tue, May 20, 2025. The IPO will take place on Fri, May 23, 2025.WHY DO WE THINK HENGRUI COULD MAINTAIN 20%+ TOPLINE GROWTH AND 25%+ EPS GROWTH?1) Market leader: Coming out of the trough of the worst VBP impact in 2021-2023, Hengrui’s topline growth is acceleratingfrom 7% to 23% YoY in the last two years. The innovative portfolio, now half of total sales, is growing well above market —sample hospital sales show 9% YoY for all China’s innovative drugs in FY’24 and 17% for Hengrui’s, respectively (Exhibit 1).Note that the sample hospital sales usually differ from actual sales booked by manufacturers, and are just a reference forrelative growth across the market. Also, a growing segment is retail pharmacy sales (20-30% of industry total) that cannot beaccounted for with sample hospital sales. According to Hengrui’s own reporting, innovative drugs grew 31% YoY in FY’24.2) The pace of new launches picks up: Five drugs launched between 2021-2023 have been the main growth drivers, and thenewer drugs are yet to make their contribution, including seven approvals since late 2023, and 12 NDAs filed. As the newlaunches ramp up, we’re confident of Hengrui’s innovative segment to accelerate from high teen