Cathay Pacific Haitong: Innovation pipeline opens up room for growth for Fuhong Hanlin (02696) with a target price of HK$101.75

The Zhitong Finance App learned that Cathay Pacific Haitong released a research report saying that global biopharmaceuticals will usher in a “patent cliff”. Fu Hong Hanlin (02696) has reached authorized cooperation with more than 10 pharmaceutical companies around the world, and is expected to fully benefit from the opportunity to go overseas. Innovation has brought the company a second performance growth curve, and the layout of a variety of innovative drugs and next-generation early research platforms are expected to drive the company's long-term growth. The company's 2026-2028E net profit is predicted to be $982, 11.48, and 1,529 million yuan. Using a comparable company valuation method, 48XPE will be awarded in 2026, corresponding to a target price of $86.49; with reference to the HKD RMB exchange rate of 0.85, corresponding to the stock price of HK$101.75, an increase rating.

Cathay Pacific Haitong pointed out that the global biopharmaceutical market will usher in a “patent cliff”. The market for similar products is expected to increase from US$58 billion in 2025 to US$187 billion in 2030. The company has already reached authorized cooperation with more than 10 global pharmaceutical companies such as Sandoz and Organon, and has disclosed that the total transaction amount exceeds US$3 billion. In August 2026, the company also packaged and authorized up to 10 assets with Sandoz, increasing the share ratio to 40%, reflecting the increase in bargaining power brought about by scarce assets. The company's overseas business has entered an intensive cash out period. Overseas revenue in 2025 was about 260 million yuan, an increase of more than 100% over the previous year. Desumab and the first imitation pertuzumab form the first overseas growth engine; starting in 2028, scarce varieties such as K drugs, O drugs, and cetuximab will be relayed, opening up room for a second wave of growth; in 2030, overseas business will become the main pillar of revenue.

Innovation has brought the company a second growth curve. Many late-stage assets have FIC/BIC potential. HLX43 (PD-L1ADC) has entered more than 1,500 cases worldwide, the three back-line NSCLC subgroups have CORR of 33%-38%, and TSCC's CORR is over 50%, which is expected to accelerate listing in the US through the AA path. HLX22 (HER2 monoclonal antibody) first-line gastric cancer stage II had a 24-month PFS rate of 61.5% (11.4% in the control group). The toxicity of diarrhea was significantly lower than that of competitive products. Stage III is expected to be detected in 2027. Differential layout of sululizumab ES-SCLC, perioperative gastric cancer, and 1lMSS/PMMR colorectal cancer is expected to be submitted by the US BLA by the end of 2026.

The company has built the next generation IO, ADC, multi-specific TCE and AI-driven four Haiclub early research platforms: the I0 platform developed PD-L1/VEGF double antibodies and PD-1/IL-2 bifunctional molecules to take on the immunotherapy echelon after sululimab; the TCE platform introduced CD28 co-stimulation to enhance long-lasting T-cell killing; and the ADC platform balances efficacy and safety with low toxic load and low DAR design. The company's early research reserves have exceeded 20 molecules, and FIC/BIC accounts for nearly 80%. In 2026, various molecules have entered clinical trials, which is expected to drive medium- to long-term growth.