BofA raises Hansoh Pharma target to HK$20.80, upgrades shares rating to buy By Investing.com

On Friday, BofA Securities adjusted its stance on Hansoh Pharmaceutical Group Company Limited, upgrading the stock from Underperform to Buy and setting a new price target of HK$20.80, up from the previous HK$16.40. The revision reflects a 20% potential upside for the company’s shares.

The upgrade comes after a reassessment of Hansoh Pharma’s business dynamics, with a notable shift in revenue composition. Innovative drugs and collaborative products now contribute over 65% to the total revenue as of 2023, lessening the impact of generic competition under China’s Volume-Based Procurement (VBP) policy.

Additionally, the company has seen a swift increase in sales from its commercialized products, including Ameile, a factor contributing to the analyst’s positive outlook.

Further reasons for the optimistic view include Hansoh Pharma’s effective business development (BD) activities overseas and its acknowledged expertise in Antibody-Drug Conjugate (ADC) research and development. The firm’s robust product pipeline, particularly in the area of chronic diseases, is expected to meet the demands of an aging population, providing a solid foundation for future growth.

Financial forecasts for Hansoh Pharma have also been updated, with revenue projections for the years 2024, 2025, and 2026 increased by 0.6%, 1.0%, and 3.1%, respectively. Capital expenditure estimates for 2027 and beyond have been reduced from RMB 392 million to RMB 298 million. The analyst’s Discounted Cash Flow (DCF) model assumptions, including a Weighted Average Cost of Capital (WACC) of 9.52% and a terminal growth rate of 3.5%, remain unchanged.

InvestingPro Insights

In the wake of BofA Securities’ upgrade of Hansoh Pharmaceutical Group Company Limited, additional insights from InvestingPro provide a deeper dive into the company’s financial health and market performance. Notably, Hansoh Pharma is trading at a low earnings multiple with a P/E Ratio (Adjusted) for the last twelve months as of Q1 2024 standing at 12.35, which could signal an attractive valuation for investors seeking entry into the pharmaceutical sector.

InvestingPro Tips highlight that Hansoh Pharma has raised its dividend for 9 consecutive years and has maintained dividend payments for 12 consecutive years, showcasing a commitment to returning value to shareholders. Moreover, the company’s strong cash flow position enables it to comfortably cover interest payments, further underpinning its financial stability. For readers who wish to explore additional InvestingPro Tips for Hansoh Pharma, which delve into aspects such as market positioning and profitability predictions, they can find more information at https://www.investing.com/pro/1093. There are currently 10 more tips available on InvestingPro.

Key InvestingPro Data metrics reveal that Hansoh Pharma’s revenue growth for the last twelve months as of Q1 2024 was a solid 4.06%, with an even more impressive quarterly revenue growth of 11.54% for Q1 2024. The company’s Gross Profit Margin for the same period stands at 71.51%, indicating a strong ability to translate sales into profit. Additionally, the Dividend Yield as of mid-2024 is an appealing 4.03%, which may interest income-focused investors.

Investors interested in gaining further insights and exploring the full range of InvestingPro Tips for Hansoh Pharmaceutical Group Company Limited can do so by visiting the dedicated InvestingPro page. Remember to use the coupon code PRONEWS24 to receive an additional 10% off a yearly or biyearly Pro and Pro+ subscription, which provides access to comprehensive analysis tools and real-time data to help make informed investment decisions.

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