20220318-招银国际-复宏汉霖-02696.HK-Strong_sales_powered_by_expanding_production_capacity_4页_810kb

Henlius Biotech (2696 HK) Summary

Core Content

Henlius Biotech is a biotechnology company that has shown strong revenue growth and improving operational efficiency. The company is focused on biosimilars and has made significant progress in both domestic and international markets. Its financial performance and strategic developments are analyzed in this equity research update.

Key Financial Highlights

• Revenue Growth:

  • FY20A: RMB588 million
  • FY21A: RMB1,682 million (+186% YoY)
  • FY22E: RMB3,009 million (+79% YoY)
  • FY23E: RMB3,342 million (+11% YoY)
  • FY24E: RMB4,287 million (+28% YoY)

• Operating Margins:

  • FY21A: 20.72%
  • FY22E: 22.78%
  • FY23E: 39.68% (significant improvement)

• Net Profit:

  • FY21A: RMB-984 million (net loss)
  • FY22E: RMB467 million
  • FY23E: RMB558 million
  • FY24E: RMB1,386 million

• EPS (RMB):

  • FY22E: 0.86
  • FY23E: 1.03
  • FY24E: 2.55

• ROE (%):

  • FY22E: 16.9
  • FY23E: 16.8
  • FY24E: 29.4

• Net Gearing (%):

  • FY20A: 22
  • FY21A: 83
  • FY22E: 76
  • FY23E: 57
  • FY24E: 14

• Current Ratio (x):

  • FY20A: 1.0
  • FY21A: 0.6
  • FY22E: 0.5
  • FY23E: 0.6
  • FY24E: 0.7

Product Performance

• HANQUYOU (trastuzumab biosimilar):

  • Revenue in 2021: RMB930 million (+584% YoY)
  • Overseas sales: RMB62 million
  • Approved in nearly 20 European countries and is the only Chinese biosimilar approved in the EU
  • US FDA filing expected this year

• HANLIKANG (rituximab biosimilar):

  • Revenue in 2021: RMB543 million (+88% YoY)
  • Approved for rheumatoid arthritis (RA) in China, where the originator rituximab is not approved
  • Key growth driver for the company

• HANDAYUAN (adamumab):

  • Revenue in 2021: RMB22 million

• HANBEITAL (bevacizumab):

  • Approved in November 2021 for mCRC and NSCLC

Upcoming Products

• Serplulimab (PD-1):
  • Expected to be approved in China for MSI-H solid tumors in 2Q22
  • NDA accepted by NMPA in September 2021, with approval expected in 2H22
  • Phase 3 Ztrial for ES-SCLC met the primary endpoint in December 2021 with encouraging OS data
  • NDAs in China and EU expected in 2022

Manufacturing Capacity

• Xuhui Facility (24,000L):

  • Dual GMP certification from China and EU
  • Completed over 350 batches with a success rate of >98%

• Songjiang First Plant (24,000L):

  • Completed construction and equipment verification
  • Manufacturing certificate for HANQUYOU received
  • Expected to be officially in use by mid-2022, increasing total capacity to 48,000L

• Songjiang Second Plant (Stage 1&2, 36,000L):

  • Expected to complete the first batch production by end of 2022
  • Potential to expand to 60,000L (Stage 3) in the future

Valuation and Investment Outlook

• Target Price (HK$): HK$29.85 (revised from previous estimates)
• Upside Potential: +54.8% from current price (HK$19.28)
• DCF Valuation (RMB mn):
  • 2022E: 15,392
  • 2023E: 15,392
  • 2024E: 13,305
• Terminal Growth Rate: 2.0%
• WACC: 12.23%
• Recommendation: BUY
• Rationale: Strong sales growth, improving operating margins, and expansion of manufacturing capacity are expected to drive profitability and long-term value creation.

Key Ratios

• Gross Margin (%):

  • FY21A: 69
  • FY22E: 81
  • FY23E: 82
  • FY24E: 84

• EBITDA Margin (%):

  • FY22E: 27
  • FY23E: 29
  • FY24E: 45

• Pre-Tax Margin (%):

  • FY22E: 17
  • FY23E: 20
  • FY24E: 38

• Net Margin (%):

  • FY22E: 16
  • FY23E: 17
  • FY24E: 32

• BVPS (RMB):

  • FY20A: 6.0
  • FY21A: 4.3
  • FY22E: 5.1
  • FY23E: 6.1
  • FY24E: 8.7

Share Performance

• 1-Month Return: -28.8%
• 3-Month Return: -44.0%
• 6-Month Return: -35.6%
• 12-Month Price Performance:
  • High: HK$46.45
  • Low: HK$14.90

Shareholding Structure

• Management Team: 31.74%
• Fosun Pharma: 14.81%
• Al-Rayyan Holding: 8.70%
• Baron Capital: 2.58%
• Free Float: 42.17%

Disclaimer

• The research is not individually tailored and should not be used for investment decisions without consulting a professional financial advisor.
• The information is based on publicly available data and is not guaranteed for accuracy or completeness.
• CMBIGM is not a registered broker-dealer in the US and the report is intended for major US institutional investors only.
• The report may be subject to conflicts of interest and is not liable for any reliance on its content.