Orient released a research report stating that Hutchmed (China) (00013) is expected to have revenue of 680, 844, and 1000 million USD from 2024 to 2026, respectively. Based on comparable companies, a 4.4x PS is given for the company in 2025, corresponding to a Target Price of 33.24 HKD, and an initial "Buy" rating is assigned.

The main points from Orient are as follows:

A small molecule innovative drug company with a global layout.

The company was founded in 2000 and has been deeply engaged in the small molecule oncology field for over twenty years. It already has three commercialized products and multiple late-stage clinical drugs, and has accumulated rich experience in commercial operation. At the same time, it collaborates with MNCs to explore international markets. CK Hutchison Holdings is the largest shareholder, the management team structure is stable, and it has a deep research and development background. The company's operation is stable, with a revenue CAGR of 23.1% from 2017 to 2023, and it achieved profitability for the first time in 2023 with USD 0.101 billion.

Innovative products are entering commercialization, and overseas expansion is being realized.

1) Furmonertinib: focusing on gastrointestinal tumors and advancing globalization. In the last 1-2 years, furmonertinib has been launched for colorectal cancer in the major markets of the USA, Europe, and Japan, quickly gaining volume both domestically and abroad. Furmonertinib has the potential to be a "pan-cancer" treatment, with future expansions expected to endometrial cancer and renal cancer; 2) Savolitinib: targeting the vast market of EGFR-TKI resistance. As the first MET inhibitor in China, Savolitinib conditionally approved for marketing in China in 2021, and included in the national medical insurance in 2023. Moreover, Savolitinib targets NSCLC (non-small cell lung cancer) EGFR-TKI resistance: domestic second and third-line EGFR-TKI resistant/MET+ indications are expected to submit NDA next year; a collaboration with AstraZeneca on second and third-line osimertinib resistant/MET+ indications is expected to submit NDA in the USA by the end of this year.

A comprehensive layout for autoimmune diseases & hematological tumors, with significant potential in innovative targets.

1) Sorrentina: a highly differentiated oral Syk inhibitor, the NDA for immune thrombocytopenia (ITP) has been submitted, and it is expected to become the first Syk inhibitor in China; 2) Sovansertib: advanced pancreatic neuroendocrine tumors have been launched in China in 2020, and the company is actively working on combinations with PD-1 monoclonal antibodies to tackle pancreatic cancer; 3) Blood tumor field: two products provide innovative potential: HMPL306 is a dual inhibitor of IDH1/2 and is the fastest globally for treating AML (acute myeloid leukemia); Tazemetostat is an introduced product, the first EZH2 inhibitor, aimed at follicular lymphoma.

Risk warning: The progress of innovative drug research and development may fall short of expectations, competition among products may intensify, or sales may be below expectations, posing risks to the company's medium to long-term profitability.