Orient: Initiate coverage on ASCLETIS-B (01672) with a "buy" rating and a target price of HKD 18.38.

Orient Research Report predicts that ASCLETIS-B (01672) will have earnings per share of -0.32/-0.35/-0.38 yuan for the years 2025-2027. They conducted an absolute valuation of the company's free cash flow and forecasted a reasonable market value of 18.366 billion Hong Kong dollars (calculated at a rate of 1:1.1001), with a corresponding target price of 18.38 Hong Kong dollars, giving the company a "buy" rating for the first time. Key points from Orient include: The market for weight loss has significant potential for growth, with three key areas for breakthroughs: The prevalence of overweight or obesity is rapidly increasing, and is expected to affect nearly 3 billion people globally by 2030. Current weight loss drugs mainly consist of GLP-1 drugs, which have low usage rates, poor compliance, significant weight regain after discontinuation, and issues with loss of lean body mass. Real world studies show that GLP-1 drugs that are more accessible, safe, convenient, and have longer dosing intervals have the potential to improve usage and compliance. Among specific types of drugs, oral, ultra-long acting, and lean body mass-preserving drugs are seen as good breakthrough directions. ASC30 has a significant competitive advantage and great potential for business development: Oral GLP-1 small molecules have multiple advantages, and Lilly's Orforglipron (Orfor) is currently the only oral small molecule to have successfully completed Phase III clinical trials. Among Lilly's oral small molecule drugs, ASC30 is in the second tier globally in terms of development progress, with stronger activity and higher exposure than Orfor, and demonstrating the best effectiveness and safety in Phase I and II weight loss studies. In recent years, there has been a lot of activity in oral small molecule business development, and after disappointing results from Orfor's Phase III weight loss trials, there is increased potential for efficacy improvement, leading to increased demand from multinational corporations. The company believes that ASC30 has superior weight loss data, good safety, and its molecular patents have been granted in the United States, indicating high business development potential. In addition, ASC30 subcutaneous injection, developed based on the Ultra long-acting drugs development platform (ULAP), has a half-life of 46 days and 75 days, far exceeding other ultra-long acting GLP-1 drugs, and has superior safety. ASC47 for lean body mass preservation, completing the weight loss product lineup: In the lean body mass preservation pipeline, Lilly's Bimagrumab (Bima) is progressing rapidly, with ASC47 being the only THR agonist. Phase II clinical results show that combining Bima with semaglutide (Semigeria) enhances weight loss compared to Semigeria alone, significantly reduces lean body mass loss, but there are safety concerns such as muscle spasms. In early phase clinical trials, ASC47 combined with Semigeria showed a significant increase in weight loss compared to Semigeria alone, with lower incidence of gastrointestinal side effects, and also improvement in blood lipids, making it a potentially safer lean body mass-preserving drug. Since October 2025, the company has been aggressively advancing four new pipelines into clinical trials, including oral triple-target peptides, monthly subcutaneous dual-target agonists, insulin receptor agonists, and a compound formulation of the two, filling in mainstream target gaps. The company's new molecules show better weight loss effects in preclinical studies compared to globally leading pipelines, with significant differences in administration method or frequency, and preliminary clinical data will be released by the end of 2026. Risk factors: Pipeline development progress falling short of expectations, authorized transactions falling short of expectations, product launch timing falling short of expectations, increased product competition, lower than expected product sales, and risks relating to the company's long-term profit capabilities.