CMB International: maintains a "buy" rating on SBP GROUP (01177) with a target price of HK$8.70.

Zhaojin International released a research report stating that it maintains a "buy" rating for SBP GROUP (01177) with a DCF target price of 8.70 Hong Kong dollars (WACC: 9.98%, perpetual growth rate: 2.0%). To reflect the authorized transaction with AZ, the bank has raised the performance growth rate of the company in 2026E, expecting a year-on-year revenue growth of 17.8%/4.0%/9.2% in 2026E/27E/28E (non-BD revenue: 10.5%/10.0%/9.2%), with adjusted net profit attributable to shareholders increasing by 13.3%/1.0%/10.6%. Zhaojin International's main points are as follows: SBP GROUP announced the authorization of its PDE3/4 inhibitor TQC3721 to AstraZeneca/AZ for a down payment of 200 million US dollars. AZ will obtain the exclusive license for the development, production, and commercialization of the product outside of China, as well as a global equity interest in certain specific development programs. This is the second authorization transaction reached by the company with a multinational pharmaceutical company (MNC) in 2026. In February of this year, the company authorized Rovatiximab to Sanofi for an initial payment of 135 million US dollars. The consecutive global authorizations fully demonstrate SBP GROUP's internal research and development innovation capabilities, and the bank expects authorization transactions to become a common occurrence for the company in the future. The second-largest PDE3/4 inhibitor in the world has successfully partnered with the leading respiratory disease company in the world. The company will receive an initial payment of 200 million US dollars, a maximum of 1.7 billion US dollars in milestone payments, and a double-digit sales share. TQC3721 is currently undergoing a Phase 3 clinical trial for COPD in China, with global development progress second and first in China. In addition, the development of the more commercially viable powder inhalation formulation is leading, with TQC3721 powder inhalation completing Phase 2 clinical trials in China, ranking second globally. AZ is the largest pharmaceutical company in the world in the respiratory field, with total respiratory/immunology revenue of 8.87 billion US dollars in 2025 (most of which is for respiratory disease drugs). It currently has over 15 respiratory products, with four generating annual sales exceeding one billion US dollars (such as budesonide/formoterol with sales of 2.89 billion US dollars in 2025), and strong research and commercialization capabilities. AZ's respiratory pipeline does not currently include inhalation drugs related to the PDE3/4 target, and the existing core products (including biologics and inhalants) can complement PDE3/4 inhibitor, with the help of AZ's global research and commercialization network, to achieve optimal value release. TQC3721 has the potential to be best-in-class globally. The company presented the results of the Phase II clinical trial of TQC3721 at the European Respiratory Society Meeting in 2025: after 4 weeks of treatment with TQC3721, severe COPD patients with moderate to severe COPD saw a peak improvement of 100ml/147ml in FEV1 compared to the placebo group in the 3mg/6mg groups, and in the LAMA and LABA/LAMA subgroups, the FEV1 peak in the 6mg group was 239ml/109ml higher than the placebo group. It is worth noting that 20% of patients in the TQC3721 clinical trial used LAMA or LABA (Group A), 70% used LABA and LAMA simultaneously (Group B), and 10% used LABA, LAMA, and ICS triple therapy (Group E). In comparison across studies, the clinical trials of the competitorin somephin only included patients in Group A. TQC3721 covers a wider range of populations, and FEV1 improvements and SGRQ scores are superior to the in somephin group. The company's domestic commercialization strength is once again recognized by MNCs. In addition, SBP GROUP has reached a cooperation agreement with GSK to obtain the commercialization rights for the latter's two blockbuster respiratory disease drugs (fluticasone umike inhalation powder and umeclidinium vilanterol inhalation powder) in mainland China. This is the second collaboration between the two parties since introducing the hepatitis B drug bepiravirsen from GSK in May of this year, indicating MNCs' recognition of SBP GROUP's commercialization capabilities.