"One day of significant gains, followed by three consecutive days of decline." When will the stock price of HANSOH PHARMA (03692) unexpectedly return to HKD 40?

After market close on August 26, HANSOH PHARMA (03692) disclosed its mid-year results for 2026. During the reporting period, the company achieved revenue of approximately 8.304 billion yuan, representing a year-on-year increase of 11.7%; the net profit for the period came in at approximately 4.258 billion yuan, a year-on-year increase of 35.8%. Notably, the revenue from the companys innovative drugs reached 7.092 billion yuan, a year-on-year increase of 15.4%, accounting for 85.4% of total revenue. Specifically, the sales revenue of innovative drug products grew by 21.6% year-on-year. Consequently, major international banks including Morgan Stanley, JPMorgan Chase, Goldman Sachs, Citigroup, and Lyon raised their ratings for HANSOH PHARMA to Buy, Overweight, or Outperform in their updated research reports, increasing their price target to a range of 40-55 Hong Kong dollars, with the highest target price being 52.7 Hong Kong dollars, indicating a 66.04% premium over HANSOH PHARMA's closing price of 31.74 Hong Kong dollars on August 26. Following the better-than-expected performance and the unanimous positive outlook from international banks, HANSOH PHARMA's stock price opened higher and surged, ultimately closing with a significant increase of 16.01% on August 27, peaking at 36.94 Hong Kong dollars during the day. Transformation and Exceeding Expectations From the half-year report, HANSOH PHARMA's performance has undoubtedly exceeded market expectations. Citigroup noted in its latest research report: HANSOH PHARMA's performance in the first half surpassed expectations, with revenue growing year-on-year by 11.7% to 8.3 billion yuan (the same below), which is 12% and 4% higher than the bank's and market consensus expectations, respectively; net profit grew by 35.8% year-on-year to 4.26 billion yuan, exceeding the bank's by 68% and the market consensus by 44%. The better-than-expected revenue was mainly driven by strong drug sales and above-expected BD income, while the net profit exceeded expectations, largely benefiting from a one-time investment gain of 631 million yuan and a significant reduction in expense ratio. In terms of revenue, the most notable highlight of HANSOH PHARMA's financial report is the increasing proportion of innovative drug revenue, which has risen significantly from 18% in 2020 to the current 85.4%. Among this, revenue from the oncology business reached 5.473 billion yuan, accounting for 65.9% of total revenue for the period; non-oncology business revenue was 2.831 billion yuan, accounting for 34.1%. However, it is worth mentioning that while HANSOH PHARMA's proportion of innovative revenue is steadily increasing, its growth remains highly dependent on its core product, Amivantamab. The financial report indicates that revenue from the anti-tumor product Amivantamab reached 5.473 billion yuan, making up 65.9% of total revenue for the period. Compared to this core product, HANSOH PHARMA's other commercialized products in areas such as autoimmunity, infectious diseases, nephrology, and metabolism are still in the commercialization ramp-up stage, suggesting that Amivantamab may continue to strongly support the company's performance in the short term. Although the company has set a long-term target of achieving 8 billion yuan in revenue from Amivantamab by 2030, it remains to be seen whether it can maintain its market advantage given the increasing number of players in the domestic third-generation EGFR-TKI arena and the regular price cuts under medical insurance. In addition, the company generated other revenue of 1.318 billion yuan during the reporting period, a substantial year-on-year increase of 127.9%, mainly from the fair value changes of life sciences equity investments, including a one-time investment gain of approximately 631 million yuan. Excluding this investment gain and other BD income, the companys core operating profit grew by about 19%, while pure product sales revenue from innovative drugs increased by 21.6% year-on-year. This performance reflects a significant change in the companys revenue structure and validates the achievements of its recent innovation transformation. Moreover, the "BD income" mentioned in Citigroup's report is another highlight of HANSOH PHARMAs financial report. The revenue includes upfront payments from the BD of clinical-stage molecules, positively impacting the apparent growth rate of the companys revenue. As of now, HANSOH PHARMA has cumulatively achieved overseas authorization for seven innovative drugs, collaborating with internationally renowned pharmaceutical companies such as GSK, MSD, and Regeneron, with a total deal amount exceeding 12 billion U.S. dollars. In June of this year, HANSOH PHARMA reached exclusive overseas rights for its IL-23 receptor antagonist HS-20118 (AVR-001) with Avere Therapeutics, with a total transaction amount exceeding 2.3 billion U.S. dollars. In Citigroup's report, it was highlighted that the company's net profit performance exceeded expectations not only due to the 631 million yuan one-time investment gain but also because of the significant reduction in the company's expense ratio. In terms of operational efficiency, HANSOH PHARMA's cost reduction and efficiency enhancement results are also apparent. After optimizing costs, the companys gross profit margin increased from 91.1% in the same period last year to 91.9%; on the expense side, the companys expense structure continued to improve, maintaining R&D expenses at a year-on-year growth of 20.7% to 1.739 billion yuan, while the selling expense ratio decreased from 24.5% to 22.4%, and management expenses decreased by 4.8% year-on-year to 326 million yuan. The double-digit growth in R&D investment further corroborates HANSOH PHARMAs accelerated input and output in the innovative drug field. As a biopharmaceutical company that has successfully transformed and continues to innovate, HANSOH PHARMA maintained a net cash inflow from operating activities of 2.337 billion yuan and cash and bank deposits of 37.383 billion yuan during the reporting period, providing crucial support for the company's subsequent innovative research and development and global commercialization. Can the stock price rise above 40 Hong Kong dollars again? Although HANSOH PHARMAs stock price surged by 16% the day after this financial report was disclosed, when viewed over a longer timeframe, since reaching a peak of 44.02 Hong Kong dollars on December 12 last year, the stock price has not surpassed this high since January 15 this year, and after forming an M top, the companys stock price fell by over 20% from January to March, with core driving factors presenting multidimensional influences. Firstly, the company's capital operations prompted a strong market reaction. On January 27, HANSOH PHARMA announced the issuance of 4.68 billion Hong Kong dollars in zero-coupon convertible bonds, with an initial conversion price at a 42.6% premium. However, the final issuance scale approached the original plan limit, raising concerns among some market investors about equity dilution and the companys cash flow management ability. Secondly, the Hong Kong stock pharmaceutical sector was under overall pressure at the time, and as a constituent stock, HANSOH PHARMA was affected by systemic risks. During the same period, there was a consistent net outflow from the Hong Kong Stock Connect innovative drug ETF, indicating a decrease in market risk appetite. Under the resonance of multiple factors, the companys stock price dropped by 28.56% within two months, reflecting the market's rebalancing of HANSOH PHARMAs short-term capital operations and long-term innovation returns. From April to June of this year, the company's stock price was again impacted by a correction in the Hong Kong Stock innovative drug sector, with a decline of 27.44% from April 24 to June 9. After two rounds of declines, HANSOH PHARMA's stock price had dropped to a low of 27.86 Hong Kong dollars on June 9. However, after June 9, HANSOH PHARMA's stock price began to move away from the lower Bollinger Band, showing a trend of rebound with fluctuations, even temporarily rising to the upper Bollinger Band at the end of June and early July. The reason for this was the warming of the Hong Kong stock innovative drug market. With favorable conditions such as the initial review of the medical insurance catalog, accelerated BD activities among domestic innovative drug companies, and over a hundred drug companies in both markets initiating a repurchase trend, the Hang Seng Medical Healthcare Index rose by 9.37% and 9.35% in July and August, respectively, while HANSOH PHARMA also rose by 9.38% and 9.82% during the same periods. Compared to some high-growth, high-elasticity drug companies in the market, HANSOH PHARMA's stock price performance leaned more toward steady growth. Following the disclosure of this financial report, HANSOH PHARMA's stock price also surged by 16% only on August 27; however, from August 28 to September 1, the stock price underwent three consecutive declines, reflecting a divergence in investor sentiment regarding the company's current valuation performance. This, on one hand, reflects market investors' recognition of HANSOH PHARMAs rising share of innovative drug revenue, steadily improving sales efficiency, and abundant cash reserves. On the other hand, it may indicate a conservative view among investors regarding the uncertain future growth of its core products and the realization of subsequent innovative pipelines. In this context, for HANSOH PHARMA to achieve a stock price return to 40 Hong Kong dollars in the short term, it may need to wait for a sustained market recovery or for the catalyst of subsequent heavyweight products.