3SBio reported 1H24 revenue of RMB4,389 mn, up 16% YoY and in line with our forecast, accounting for 49% of our full-year estimate. Attributable net profit increased by 11% YoY to RMB1,090mn, reaching 58% of our full-year estimate. Attributable net profit margin declined by 1.1 ppts to 24.8% due to higher R&D expense rate and effective income tax rate. In 1H24, 3SBio accelerated its R&D endeavors, including a significant upfront payment of RMB45mn to Hybio Pharmaceutical for the exclusive license of semaglutide Injection for obesity indication. Additionally, the Company allocated a total of HK$860mn towards dividends and share repurchases. These cross-border transactions caused the heightened effective tax rate in 1H24.
TPIAO delivered strong revenue growth. In 1H24, TPIAO's sales grew 22.6% YoY to RMB2,476mn, accounting for 56% of 3SBio's total revenue. TPIAO has solidified its leadership in China's thrombocytopenia treatment market, expanding its market share from 65% in 2023 to 66% in 1H24. 3SBio continued to broaden the indications of TPIAO, with advancements including the NMPA's approval in Apr 2024 for its use in persistent or chronic primary ITP in children and adolescents. The Phase III study for TPIAO in CLDT patients awaiting invasive surgery met its primary endpoints in July 2024, underpinning TPIAO's potential for further indication expansion. In addition to TPIAO, other key products also showed solid performance in 1H24. The sales of rhEPO products (including EPIAO and SEPO)/ Yisaipu/ Cipterbin, increased 11.3%/ 9.5%/ 48.9% YoY to RMB516mn/ RMB329mn/ RMB162mn in 1H24, respectively.
Diversified product portfolio fuels Mandi's growth. 3SBio continued to expand its hair growth product matrix. In Jan 2024, Mandi (5% minoxidil) Foam was approved as OTC drug, which is propylene glycol-free and tailored for skin sensitive population. Despite subdued consumer sentiment, Mandi's sales grew 10% YoY to RMB550mn in 1H24. Given the substantial untapped potential in China's hair loss market, we expect sustained growth for Mandi.
Expect rich catalysts from innovative. The long-acting EPO SSS06 for anemia in chronic renal failure may receive approval in 2025E (NDA accepted for review in July 2024). The Phase III studies of TPIAO for CLDT and 608 (IL- 17) for moderate-to-severe PsO both reached the primary endpoints and may submit NDAs in 2024E. Clascoterone (WS204), the world's first marketed topical androgen receptor for acne treatment, is currently recruiting patients for the phase III bridging clinical trial. We expect Clascoterone to complete the clinical trial and submit NDA in 2025E. Phase III studies for 613 (IL-1β) for acute gout arthritis and 611 (IL-4R) for adult AD are underway, with NDAs expected in 2025E and 2026E, respectively.
Maintain BUY. We maintain our earnings forecasts and expect its revenue to increase at a CAGR of 11.1% from 2023-2026E, and attributable net profit to grow at a CAGR of 13.3% from 2023-2026E. We derive our TP of HK$9.46 based on a 9-year DCF model (WACC: 11.1%, terminal growth rate: 2.0%).
