Our target price of HK$20 is based on a discounted cash flow (DCF) approach. We consider DCF as an appropriate method for an R&D-driven company currently without profit.  Our DCF analysis factors in our revenue and earnings forecasts out to 2037E; we assume a terminal growth rate of 2.0%, a WACC of 10.4% and a beta of 1.4.

We assign a High Risk rating to the stock based on our Quant rating model given its short listing history and high uncertainty for clinical development. Key risks that could impede the stock from reaching our target price include: 1) Lack of profitability; 2) sales may be worse than expected; 3) ASC30 or ASC47 may fail in clinical trials; 4) geopolitical risks may bring uncertainty to the BD collaborations.