Our target price of HK$3.5 is derived from a price-to-sales (PS)–based sum-of-the-parts (SOTP) valuation methodology, which is the sum of discounted values of 2x/4x commercialization probability-weighted peak sales of licensed-in/internally-developed innovative candidates, respectively. We assign a discount rate of 11%, with separate discount periods for each product.

We rate Antengene shares as High Risk given its short trading history as well as the company- and sector-specific risk factors. Key risks include: 1) lack of profitability; 2) R&D failures; 3) regulatory risks; and 4) competition. Key upside risks include: 1) better-than-expected globalization progress; and 2) BD collaborations on early-stage pipeline candidates.