Our target price of HK$2.5 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 2034E; we assume a terminal growth rate of 2.0% and a WACC of 12.7%, with  a beta of 1.5 and a risk-free rate of 4.0%.

Our quant risk rating system ascribes High Risk to the stock for its volatility. We also rate Alphamab Oncology as High Risk given: 1) KN046 missed the OS endpoint in interim analysis for 1L sqNSCLC; 2) development risk of early stage candidates. Key upside risks that may prevent the shares from reaching our target price include: 1) success of KN046 in NSCLC; and 2) better-than-expected progress of other candidates.