Group 1 - The Hang Seng Index fell by 1.07%, down 270 points, closing at 24,906 points, while the Hang Seng Tech Index rose by 0.34% [1] - AI concept stocks showed strong performance, with multiple catalysts for AI applications in the second half of the year, indicating significant investment opportunities [1] - Notable gainers in AI stocks included Meitu Inc. (up 15.26%), Kingdee International (up 11.70%), and Kuaishou-W (up 8.98%) [1] Group 2 - Three-Six Pharmaceutical saw a rise of over 5% due to the overseas potential of SSGJ-707 being linked with Pfizer [2] - Huajian Medical surged over 10% after partnering with BGI to establish an innovative drug intellectual property tokenization fund [2] - Copper stocks declined across the board following Trump's announcement of a 50% tariff on imported semi-finished copper, with Zijin Mining falling by 4.93% [2]

Core Viewpoint - Sanofi Pharmaceutical (01530) has seen its stock price increase by over 160% in the past two months, with a current price of 32.8 HKD and a trading volume of 404 million HKD [1] Group 1: Market Potential - The global licensing agreement between Sanofi Pharmaceutical and Pfizer for the PD-1*VEGF dual antibody SSGJ-707 became effective in July 2025, with a potential market size of 200 billion USD [1] - The PD(L)1 monoclonal antibody market is expected to reach 100 billion USD by 2029, indicating significant growth potential in oncology treatments [1] Group 2: Sales Forecast - The peak sales for SSGJ-707 in China is projected to reach between 6.3 billion to 8.4 billion CNY, while global peak sales are estimated to be between 11.3 billion to 13.4 billion USD [2] - Pfizer's oncology business focuses on breast cancer, hematological malignancies, thymic tumors, and bladder cancer, with plans to combine SSGJ-707 with existing drugs to target over 500,000 first-line patients in Europe and the US [2]

Core Viewpoint - The company is initiating coverage on Sangfor Technologies with an "Outperform" rating and a target price of HKD 45.5, highlighting its strong market position and growth potential in the pharmaceutical sector [1] Group 1: Market Position and Financial Performance - The company has a leading market share in its core products, including TPO (67%), EPO (42%), and the hair loss treatment brand Mandy (over 70%), which supports stable cash flow and growth [1][2] - The company is expected to achieve robust revenue growth, with projected peak sales from its innovative drug pipeline reaching between RMB 7 billion to 10 billion [2] Group 2: Innovation Pipeline - The company has over 30 drug candidates in development, with four innovative drugs currently undergoing NDA approval, which are expected to contribute to future revenue [2] - Key products in the pipeline, such as SSS06 (long-acting EPO) and IL-17A monoclonal antibody, are anticipated to have significant sales potential [2] Group 3: Strategic Partnerships - The global licensing agreement with Pfizer for SSGJ-707 (PD-1×VEGF dual antibody) is expected to enhance the company's global valuation, with peak global sales projected to reach USD 11.3 billion to USD 13.4 billion [3][4] - The partnership with Pfizer is expected to leverage their existing oncology portfolio, potentially expanding the market reach of SSGJ-707 [4] Group 4: Financial Projections - Revenue forecasts for the company from 2025 to 2027 are projected at RMB 19.18 billion, RMB 11.90 billion, and RMB 14.05 billion, with net profits of RMB 9.36 billion, RMB 2.73 billion, and RMB 3.33 billion respectively [4]

Core Viewpoint - Sangfor Pharmaceuticals (01530) has seen a significant stock increase of over 160% in the past two months, with a current price of 32.8 HKD and a trading volume of 404 million HKD [1] Group 1: Market Potential - The global licensing agreement between Sangfor Pharmaceuticals and Pfizer for the PD-1*VEGF dual antibody SSGJ-707 is set to take effect in July 2025, with a potential market size of 200 billion USD [1] - The PD(L)1 monoclonal antibody market is expected to reach 100 billion USD by 2029, indicating substantial growth in cancer treatment standards [1] Group 2: Sales Forecast - The peak sales potential for SSGJ-707 in China is estimated to reach between 6.3 billion to 8.4 billion CNY, while the global peak sales potential is projected to be between 11.3 billion to 13.4 billion USD [2] - Pfizer's oncology business focuses on breast cancer, hematological malignancies, thymic tumors, and bladder cancer, with plans to combine SSGJ-707 with existing drugs to cover over 500,000 frontline patients in Europe and the US [2]

Group 1 - The stock of Sanofi Pharmaceutical (01530) has increased over 3%, with a cumulative rise of more than 160% over the past two months, currently trading at 32.8 HKD with a transaction volume of 404 million HKD [1] - Haitong International's report indicates that the global licensing agreement with Pfizer for the PD-1*VEGF dual antibody SSGJ-707 became effective in July 2025, with a potential market coverage of 200 billion USD [1] - The PD(L)1 monoclonal antibody has become the standard treatment for global oncology indications over the past decade, with the overall market expected to reach 100 billion USD by 2029 [1] Group 2 - The peak sales for SSGJ-707 in China is projected to reach 6.3 to 8.4 billion CNY, while the global peak sales are expected to be between 11.3 to 13.4 billion USD [2] - Pfizer's oncology business focuses on breast cancer, hematological malignancies, thymic tumors, and bladder cancer, with an emphasis on small molecules, dual antibodies, and ADC drugs [2] - Pfizer is expected to leverage SSGJ-707 in combination with its existing drugs to cover over 500,000 frontline patients in Europe and the US, and to expedite the development of potential indications not yet in Phase III clinical trials [2]

1. Report Industry Investment Rating No relevant information provided. 2. Core View of the Report In Q2 2025, the Hong Kong stock market showed a V-shaped trend of sharp decline followed by recovery. The returns of various types of Hong Kong stock funds were positive, and the scale and share of Hong Kong stock funds increased. The stock positions and Hong Kong stock positions of Hong Kong stock funds increased slightly. In terms of heavy - position sectors, there were increases in medicine, finance, and technology, and a decrease in consumption. Among heavy - position stocks, pharmaceutical stocks showed obvious increases, while some Internet platform leaders declined. The scale of some fund companies increased significantly [3]. 3. Summary According to the Table of Contents 3.1 Hong Kong Stock Fund Performance and Scale Development - **Performance**: In Q2 2025, among the main indices tracked by Hong Kong stock funds, the Hang Seng Index and Hang Seng China Enterprises Index rose by 4.42% and 1.9% respectively, outperforming the CSI 300. The Hang Seng Technology Index fell by - 1.70%. The leading indices in terms of gains were the China Securities Hong Kong Stock Connect Innovative Drug Index (25.6%) and the China Securities Hong Kong Stock Connect Non - Banking Financial Index (21.8%). The average returns of various types of Hong Kong stock funds were positive, with "Hong Kong QDII - Active" leading with an average increase of 10.22% [3]. - **Scale and Share**: As of the end of Q2, the total scale of Hong Kong stock funds was 619.134 billion yuan, a quarter - on - quarter increase of 13.54 pct; the total share was 623.83 billion shares, a quarter - on - quarter increase of 7.45 pct. In Q2, the number of newly issued funds was 28, an increase from the previous quarter, but the newly issued scale was 7.517 billion yuan, lower than the previous quarter [3]. 3.2 Hong Kong Stock Fund Positioning Characteristics - **Stock and Hong Kong Stock Positions**: In Q2, the average stock position was 92%, a slight increase from the previous quarter. The stock position of index funds was higher than that of actively managed funds. The average Hong Kong stock position was 85%, an increase from the previous quarter, and the gap between index funds and actively managed funds narrowed in Q2 [3]. - **Heavy - Position Sector Allocation**: Technology (39%) and consumption (25%) ranked first and second in terms of proportion. The sectors with more increases were medicine (+2.27 pct), finance (+2.25 pct), and technology (+1.67 pct), while consumption (-5.97 pct) was significantly reduced [3]. - **Heavy - Position Stock Industry Distribution**: Media ranked first for four consecutive quarters, with a quarter - on - quarter increase of 0.66 pct in Q2; Commerce and Retail ranked second for four consecutive quarters, with a quarter - on - quarter decrease of 3.5 pct; Electronics became the third for two consecutive quarters, with a quarter - on - quarter increase of 0.88 pct. The sector with the highest quarter - on - quarter increase was Medicine and Biology, accounting for 12.42% and a quarter - on - quarter increase of 2.27 pct [3]. - **Individual Stock Level**: The "herding effect" of funds on leading stocks decreased. In terms of the number of funds holding heavy - position stocks, Xiaomi rose one place to become the third, and Sino Biopharmaceutical and Pop Mart entered the top 10 for the first time in four quarters. The concentration of heavy - position stocks decreased, and the proportion of large - cap stocks with a market value of over 80 billion yuan rose to 90% [3]. 3.3 Hong Kong Stock Fund Company Analysis - **Scale Ranking**: In Q2, the top 5 fund companies in terms of scale were Huaxia, E Fund, Fullgoal, GF, and ICBC Credit Suisse, and their total scales increased to varying degrees compared with the previous quarter. Huaxia's Hong Kong stock product scale exceeded 10 billion yuan, and ICBC Credit Suisse's scale increased by 35.45 pct quarter - on - quarter. Among the top 20, the most obvious expansion was by Huatai - PineBridge, with a quarter - on - quarter increase of 91.13 pct, rising four places to the seventh [3]. 3.4 Performance - Oriented Hong Kong Stock Fund Positioning Display and Quarterly Report Views - **Positioning Display**: Some actively managed Hong Kong stock funds in Q2 2025 held stocks that were among the top 50 in terms of gains, such as Rongchang Biologics, Sino Biopharmaceutical, and Innovent Biologics [54]. - **Quarterly Report Views**: Fund managers generally expressed optimism about the development prospects of sectors such as innovative drugs, new consumption, and technology Internet, and adjusted their investment strategies according to market conditions [57][58].

Core Insights - The innovative drug sector has seen significant growth this year, with the China Securities Hong Kong Stock Connect Innovative Drug Index rising over 124% since the beginning of the year, and the Shanghai Stock Exchange Sci-Tech Innovation Board Innovative Drug Index increasing over 80% [2][3] - There is a growing divergence in opinions among fund managers regarding the valuation of innovative drugs, with some expressing caution and suggesting profit-taking, while others remain optimistic about future growth [2][11] Fund Performance - As of July 29, 2023, 16 funds have reported returns exceeding 100%, all heavily invested in the innovative drug sector [5] - The fund managed by Zhang Wei, Huatai-PineBridge Hong Kong Advantage Selection, leads with a 139% return [5] - The total scale of funds focused on innovative drugs has increased from 111 billion yuan to 366 billion yuan this year, marking a growth of over 200% [5] Market Dynamics - The innovative drug sector has attracted significant investor interest, with the scale of the Huatai-PineBridge National Index Hong Kong Stock Connect Innovative Drug ETF rising from less than 700 million yuan to nearly 8 billion yuan in the first half of the year [5] - The innovative drug index has seen a net inflow of 172 billion yuan, making it one of the highest net buying sectors this year [5][6] Valuation Concerns - Some fund managers, like Wan Minyuan from Rongtong Fund, have raised concerns about the high valuations of A-share innovative drug stocks, suggesting that many companies may have reached their peak valuations [11][12] - There is a belief that the current market is experiencing a bubble, with excessive speculation on early-stage clinical drugs [11][12] Long-term Outlook - The innovative drug sector is viewed as a critical area for investment, with expectations of continued growth driven by technological advancements and supportive policies [10][14] - Fund managers emphasize the importance of selecting companies with strong technological capabilities and sustainable clinical value to navigate potential market volatility [2][14]

Group 1 - The overall market has seen significant growth in 2023, with 23 funds achieving over 100% returns year-to-date, predominantly in the pharmaceutical sector [1][3] - Among these, 17 funds are focused on innovative drugs, making up over 70% of the "doubling funds," with the top performers including 汇添富香港优势精选混合 (QDII) C at 139.12% [4][6] - Over the past year, a total of 134 funds have doubled their returns, with the top fund, 中信建投北交所两年定开混合 A, achieving a remarkable 207.48% return [4][5] Group 2 - The pharmaceutical sector remains a focal point for investment, with analysts optimistic about the innovative drug market and its potential for continued growth [6][7] - Key stocks in high-performing funds include 三生制药 and 科伦博泰生物-B, which have seen substantial price increases of 428.9% and 138% respectively [6][7] - The outlook for the third quarter suggests ongoing opportunities in the innovative drug space, driven by global collaborations and significant clinical data releases [6][7]

Core Insights - The Chinese innovative drug sector is entering a phase of explosive growth, with 43 innovative drugs approved in the first half of the year, marking a 59% year-on-year increase and setting a historical record [1][3] - The majority of these drugs (40) are developed by Chinese companies, indicating a strong domestic capability and the effective transformation of policy benefits into industry growth [1][3] - China's innovative drug R&D pipeline accounts for about 25% of the global total, with approximately 3,000 clinical trials conducted annually, positioning China as a significant player in the global innovative drug landscape [1][6] Approval Efficiency - The approval process for innovative drugs has seen significant improvements, with the average approval time for new drugs expected to reach 8.8 months by mid-2025, nearing FDA standards [5] - In the first half of this year, 18 out of 43 approved innovative drugs were anti-tumor medications, representing about 40% of the total [3][4] - The rapid approval of innovative drugs is attributed to the optimization of the review and approval system, with a record of 11 domestic innovative drugs approved in a single day [4][5] International Expansion - By 2025, the total amount of License-out agreements for innovative drugs is projected to approach $66 billion, surpassing the total business development transaction amount for 2024 [7] - The NewCo model has emerged as a mainstream approach for Chinese innovative drug companies to enter the European and American markets, allowing for independent operations that meet international compliance requirements [7][8] - Chinese companies are increasingly participating in global clinical trials, with 39% of global oncology trials being conducted by Chinese firms, a significant increase from previous years [6] Local Ecosystem Development - The establishment of a robust local innovation ecosystem is crucial for the sustainable development of China's innovative drugs, emphasizing the need for collaboration across various sectors [2][10] - The Chinese market provides a solid foundation for international expansion, but over-reliance on external capital and markets poses potential risks [10] - Recent policy initiatives, such as the establishment of a commercial insurance directory for innovative drugs, aim to enhance the payment mechanisms for high-value drugs, supporting their market entry [11][12]

Investment Rating - The report initiates coverage on 3S BIO with an "OUTPERFORM" rating and a target price of HK$45.50, indicating a positive outlook for the company's stock performance [1][2][7]. Core Insights - The company's core business is robust, with innovative products expected to drive future growth. Key products include TPO, EPO, and the leading hair loss treatment brand Mandi, which dominate their respective markets [2][9]. - The company has a strong pipeline with over 30 projects in development, including four innovative drugs currently undergoing NDA approval, which are anticipated to contribute significantly to revenue growth [2][12]. - The partnership with Pfizer for the PD-1×VEGF dual antibody SSGJ-707 is expected to reshape the global valuation landscape, with peak global sales projected to reach between US$11.3 billion and US$13.4 billion [3][6][31]. Summary by Sections Business Overview - 3S BIO has established itself as a leading biopharmaceutical company in China, focusing on nephrology, hematology, oncology, and other therapeutic areas. The company has shown steady revenue growth from RMB 55.9 billion in 2020 to an estimated RMB 91.1 billion in 2024 [9][12]. - The company’s core products, including TPO and EPO, maintain leading market shares of 67% and 42% respectively, ensuring a solid cash flow foundation [2][11]. Product Pipeline - The innovative pipeline includes promising candidates such as SSS06 (long-acting erythropoietin) and IL-17A monoclonal antibody, with peak sales potential estimated at RMB 7-10 billion [2][12]. - The company has also introduced new products in the consumer healthcare sector, targeting the growing market for hair loss treatments, with Mandi achieving sales of RMB 1.34 billion in 2024 [15]. Strategic Partnerships - The collaboration with Pfizer for SSGJ-707, a PD-1×VEGF dual antibody, is a significant milestone, with Pfizer paying US$1.25 billion upfront and potential milestone payments of US$4.8 billion, highlighting the product's anticipated market potential [31][33]. - The dual antibody is positioned to capture a substantial share of the oncology market, projected to exceed US$200 billion, as it demonstrates superior efficacy compared to existing PD-1 monoclonal antibodies [18][22]. Financial Projections - Revenue projections for 2025-2027 are estimated at RMB 19.18 billion, RMB 11.90 billion, and RMB 14.05 billion respectively, with net profits expected to reach RMB 9.36 billion, RMB 2.73 billion, and RMB 3.33 billion [7][9]. - The report employs a discounted cash flow (DCF) model with a WACC of 10% and a perpetual growth rate of 3.5%, supporting the target price of HK$45.50 per share [7].