Investment Rating - The report maintains a "Buy" rating for Wuxi Biologics [5][17][28] Core Insights - Wuxi Biologics reported a revenue of Rmb 9.95 billion for the first half of 2025, representing a year-on-year growth of 16.1%, and a net profit of Rmb 2.34 billion, which is a 56.1% increase year-on-year [8][14] - The adjusted net profit reached Rmb 2.39 billion, reflecting a 6.2% year-on-year growth, aligning with expectations [8][14] - The blended gross margin increased by 3.7 percentage points to 42.7%, while the adjusted net profit margin rose by 1.2 percentage points to 45.6% [8][14] Revenue Breakdown - Pre-IND service revenue grew by 35.2% year-on-year to Rmb 4.15 billion in the first half of 2025 [9][15] - Revenue from early-phase projects (Phase I & II) declined by 29.7% year-on-year, primarily due to large projects moving to later stages [9][15] - Revenue from Phase III and commercial projects increased by 24.9% year-on-year [9][15] - Revenue from the US market grew by 20.1%, accounting for 60.5% of total revenue, while revenue from Europe and China increased by 5.7% and decreased by 8.5%, respectively [9][15] Order Backlog - The total backlog reached US$ 20.4 billion, a 1.2% year-on-year increase, including a service backlog of US$ 11.4 billion (down 13% year-on-year) and potential milestone fees backlog of US$ 9.0 billion (up 27% year-on-year) [9][15] - The backlog within three years increased by 16% year-on-year to US$ 4.2 billion, representing 21% of the total backlog [9][15] Project Pipeline - The number of new projects added in the first half of 2025 was 86, with over 50% from the US [10][16] - The total number of integrated projects reached 864, including 67 Phase III and 24 commercial projects, indicating potential future revenue growth [10][16] Financial Forecasts - Adjusted net profit forecasts for 2025 and 2026 have been revised down to Rmb 4.90 billion and Rmb 5.50 billion, respectively, with a new forecast of Rmb 6.34 billion for 2027 [10][17] - Revenue projections for 2025, 2026, and 2027 are Rmb 21.38 billion, Rmb 24.64 billion, and Rmb 28.57 billion, respectively, with year-on-year growth rates of 14.49%, 15.23%, and 15.95% [12][19]

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概不負責，對其準確 性或完整性亦不發表任何聲明，並明確表示，概不對因本公告全部或任何部分內容而產生或 因倚賴該等內容而引致的任何損失承擔任何責任。 茲提述(1)藥明合聯招股章程；及(2)本公司日期為二零二四年三月三十一日的 公告，內容有關（其中包括）日期為二零二三年十一月三日的二零二三年連接 子及有效載荷主服務協議，就連接子及有效載荷向藥明合聯集團提供研發及 製造服務，並向藥明合聯集團供應其ADC CRDMO服務使用的相關中間產品。 在行業快速擴張的推動下，市場對本集團ADC CRDMO服務的需求持續大幅 增長。預計對藥明合聯集團服務的需求將進一步增長，因其業務於二零二五 年繼續呈上升態勢。考慮到藥明合聯的強勁表現及藥明合聯集團於截至二零 二五年六月三十日止六個月的最近期未經審核簡明綜合中期業績，預計二零 二三年連接子及有效載荷主服務協議的交易金額於二零二五年將超過其原 定年度上限，因此，建議就二零二三年連接子及有效載荷主服務協議採納經 修訂年度上限。此外，由於二零二三年連接子及有效載荷主服務協議將於二 零二五年十二月三十一日到期，藥明合聯建議訂立 ...

Core Viewpoint - The innovative drug sector is experiencing strong performance due to favorable policies and positive earnings reports, with significant gains in Hong Kong-listed innovative drug stocks [1][2]. Policy Aspects - The National Healthcare Security Administration has introduced a "newly listed drug initial pricing mechanism" to encourage drug research and innovation, marking the first public announcement of this mechanism since last year's consultation [1]. - The mechanism aims to ensure that high-level innovative drugs can achieve returns that correspond to their high investment and risk during the initial listing period [1]. Performance Aspects - In the first half of this year, among 80 listed companies in the innovative drug sector, 34 companies reported year-on-year growth in net profit attributable to shareholders, excluding companies that turned losses into profits or reduced losses [2]. - For instance, Heng Rui Medicine achieved revenue of 15.76 billion yuan, a year-on-year increase of 15.88%, and a net profit of 4.45 billion yuan, up 29.67% [2]. - In the medical device sector, United Imaging Healthcare reported revenue of 6.02 billion yuan, a 12.79% increase, and a net profit of 998 million yuan, up 5.03% [2]. - The continuous optimization of the medical insurance catalog adjustment mechanism by the government has stimulated companies' enthusiasm for innovation, as they see increased chances of their products entering insurance and commercial insurance catalogs [2].

Group 1 - The Hong Kong Innovative Drug ETF (159567) closed with a gain of 2.67% on September 1, with a trading volume of 1.985 billion yuan [1] - The fund was established on January 3, 2024, with a management fee of 0.50% and a custody fee of 0.10% [1] - As of August 29, 2024, the fund's latest share count was 6.686 billion, with a total size of 6.403 billion yuan, reflecting a year-to-date increase of 1591.03% in shares and 1594.74% in size compared to the end of 2023 [1] Group 2 - The current fund manager is Ma Jun, who has managed the fund since its inception, achieving a return of 91.54% during the tenure [2] - The top holdings of the fund include companies such as Innovent Biologics, WuXi Biologics, BeiGene, and others, with significant weightings in the portfolio [2] - The fund's liquidity is strong, with a cumulative trading amount of 34.181 billion yuan over the last 20 trading days, averaging 1.709 billion yuan per day [1]

Investment Rating - The report maintains an "Overweight" rating for the pharmaceutical and biotechnology sector [5] Core Views - The pharmaceutical sector is expected to continue its recovery, with a focus on innovative drugs as the main investment theme. The report highlights a gradual improvement in the industry, with Q2 showing a significant reduction in the decline of revenue and profits compared to Q1 [7][21][19] - The report emphasizes the potential for a turnaround in the industry, driven by policy improvements, demand recovery, and the performance of the CRO/CDMO segments [10][16] Summary by Sections Market Performance - In August 2025, the pharmaceutical and biotechnology sector rose by 2.6%, underperforming the Shanghai and Shenzhen 300 index, which increased by 10.3%. The sector ranked 24th among 31 sub-industries [7][15] - The report notes a mixed performance among sub-sectors, with medical devices and services showing gains, while the pharmaceutical commercial sector declined [15] Financial Performance - In the first half of 2025, the cumulative revenue of pharmaceutical companies decreased by 2.6%, with total profits down by 4.0%. However, Q2 showed a narrowing of declines, with revenue down by only 1.1% and total profits down by 2.9% [21][19] - The report indicates that the CRO/CDMO segments performed well, with significant revenue and profit growth, particularly in Q2 [21][19] Investment Opportunities - The report suggests focusing on innovative drugs, which are seen as having strong growth potential and clear industry trends. It recommends several companies across different categories, including biotech firms transitioning to biopharma and large pharmaceutical companies involved in innovative drug development [9][10][11] - The report also highlights the potential for recovery in the CRO/CDMO segments and suggests that companies in these areas are likely to benefit from improving demand and order recovery [10][16] Key Recommendations - The report lists key companies to watch, including WuXi AppTec, WuXi Biologics, and others, indicating a positive outlook for these firms based on their performance and market position [17][18]

Summary of Key Points Core Viewpoint - As of September 1, a total of 110 stocks reached their 52-week highs, with notable performances from Hejia Holdings (33.33%), International Commercial Settlement (30.00%), and Xinjiang Xinmin Mining (24.16%) [1]. 52-Week Highs - Hejia Holdings (00704) closed at 0.217 with a peak of 0.280, achieving a high rate of 33.33% [1]. - International Commercial Settlement (00147) reached a closing price of 0.430 and a high of 0.455, marking a 30.00% increase [1]. - Xinjiang Xinmin Mining (03833) had a closing price of 1.770 and a peak of 1.850, resulting in a 24.16% high rate [1]. - Other notable stocks include: - Shuoao International (02336) at 22.38% [1] - Sanleaf Bio-B (02197) at 16.00% [1] - Wanka Yilian (01762) at 13.08% [1] 52-Week Lows - INTL Genius (00033) recorded a low rate of -14.89% with a closing price of 0.410 [3]. - Junan Holdings (01559) saw a decline of -14.10%, closing at 0.069 [3]. - Other significant declines include: - Kuangshi Fragrance (01925) at -8.41% [3] - Baida Group Holdings (08179) at -8.33% [3] - Shimao Group (00813) at -7.58% [3]

Group 1 - Pharmaceutical stocks in Hong Kong have shown strong performance, with notable gains in companies such as 加科思-B (up 23.18%), 三叶草生物-B (up 22.09%), and others [1] - The overall performance of Hong Kong pharmaceutical companies in the first half of the year has been robust, with 恒瑞医药 achieving record high revenue and profit, and 翰森制药 exceeding revenue expectations [1] - Upcoming major conferences, including the World Lung Cancer Conference (WCLC) and the European Society for Medical Oncology (ESMO), will showcase research results from innovative domestic drugs [1] Group 2 - 海通国际 maintains a positive outlook on Hong Kong pharmaceutical companies due to their stable cash flow, rich R&D pipelines, and normalizing external licensing revenues [2] - The recent slight pullback in the Hong Kong pharmaceutical sector is attributed to rapid fund rotation, with expectations of short-term fluctuations [2] - The long-term value reassessment logic in the pharmaceutical industry remains unchanged, supported by the engineer dividend and a rich catalyst environment in the innovative drug industry [2]

Group 1 - CRO concept stocks have shown significant gains, with WuXi AppTec (603259) up 6.3% at HKD 114.7, WuXi Biologics (02269) up 6.02% at HKD 35.2, and others like Kanglong Chemical (300759) and Kelaiying (002821) also experiencing notable increases [1] - Dongwu Securities reports that 22 CXO listed companies are expected to see revenue, net profit attributable to shareholders, and net profit excluding non-recurring gains and losses grow by 14.16%, 64.03%, and 24.82% year-on-year for the first half of 2025, respectively [1] - The second quarter of 2025 is projected to show further improvement in revenue and profit growth rates, with expected increases of 15.15% in revenue and 53.58% in net profit attributable to shareholders [1] Group 2 - Xiangcai Securities highlights the active performance of the innovative drug industry chain under the backdrop of national encouragement for innovation, despite ongoing pressures from medical insurance cost control [2] - The establishment of a multi-tiered payment system and the rigid demand for medical services are expected to stabilize and rebound the industry [2] - Companies in the pharmaceutical outsourcing services sector, particularly in ADC CDMO and peptide CDMO for weight loss drugs, are recommended for attention, including WuXi AppTec, Haoyuan Pharmaceutical, and WuXi Biologics [2]

Group 1 - CRO concept stocks have shown significant gains, with WuXi AppTec (02359) up 6.3% to HKD 114.7, WuXi Biologics (02269) up 6.02% to HKD 35.2, and others also experiencing notable increases [1] - Dongwu Securities reports that 22 CXO listed companies are expected to see revenue, net profit attributable to parent, and net profit excluding non-recurring gains and losses grow by 14.16%, 64.03%, and 24.82% year-on-year for the first half of 2025, respectively [1] - The second quarter of 2025 is projected to show further improvement in revenue and profit growth rates, with expected increases of 15.15% in revenue and 53.58% in net profit attributable to parent [1] Group 2 - Xiangcai Securities highlights the active performance of the innovative drug industry chain under the backdrop of national encouragement for innovation, despite ongoing pressures from medical insurance cost control [2] - The establishment of a multi-tiered payment system and the rigid demand for medical services are expected to stabilize and rebound the industry [2] - Companies such as WuXi AppTec, Haoyuan Pharmaceutical, and WuXi Biologics are recommended for attention in the ADC CDMO and peptide CDMO sectors [2]

Group 1 - The China Securities Hong Kong Stock Connect Medical Theme Index (932069) has risen by 2.99%, with notable increases in constituent stocks such as Chunli Medical (01858) up 10.49%, MicroPort Medical (00853) up 7.02%, and Crystal Technology Holdings (02228) up 6.89% [1] - The Hong Kong Medical ETF (159366) has also seen an increase of 2.44% [1] - The China Securities All Index Medical Device Index (H30217) has increased by 1.46%, with significant gains from Ji Min Health (603222) up 9.98%, Hualan Biological Engineering (301093) up 7.81%, and Huatai Medical (688617) up 6.93% [2][3] Group 2 - The FDA has accepted Vibration-Controlled Transient Elastography (VCTE) as an alternative endpoint for assessing liver fibrosis in patients with Metabolic Associated Steatotic Liver Disease (MASH), marking a significant breakthrough in non-invasive diagnostic technology [4] - This advancement is expected to enhance drug development efficiency for MASH and provide growth opportunities for domestic companies in the non-invasive companion diagnostics field [4] - The pharmaceutical and biotechnology sector showed marginal improvement in Q2 2025, with the innovative drug and CXO sectors performing particularly well, as the CXO industry rebounded with a 14% year-on-year revenue increase and a 54% increase in net profit [4] Group 3 - The domestic medical device industry is gradually recovering from an adjustment period, with market demand showing signs of recovery [5] - In Q2 2025, the medical equipment sector experienced a 5.26% year-on-year revenue growth, and the medical consumables sector maintained stable growth [5] - The Hong Kong Medical ETF (159366) focuses on rare medical segment leaders and has a high CXO content, while the Medical Device ETF (159883) is the largest in A-shares, covering various sub-sectors of the medical device industry [5]