Core Viewpoint - The pharmaceutical research and development outsourcing company, Zhaoyan New Drug, reported a significant decline in revenue for the first half of 2025, but managed to turn a profit in net income and net profit after deducting non-recurring items, indicating a potential recovery despite ongoing challenges in its laboratory services business [1][3][6]. Financial Performance - In the first half of 2025, Zhaoyan New Drug achieved revenue of approximately 669 million yuan, a year-on-year decrease of 21.28% [1]. - The company reported a net profit attributable to shareholders of 60.93 million yuan and a net profit of 23.05 million yuan after deducting non-recurring items, marking a turnaround from previous losses [1]. - The laboratory services business contributed a net profit of -97.18 million yuan, a decline of 537.54% compared to the previous year, indicating ongoing price competition in this segment [3]. Business Structure and Market Position - Zhaoyan New Drug is recognized as a leader in non-clinical safety evaluation services within the CRO (Contract Research Organization) sector, primarily focusing on preclinical drug development [5]. - The company has faced challenges due to significant losses related to biological assets, particularly concerning the management of laboratory animals, but these pressures appear to be easing [5][6]. Historical Context and Future Outlook - The company experienced a peak in performance in 2022, coinciding with the end of a significant growth period in the domestic biopharmaceutical industry [9][11]. - The sales net profit margin for Zhaoyan New Drug was 47.32% in 2022, but has since dropped to 16.48% in 2023 and 3.46% in 2024, with a mere 9.11% in the first half of 2025, indicating a need for substantial improvement in profitability [11].

Group 1 - The Hong Kong biotechnology stocks experienced a collective decline, with notable drops in several companies [1] - WuXi AppTec (02126) saw a decrease of 12.95%, closing at 4.840 [2] - BioNTech (06952) fell by 12.53%, with a latest price of 13.750 [2] Group 2 - Other companies such as Valiant (09887) and Beihai Kangcheng (01228) also reported significant declines of 9.93% and 9.75% respectively [2] - The decline extended to companies like Saint Noble (02257) and MIRXES (02629), which dropped by 9.64% and 8.43% [2] - Overall, the biotechnology sector is facing downward pressure, impacting multiple firms [1]

Core Viewpoint - The company is experiencing a phase of performance pressure due to industry cyclicality, but there are signs of order growth and potential improvement in financial results in the future [3]. Financial Performance - In the first half of 2025, the company achieved operating revenue of 669 million yuan, a year-on-year decline of 21.29%. The net profit attributable to the parent company was 61 million yuan, marking a return to profitability, while the net profit excluding non-recurring items was 23 million yuan, also indicating a return to profitability [1]. - In Q2 2025, the company reported operating revenue of 381 million yuan, a year-on-year decline of 27.32%. The net profit attributable to the parent company was 20 million yuan, down 80.67%, and the net profit excluding non-recurring items was -2.61 million yuan [1]. - The company's non-clinical drug research services generated revenue of 639 million yuan in H1 2025, down 21.07% year-on-year, while clinical services generated 29 million yuan, down 26.82% [2]. Profitability Analysis - The laboratory services segment faced significant profit pressure, contributing a net loss of approximately 970 million yuan in H1 2025, a decline of 537.54% year-on-year, primarily due to increased competition leading to a drop in gross margin (24.03%, down 6.34 percentage points) [2]. - The company’s financial management income contributed approximately 320 million yuan to net profit, while the fair value changes of biological assets contributed about 880 million yuan, likely due to a slight increase in the price of experimental monkeys [2]. Order Trends - The total order amount on hand for the company in H1 2025 was approximately 2.3 billion yuan, showing a recovery from about 2.2 billion yuan in Q1 2025. New orders signed in H1 2025 amounted to approximately 1.02 billion yuan, a significant increase from about 900 million yuan in H1 2024 [2]. International Strategy - The company is focusing on expanding its overseas market, achieving operating revenue of 252 million yuan from international operations in H1 2025, a year-on-year increase of 7.13%, with overseas revenue accounting for 37.69% of total revenue [4]. - Over the past two and a half years, the company has signed nearly 500 foreign application projects, with over 90% being dual submissions in China and the U.S. The company has obtained various international industry qualifications to support its international business [4]. Profit Forecast - The company forecasts operating revenues of 1.812 billion yuan, 2.087 billion yuan, and 2.406 billion yuan for 2025, 2026, and 2027, respectively. The net profits attributable to the parent company are expected to be 230 million yuan, 296 million yuan, and 367 million yuan for the same years, with corresponding diluted EPS of 0.31 yuan, 0.40 yuan, and 0.49 yuan [5].

Group 1 - The stock price of Zhaoyan New Drug fell by 5.53% on August 28, closing at 30.21 yuan per share, with a trading volume of 408 million yuan and a turnover rate of 2.08%, resulting in a total market capitalization of 22.642 billion yuan [1] - Zhaoyan New Drug Research Center Co., Ltd. is located in Beijing and was established on February 25, 1998. The company went public on August 25, 2017, and primarily engages in non-clinical safety evaluation services for drugs and the sale of experimental animals and related products [1] Group 2 - According to data, one fund under Rongtong Fund holds a significant position in Zhaoyan New Drug. The Rongtong Healthcare Industry Mixed A/B Fund (161616) held 1.2568 million shares in the second quarter, accounting for 3.25% of the fund's net value, ranking as the tenth largest holding [2] - The Rongtong Healthcare Industry Mixed A/B Fund was established on July 26, 2012, with a current scale of 660 million yuan. Year-to-date, it has achieved a return of 18.22%, ranking 3780 out of 8190 in its category, and a one-year return of 31.5%, ranking 4228 out of 7966 [2] - The fund managers, Wan Minyuan and Liu Xiyang, have different tenures and performance records. Wan Minyuan has a tenure of 9 years and 5 days, managing assets totaling 4.223 billion yuan, with the best return of 156.05% and the worst return of -17.58% during his tenure. Liu Xiyang has been managing 814 million yuan for 1 year and 167 days, with a best return of 1.41% and a worst return of 0.98% [2]

Core Viewpoint - Zhaoyan New Drug (06127) reported a significant decline in revenue and gross profit for the first half of 2025, primarily due to increased competition leading to price reductions, while net profit turned positive due to changes in the fair value of biological assets [1] Financial Performance - Revenue for the first half of 2025 was approximately 669 million yuan, a year-on-year decrease of 21.3% [1] - Gross profit was about 105 million yuan, reflecting a year-on-year decline of 50.3% [1] - Net profit reached 60.93 million yuan, marking a turnaround from a loss in the previous period, with earnings per share at 0.08 yuan [1] Factors Influencing Performance - The decrease in revenue was driven by intensified competition resulting in a decline in project unit prices [1] - The increase in net profit was attributed to a gain of 95 million yuan from changes in the fair value of biological assets [1] - The fair value changes were primarily due to natural growth of biological assets, contrasting with a loss of 254.4 million yuan in the previous period, which was linked to a decrease in unit fair value and market price of experimental models [1]

Core Viewpoint - Zhaoyan New Drug (603127) reported a significant decline in revenue and gross profit for the first half of 2025, primarily due to increased competition leading to price reductions, while net profit turned positive due to changes in the fair value of biological assets [1] Financial Performance - Revenue for the first half of 2025 was approximately 669 million yuan, a year-on-year decrease of 21.3% [1] - Gross profit was about 105 million yuan, reflecting a year-on-year decrease of 50.3% [1] - Net profit reached 60.93 million yuan, marking a turnaround from previous losses [1] - Earnings per share stood at 0.08 yuan [1] Factors Influencing Performance - The decrease in revenue was driven by intensified competition resulting in a decline in project unit prices [1] - The increase in net profit was attributed to a gain of 95 million yuan from changes in the fair value of biological assets [1] - The fair value changes were primarily due to natural growth of biological assets during the reporting period, contrasting with a loss of 254.4 million yuan in the previous period [1]

Investment Rating - The report assigns a "Hold" rating for the stock, indicating that the stock price is expected to fluctuate within ±5% of the benchmark [13]. Core Views - The report highlights that the company's performance is under pressure due to industry cyclicality, but there is a marginal acceleration in order growth, suggesting potential improvement in future financial results [2][3]. - The company is focusing on expanding its overseas market presence, with international revenue showing a year-on-year increase of 7.13% in the first half of 2025, accounting for 37.69% of total revenue [4][5]. Summary by Sections Financial Performance - In the first half of 2025, the company reported total revenue of 669 million yuan, a year-on-year decline of 21.29%. The net profit attributable to the parent company was 61 million yuan, marking a return to profitability [1][2]. - The laboratory services segment experienced a significant decline in profit, with a net loss of approximately 97 million yuan, primarily due to increased competition leading to a drop in gross margin [2]. - The company had an order backlog of approximately 2.3 billion yuan as of the first half of 2025, indicating a recovery from the previous quarter [2]. Market Expansion - The company has signed nearly 500 projects for international submissions over the past two and a half years, with over 90% of these projects being dual submissions in China and the United States [4]. - The internationalization strategy is supported by comprehensive industry qualifications, enabling smooth operations in global markets [4]. Earnings Forecast - The company is projected to achieve revenues of 1.812 billion yuan, 2.087 billion yuan, and 2.406 billion yuan for the years 2025, 2026, and 2027, respectively. The net profit attributable to the parent company is expected to be 230 million yuan, 296 million yuan, and 367 million yuan for the same years [7].

据证券之星公开数据整理，近期昭衍新药（603127）发布2025年中报。截至本报告期末，公司营业总收 入6.69亿元，同比下降21.28%，归母净利润6093.24万元，同比上升135.9%。按单季度数据看，第二季 度营业总收入3.81亿元，同比下降27.32%，第二季度归母净利润1981.29万元，同比下降80.67%。本报 告期昭衍新药三费占比上升明显，财务费用、销售费用和管理费用总和占总营收同比增幅达30.88%。 本次财报公布的各项数据指标表现一般。其中，毛利率24.03%，同比减20.88%，净利率9.11%，同比增 144.94%，销售费用、管理费用、财务费用总计1.12亿元，三费占营收比16.71%，同比增30.88%，每股 净资产10.81元，同比增2.44%，每股经营性现金流0.22元，同比增3.26%，每股收益0.08元，同比增 134.78% 财报体检工具显示： 建议关注公司应收账款状况（应收账款/利润已达214.86%） | 项目 | 2024年中报 | 2025年中报 | 同比增幅 | | --- | --- | --- | --- | | 营业总收入(元) | 8.49 Z | 6 ...

Summary of the Conference Call for Zhaoyan New Drug (2025) Company Overview - **Company**: Zhaoyan New Drug - **Industry**: Pharmaceutical and CRO (Contract Research Organization) Key Financial Performance - **New Orders**: In the first half of 2025, new orders amounted to 1.02 billion yuan, a year-on-year increase of 13.33%. The second quarter saw a single-quarter increase of 18% with new orders of 590 million yuan [2][5] - **Revenue**: Total revenue for the first half was 669 million yuan, with domestic clients contributing 417 million yuan (62.31%) and international clients contributing 252 million yuan (37.69%) [3] - **Net Profit**: The net profit attributable to shareholders was 60.93 million yuan, marking a turnaround from losses in the same period of 2024 [2][3] - **Gross Margin**: The gross margin was reported at 24.03%, down from previous levels due to a decrease in revenue and fewer high-margin long-cycle orders [3][4] Business Developments - **Technological Investments**: The company is investing in drug evaluation technologies, organoids, organ-on-chip technologies, and has seen a significant increase in antibody, small nucleic acid, and ADC project numbers [2][6] - **CMA Certification**: The Suzhou facility has passed CMA certification, allowing it to conduct medical device testing and non-clinical research [2][6] - **Innovation in Domestic Market**: The booming domestic innovative drug business is enhancing international recognition of Chinese innovations, leading to increased R&D investments [2][7] Market Dynamics - **Experimental Monkey Pricing**: Prices for experimental monkeys are stable, with quarterly fair value changes expected to be around 50 million yuan due to natural growth impacts [2][8] - **Offshore Outsourcing**: The company is focusing on expanding its offshore outsourcing business, with a double-digit growth in order numbers, although the total order value remains stable [2][9] Challenges and Risks - **Aging Monkey Population**: The aging population of experimental monkeys in China poses a long-term capacity risk. The company is implementing measures to ensure stable supply and quality [2][10] - **Cost Pressures**: Rising costs due to overseas inflation have led to a decrease in gross margin for international business, which fell to 26% in the first half of 2025 [3][35] Future Outlook - **Capital Expenditure**: The company plans to invest 200 to 300 million yuan in capital expenditures for facility expansions and new laboratory constructions [3][26] - **Order Trends**: The company anticipates a slight decline in overseas orders but aims to maintain overall order levels [3][13] - **Market Positioning**: The company is optimistic about the future of the innovative drug sector in China and plans to continue developing its capabilities in organoid and AI technologies [2][38] Additional Insights - **Client Composition**: In the second quarter, new orders were primarily from biotech companies, which accounted for over 50% of the total, while traditional pharmaceutical companies contributed less than 50% [3][27] - **Impact of FDA Regulations**: The company is monitoring potential impacts from FDA regulations that may reduce animal testing requirements and is prepared to adjust its R&D strategies accordingly [3][17] This summary encapsulates the key points from the conference call, highlighting the financial performance, business developments, market dynamics, challenges, and future outlook for Zhaoyan New Drug.

Investment Rating - The investment rating for the company is "Buy" for both A and H shares, maintained from previous assessments [7]. Core Views - The company's 1H25 revenue and net profit attributable to shareholders were CNY 66.9 million and CNY 6.1 million respectively, showing a year-on-year decline of 21.3% in revenue but a significant increase of 135.9% in net profit, aligning with performance forecasts [1]. - The overall order backlog stands at approximately CNY 2.3 billion, with new orders amounting to CNY 1.02 billion, reflecting a year-on-year increase of 13.3%, and a notable recovery in new orders in 2Q25 with an 18.0% year-on-year growth [1][4]. - The company is expected to benefit from a continued recovery in industry demand and a well-structured overseas business expansion, indicating strong long-term growth potential [1][4]. Financial Performance - The gross margin for 1H25 was 24.0%, down 6.3 percentage points year-on-year, primarily due to pressure on domestic order volume and the completion of high-margin long-term projects by the end of 2024 [2]. - Operating cash flow for 1H25 was CNY 163 million, representing a year-on-year increase of 3.2%, indicating stable cash flow performance [2]. Business Segments - Non-clinical drug research services generated revenue of CNY 639 million, down 21.1% year-on-year, attributed to short-term pressures in domestic business, while overseas revenue in this segment grew by 7.1% [3]. - Clinical services and others reported revenue of CNY 29.02 million, down 26.8% year-on-year, with several service varieties progressing through NMPA inspections [3]. - The experimental model supply segment generated revenue of CNY 480,000, with ongoing development in non-human primate models and small animal models [3]. Geographic Revenue Breakdown - Overseas revenue reached CNY 252 million, up 7.1% year-on-year, accounting for 37.7% of total revenue, with expectations for continued growth in this area [4]. - Domestic revenue was CNY 417 million, down 32.2% year-on-year, primarily due to historical pressures on order volume and pricing, but there are expectations for marginal improvement in domestic business [4]. Profit Forecast and Valuation - The profit forecast remains unchanged, with expected net profits attributable to shareholders of CNY 292 million, CNY 360 million, and CNY 445 million for 2025-2027 [5]. - The company is positioned as a leader in the domestic non-clinical safety evaluation industry, with a solid technical foundation and active overseas expansion, leading to a target price of CNY 37.02 and HKD 27.34 for A and H shares respectively [5].