Group 1 - The Hong Kong stock market's innovative drug concept saw a strong performance in the afternoon, with Rongchang Biopharmaceutical and China National Pharmaceutical Group rising over 15% [1] - Other companies such as Junshi Biosciences, Zhaoyan New Drug (603127), BeiGene, and Kelun Pharmaceutical (002821) also experienced gains exceeding 5% [1] - Investors can buy Hong Kong stocks through A-share accounts without the need for the Hong Kong Stock Connect, allowing for T+0 trading [1]

Core Viewpoint - The report highlights the performance and holdings of the Huatai-PineBridge Medical Services Flexible Allocation Mixed Fund A, indicating a recent decline in net value but strong returns over various time frames [1]. Fund Performance - The latest net value of the fund is 1.5670 yuan, reflecting a decrease of 1.94% - Over the past month, the fund achieved a return of 3.91%, ranking 171 out of 1959 in its category - In the last three months, the fund's return was 22.33%, ranking 5 out of 1950 - Year-to-date, the fund has returned 30.15%, ranking 17 out of 1943 [1]. Fund Holdings - The top ten stock holdings of the fund account for a total of 64.17%, with the following allocations: - Heng Rui Medicine: 10.23% - Kelun Pharmaceutical: 9.09% - Baile Tianheng: 8.94% - Haizike: 8.27% - Xinlitai: 6.66% - Zai Jian Pharmaceutical-U: 6.10% - Xin Nuo Wei: 4.69% - Rongchang Biotechnology: 3.49% - Nuocheng Jianhua-U: 3.35% - Microelectrophysiology: 3.35% [1]. Fund Background - The Huatai-PineBridge Medical Services Flexible Allocation Mixed Fund A was established on June 18, 2015, and as of March 31, 2025, it has a total scale of 4.408 billion yuan - The fund manager is Zhang Wei, who has extensive experience in the pharmaceutical sector [1][2].

Core Viewpoint - Rongchang Biopharmaceutical (9995.HK) has announced a H-share placement plan to raise approximately HKD 796 million, reflecting the company's ongoing financial challenges despite a significant revenue increase in 2024 [2][4]. Financial Performance - In 2024, Rongchang Biopharmaceutical reported a revenue of approximately CNY 1.72 billion, a year-on-year increase of 58.54%, but still faced a net loss of CNY 1.468 billion [3][4]. - The company has experienced losses in six out of the seven years since its establishment, with a peak loss of CNY 1.511 billion in 2023 [4][5]. - In Q1 2025, the company achieved a revenue of CNY 526 million, representing a 59.17% year-on-year growth, but continued to incur a net loss of CNY 254 million [4][7]. Product Development and Market Position - Rongchang Biopharmaceutical focuses on innovative biopharmaceuticals, particularly in antibody drug conjugates and therapeutic antibodies [4][6]. - The company has two commercialized products: RC18 (Taitasip) and RC48 (Vidisizumab), which have contributed to its revenue growth since their market approval [6][8]. - Despite the growth in sales, the company faces challenges with slowing growth rates for its core products, indicating potential market saturation or increased competition [6][8]. Funding and Financial Strategy - The recent H-share placement is a critical move to address the company's cash flow pressures and support ongoing research and development efforts [2][8]. - The company has faced difficulties in previous fundraising attempts, including a failed private placement in 2024, highlighting ongoing financial strain [9][10]. - As of Q1 2025, the company's cash reserves decreased to CNY 722 million, while short-term borrowings reached CNY 1.131 billion, indicating significant debt pressure [8][9]. Industry Context - The biopharmaceutical industry is characterized by high research and development costs and long commercialization timelines, leading to widespread financial challenges among similar companies [8]. - Experts suggest that companies need to optimize cost structures and enhance collaboration to achieve profitability in a competitive market [8].

Investment Rating - The report assigns a "Buy" rating to the company, Rongchang Biopharmaceutical (9995 HK) [4][12]. Core Insights - The target price for the company has been raised to HKD 66.00, indicating a potential upside of 40.7% from the current price of HKD 46.90 [1][12]. - The company has initiated an H-share placement to raise approximately HKD 796 million to support pipeline expansion and operations, which is expected to alleviate cash burn pressure significantly [7]. - The revenue for Q1 2025 showed a strong growth of 59.2% year-on-year, driven by increased sales of Taitasip and Vidisizumab [7]. - The report maintains expectations for continued loss reduction in 2025-2026, with a forecasted break-even point in 2027 [7]. Financial Summary - Revenue projections for the company are as follows: - 2023: RMB 1,076 million - 2024: RMB 1,710 million - 2025E: RMB 2,365 million - 2026E: RMB 3,331 million - 2027E: RMB 5,459 million - The net profit (loss) projections are: - 2023: (RMB 1,511 million) - 2024: (RMB 1,468 million) - 2025E: (RMB 800 million) - 2026E: (RMB 262 million) - 2027E: RMB 398 million [3][13]. - The report indicates a significant adjustment in the net profit forecast for 2027, increasing by over 60% due to optimistic expectations for Taitasip's market performance [7][8]. Valuation Model - The DCF valuation model estimates the equity value of the company at approximately RMB 33,799 million, translating to a per-share value of HKD 66.00 [9]. - The projected revenue growth reflects a robust increase, with expected revenues reaching RMB 18,221 million by 2033 [9]. Market Performance - The stock has shown a year-to-date increase of 225.69%, with a 52-week high of HKD 47.00 and a low of HKD 10.62 [6]. - The average daily trading volume is reported at 7.65 million shares [6]. Analyst Contact - The report includes contact information for analysts Ethan Ding and Gloria Zhuge for further inquiries [7].

Core Viewpoint - The Hong Kong stock market has seen a rise in discounted placements, with Rongchang Biopharmaceutical (09995.HK) announcing a placement of 19 million shares to raise approximately HKD 796 million, indicating strong market interest despite the company's ongoing losses [1][2][3]. Group 1: Placement Details - Rongchang Biopharmaceutical plans to place up to 19 million H-shares, representing about 10.02% of existing H-shares and 3.49% of total shares as of the announcement date [2]. - The placement price is set at HKD 42.44 per share, reflecting a discount of approximately 9.51% from the closing price on May 21 [2]. - The net proceeds from the placement are expected to be around HKD 796 million, aimed at enhancing research capabilities and business expansion [2]. Group 2: Financial Performance - Despite a revenue increase of 59% to RMB 1.71 billion in 2024, Rongchang Biopharmaceutical continues to operate at a loss, with a net loss of RMB 254 million in Q1 2025, which is a 27% increase in losses year-on-year [6][7]. - The company has only recorded a profit in 2021, primarily due to a licensing agreement with Seattle Genetics, which generated a net profit of RMB 276 million [6][5]. - As of Q1 2025, the company had cash and cash equivalents of RMB 719 million, indicating some liquidity but ongoing pressure on cash flow due to continuous losses [7]. Group 3: Product Pipeline and Market Potential - Rongchang Biopharmaceutical has developed over ten candidate drugs, with seven in clinical development targeting more than twenty indications [3]. - The company’s marketed products, including RC18 and RC48, are undergoing clinical trials for various indications, with RC48 being the first ADC drug in China to receive dual breakthrough therapy designation from both the FDA and the Chinese regulatory authority [4][3]. - The company is focusing on expanding the indications for its core product RC18, which has already received approvals for systemic lupus erythematosus and is expected to gain further approvals in the near future [4]. Group 4: Market Sentiment and Stock Performance - Since the beginning of 2025, Rongchang Biopharmaceutical's stock has surged over 240%, reflecting strong market sentiment and positioning for the placement [8]. - The stock's performance on May 22, where both A and H shares opened low but closed higher, suggests a positive market reaction to the placement announcement [8].

Investment Rating - The report assigns a "Buy" rating to the company, Rongchang Biopharmaceutical (9995 HK) [4][12]. Core Insights - The target price for the company has been raised to HKD 66.00, indicating a potential upside of 40.7% from the current price of HKD 46.90 [1][12]. - The company has initiated an H-share placement to raise approximately HKD 796 million to support pipeline expansion and operations, which is expected to alleviate cash burn pressure significantly [7]. - The revenue for Q1 2025 showed a strong growth of 59.2% year-on-year, driven by increased sales of Taitasip and Vidisizumab [7]. - The report maintains expectations for continued loss reduction in 2025-2026, with a forecasted break-even point in 2027 [7]. Financial Summary - Revenue projections (in million RMB) are as follows: - 2023: 1,076 - 2024: 1,710 - 2025E: 2,365 - 2026E: 3,331 - 2027E: 5,459 - Year-on-year growth rates for revenue are projected at 40.2% for 2023, 58.9% for 2024, 38.3% for 2025, 40.9% for 2026, and 63.9% for 2027 [3][13]. - The net profit (loss) is expected to improve from a loss of RMB 1,511 million in 2023 to a profit of RMB 398 million by 2027 [3][13]. - The report indicates a significant adjustment in the net profit forecast for 2027, increasing by over 60% due to optimistic projections for Taitasip's market performance [7]. Valuation Model - The DCF valuation model estimates the equity value of the company at approximately RMB 33,799 million, translating to a per-share value of HKD 66.00 [9]. - The projected free cash flow is expected to turn positive by 2026, with a forecast of RMB 865 million [9]. Stock Performance - The stock has shown a year-to-date increase of 225.69% [6]. - The 52-week high and low for the stock are HKD 47.00 and HKD 10.62, respectively [6]. Analyst Coverage - The report is authored by analysts from BOCOM International, with contact details provided for further inquiries [7].

A股今日（5月20日）全线上扬，市场整体活跃，成交量有所放大；港股亦走高，两大股指均涨超 1%。 中信证券表示，海外订单稳健增长、鸡肉成本下行、人民币贬值、国产宠粮自主品牌整体增长提速、国货 龙头盈利能力持续提升等背景下，2024年、2025年一季度宠物板块业绩持续新高。展望后续，预计海外 需求稳健，国内市场国货替代持续，2025年宠物板块业绩有望持续增长。宠物经济是稀缺赛道，需求韧 性强，国内市场目前仍处"大行业、小龙头"阶段，龙头集中程度有望进一步提升，看好龙头通过产品创 新、品牌和渠道建设不断提升市场份额。 具体来看，A股三大股指盘中发力拉升，创业板指一度涨超1%。截至收盘，沪指涨0.38%报3380.48 点，深证成指涨0.77%报10249.17点，创业板指涨0.77%报2048.46点，北证50指数涨1.22%，沪深北 三市合计成交12114亿元，较昨日（5月19日）增加923亿元。 场 内 超 3800 股 飘 红 ， 宠 物 经 济 概 念 爆 发 ， 天 元 宠 物 （ 301335 ） 20% 涨 停 创 出 新 高 ， 路 斯 股 份 （832419）一度涨停亦创新高；合成生物概念再度活 ...

Investment Rating - The report assigns a rating of "Buy" with a target price of HKD 45.00 for Rongchang Biologics (9995 HK) [4][5]. Core Insights - The approval of the new indication for Vidisicimab in treating HER2-positive metastatic breast cancer with liver metastasis is expected to boost product sales significantly [1]. - The company has made progress in clinical trials for new indications, including a Phase III study for Vidisicimab in combination with Toripalimab for advanced or metastatic urothelial carcinoma [2]. - The Q1 2025 financial results exceeded expectations, with revenue increasing by 59.1% year-on-year to RMB 530 million, and a reduction in net loss by 27.2% to RMB 250 million [3]. Financial Projections - Revenue forecasts for 2025 and 2026 have been raised by 3.2% and 4.8%, respectively, while net loss projections have been lowered by 5.2% and 13.5% [4]. - The company anticipates total revenue to reach RMB 1,076 million in 2023, growing to RMB 3,798 million by 2027, reflecting a compound annual growth rate of 40.2% from 2023 to 2024 [11]. - The projected net loss is expected to decrease from RMB 1,511 million in 2023 to a profit of RMB 29 million by 2027 [11]. Stock Information - The current closing price is HKD 39.20, with a market capitalization of HKD 26,972.99 million [5]. - The stock has a 52-week price range of HKD 10.2 to HKD 46.90 [5].

Group 1 - The stock market showed strength on May 14, with both the ChiNext Index and Shanghai Composite Index rising over 1%, while the Hong Kong Hang Seng Index increased by 2% and the Hang Seng Tech Index rose by over 2% [1] - Popular ETFs such as the Biopharmaceutical ETF (159859) and the Innovative Drug Hong Kong-Shanghai ETF (517380) turned positive in the afternoon, with the Innovative Drug ETF up 0.35% and key components like China National Pharmaceutical Group and Hengrui Medicine rising over 3% [1] - The Biopharmaceutical ETF tracks the National Biopharmaceutical Index, which includes the top 30 stocks in the biopharmaceutical sector based on market capitalization and liquidity, reflecting the overall performance of the industry [1] Group 2 - The 36th Pharmaceutical Economic Information Conference was held in Guangzhou from May 12 to 14, focusing on drug regulation policies, industry trends, and high-quality development in the pharmaceutical sector [2] - According to Founder Securities, the pharmaceutical and biotechnology sector's Q1 2025 financial reports showed stable revenue and profit performance, with notable improvements in certain sub-sectors, particularly in pharmaceutical R&D outsourcing, which achieved over 10% growth in both revenue and profit [2] - The market sentiment towards the pharmaceutical industry has improved, with a noticeable increase in equity fund allocations since Q1 2024, driven by a systematic valuation increase in the innovative drug sector [2]

Company News - TaiLing Pharmaceutical (01011.HK) proposed to split the assets of its joint venture company while ensuring the protection of all shareholders' rights, dissolving the joint venture relationship for independent operations [2] - China Evergrande (03333.HK) has filed a joint application with the liquidators of CEG Holdings to the Hong Kong court on May 12 [2] - Yanzhou Coal Mining (01171.HK) plans to invest approximately $300 million in cash to acquire shares of Highland Resources, becoming its largest shareholder [2] - Baolong Properties (01238.HK) has postponed the hearing for its liquidation application to July 21 [2] - Sunny Optical Technology (02382.HK) reported a smartphone lens shipment of 103 million units in April, a month-on-month increase of 9.2% and a year-on-year increase of 1.3%; vehicle lens shipments reached 11.566 million units, with a month-on-month increase of 17.8% and a year-on-year increase of 28.9%, driven by increased customer demand and improved product structure [2] Industry News - CK Hutchison (00001.HK) issued a statement regarding port transactions, asserting that it will never engage in any illegal or non-compliant activities [3] - Contemporary Amperex Technology (CATL) saw its Hong Kong public offering portion oversubscribed by 21 times, attracting HKD 51.7 billion in financing subscriptions [3] - Kweichow Moutai has no current plans for a Hong Kong listing [3] - China Merchants Securities (06099.HK) announced the resignation of Vice President Zhang Haochuan due to personal reasons, effective May 12, 2025 [3] - Rongchang Biopharmaceutical (09995.HK) received a notice of acceptance for its clinical trial application for the antibody-drug conjugate RC278 [3] - China CNR Corporation (01766.HK) and its subsidiaries have recently signed several major contracts worth approximately CNY 54.74 billion [3]