Core Viewpoint - Zhongyin International has slightly lowered the profit forecast for Kanglong Chemical (300759) for 2025-2026 based on more conservative margin assumptions, but has raised revenue forecasts for 2027 and beyond due to strong order momentum offsetting geopolitical disruptions, with the target price increased from HKD 18 to HKD 25 while maintaining a "Buy" rating [1] Group 1: Financial Performance - Kanglong Chemical's revenue grew by 15% year-on-year in the first half of the year, driven mainly by contributions from the top 20 multinational pharmaceutical companies and the European market [1] - The core business, particularly laboratory services and CMC, showed good growth, while clinical CRO stabilized, and the large molecule and cell gene therapy business remained weak [1] - In Q2, revenue increased by 14% year-on-year and 8% quarter-on-quarter, with non-IFRS net profit rising by 16% year-on-year and 15% quarter-on-quarter [1] Group 2: Order and Guidance - In the first half of 2025, new orders for Kanglong Chemical increased by over 10% year-on-year, with laboratory services and CMC growing by 10% and 20% respectively, and the addition of 9 Phase III and commercialization projects [1] - The company maintains its full-year revenue growth guidance of 10% to 15%, expecting margin improvement in the second half of the year, primarily benefiting from CMC scale effects, stable contributions from laboratory services, and stabilization of clinical CRO pricing [1] - The large molecule and cell gene therapy business is expected to continue to drag on profits in the short term, but is anticipated to achieve breakeven in the medium to long term [1]

Core Viewpoint - Zhongyin International has slightly lowered the profit forecast for Kanglong Chemical (03759) for 2025-2026 based on more conservative margin assumptions, but has raised revenue forecasts for 2027 and beyond due to strong order momentum offsetting geopolitical disruptions, increasing the target price from HKD 18 to HKD 25 while maintaining a "Buy" rating [1] Group 1: Financial Performance - Kanglong Chemical's revenue grew by 15% year-on-year in the first half of the year, driven by contributions from the top 20 multinational pharmaceutical companies and the European market [1] - The core business, particularly laboratory services and CMC, showed good growth, while clinical CRO stabilized, and the large molecule and cell gene therapy business remained weak [1] - In the second quarter, revenue increased by 14% year-on-year and 8% quarter-on-quarter, with non-IFRS net profit rising by 16% year-on-year and 15% quarter-on-quarter [1] Group 2: Order and Guidance - Kanglong Chemical's new orders in the first half of 2025 increased by over 10% year-on-year, with laboratory services and CMC growing by 10% and 20% respectively, and the addition of 9 Phase III and commercialization projects [1] - The company maintains its full-year revenue growth guidance of 10% to 15%, expecting margin improvement in the second half of the year, primarily benefiting from CMC scale effects, stable contributions from laboratory services, and stabilization of clinical CRO prices [1] - The large molecule and cell gene therapy business is expected to continue to drag on profits in the short term, but is anticipated to achieve breakeven in the medium to long term [1]

Summary of Pharmaron (3759.HK) Earnings Review Company Overview - **Company**: Pharmaron (3759.HK) - **Market Cap**: HK$38.5 billion / $4.9 billion - **Industry**: Healthcare Services in China & Korea - **Rating**: Buy - **12-month Price Target**: HK$23.30 (current price: HK$21.68, upside: 7.5%) [1][6] Key Financial Highlights - **2Q25 Revenue**: Rmb3.34 billion, +13.9% year-over-year (y/y) [1] - **Adjusted Net Profit**: Rmb406 million, +15.6% y/y and +16.3% quarter-over-quarter (q/q) [1] - **Adjusted Net Margin**: Improved to 12.2% from 11.3% in 1Q25 [1] - **New Orders Growth**: +10% y/y in 1H25, with CMC services seeing +20% y/y growth [2][19] - **Capex**: Rmb1.15 billion in 1H25, on track to meet FY24 capex levels [2] Segment Performance - **Lab Services Revenue**: Rmb2.04 billion, +15.2% y/y and +9.6% q/q [3] - **CMC Services Revenue**: Rmb697 million, +17.4% y/y, with gross margin (GM) improving to 29.9% [21] - **Clinical Development Services Revenue**: Rmb492 million, +8.9% y/y, GM declined to 12.8% [21] - **Biologics and CGT Revenue**: Rmb113 million, -5.8% y/y, GM diluted to -42.4% [21] Geographic and Customer Analysis - **Revenue by Region**: North America (62% of revenue, +6% y/y), Europe (20%, +34% y/y), China (15%, +18% y/y) [19] - **Top 20 Pharma Clients**: Accounted for 21% of total revenue, +63% y/y [19] Guidance and Expectations - **FY25 Revenue Guidance**: Maintained at +10-15% y/y, with expectations for q/q growth in 2H25 [2] - **Free Cash Flow**: Management expects positive free cash flow for FY25 [2] Valuation and Risks - **Valuation Methodology**: Target prices based on a 3-year exit P/E of 20x and a discount rate of 10.5% [20][22] - **Key Upside Risks**: Accelerated revenue conversion, better-than-expected facilities ramp-up, improved order signing [20][22] - **Downside Risks**: US-China trade tensions, rising labor costs, slowdown in global pharma R&D spending [20][22] Investment Thesis - **Positioning**: Pharmaron is the second-largest pharma CRO/CMO platform in China, with resilient demand and potential margin expansion [23] - **Growth Drivers**: Higher GM for CDMO business, recovery of clinical CRO revenue, and narrowed losses in CGT business [23] Conclusion Pharmaron demonstrates strong financial performance with significant growth in revenue and profit margins, supported by robust demand in its service segments. The company maintains a positive outlook for FY25, with strategic investments and geographic expansion contributing to its growth trajectory. The investment thesis remains favorable, with a Buy rating reflecting confidence in the company's ability to navigate market challenges and capitalize on opportunities.

Summary of the Conference Call for 康龙化成 (Crown Bioscience) Company Overview - 康龙化成 reported a revenue growth of 9.5% year-on-year in the first half of 2025, with new orders increasing by over 10% [2][3] - The company achieved a revenue of 33.42 billion yuan in Q2, representing a 13.9% year-on-year increase, while net profit attributable to shareholders was 3.96 billion yuan, down 55.2% year-on-year [2][3] Financial Performance - Total revenue for the first half of 2025 reached 64.41 billion yuan, a 14.9% increase year-on-year [3] - Adjusted net profit for the same period was 7.56 billion yuan, a 9.5% increase year-on-year [3] - The company expects to maintain a revenue growth target of 10% to 15% for the full year 2025 [4][8] Business Segments Performance Laboratory Services - Laboratory services accounted for 60% of total revenue, growing 15.5% year-on-year, with a gross margin maintained at 44%-45% [2][5][11] - The company participated in 795 global drug discovery projects, with significant growth in new molecular type projects [11][20] CMC (Contract Manufacturing Organization) Services - CMC small molecule CDMO services represented 22% of total revenue, with an 18.2% year-on-year growth and a gross margin of 30.2% [2][12] - The company reported a significant increase in new orders, with a 20% year-on-year growth in new contracts [12][18] Clinical Services - Clinical services accounted for 15% of total revenue, with an 11.4% year-on-year growth and a gross margin of 12.3% [2][13] - The company is managing 1,027 clinical projects, including 89 Phase III trials [13][14] Large Molecule and CGT (Cell and Gene Therapy) Services - Revenue from large molecule and CGT services was 1.13 billion yuan, a 5.8% year-on-year decrease, but a 14.3% increase quarter-on-quarter [15] - The company is involved in 22 different development stage CG products, including commercial projects [15] Market Dynamics - The company reported strong growth in MNC (Multinational Corporation) revenue, which increased by 48% [4][16] - The overseas market is showing signs of recovery, while the domestic market is improving but not fully recovered [4][21] Technological Advancements - 康龙化成 is enhancing its AI capabilities by acquiring a controlling stake in 海兴智慧 and establishing a joint R&D center with Zhejiang University [7][23] - The company is integrating AI technology into clinical data management to improve service efficiency [7][14] Sustainability Initiatives - The company has achieved an MSCI ESG rating of AA and is actively pursuing energy-saving and emission reduction strategies [9][10] Future Outlook - 康龙化成 expects to achieve positive free cash flow for the second consecutive year in 2025 [4][8] - The company is optimistic about maintaining strong growth in laboratory services and CMC projects in the second half of the year [22][24] Key Takeaways - 康龙化成 is positioned for continued growth with a focus on expanding its service offerings and leveraging new technologies [24] - The company is committed to sustainability and improving its market position through innovative solutions and strategic partnerships [9][10][24]

Core Viewpoint - 康龙化成's 2025 mid-year report shows a mixed performance with a revenue increase but a significant decline in net profit, raising concerns about its financial health and cash flow management [1][4]. Financial Performance - Total revenue for the first half of 2025 reached 6.441 billion yuan, a year-on-year increase of 14.93% [1]. - Net profit attributable to shareholders was 701 million yuan, down 37.0% compared to the previous year [1]. - In Q2 2025, total revenue was 3.342 billion yuan, up 13.92% year-on-year, while net profit dropped 55.17% to 396 million yuan [1]. - Gross margin improved to 33.97%, an increase of 1.74% year-on-year, but net margin fell to 10.13%, a decrease of 47.56% [1]. - Total expenses (selling, administrative, and financial) amounted to 1.061 billion yuan, accounting for 16.47% of revenue, down 7.08% year-on-year [1]. Cash Flow and Debt Management - The company reported a significant increase in accounts receivable, which reached 2.545 billion yuan, representing 141.9% of the latest annual net profit [1][4]. - Cash and cash equivalents decreased by 45.78% to 1.302 billion yuan [1]. - The company’s short-term borrowings increased by 31.03% due to new borrowings during the reporting period [3]. Investment and Market Position - The company’s return on invested capital (ROIC) was 8.74%, indicating average capital returns, with a historical median ROIC of 11.67% since its listing [3][4]. - Analysts expect the company's performance in 2025 to reach 1.728 billion yuan, with an average earnings per share of 0.97 yuan [4]. Market Trends and Competitor Analysis - The top 20 multinational pharmaceutical companies (MNCs) experienced a growth rate of 48%, driven by mature CMC project pipelines and deeper collaborations in laboratory services [6].

两融数据显示，该股最新融资余额为14.48亿元，近5日增加2384.00万元，增幅为1.67%。（数据宝） 8月22日康龙化成大宗交易一览 | 成交量 | 成交金额 | 成交价 | 相对当日收盘折 | | | | --- | --- | --- | --- | --- | --- | | （万 | （万元） | 格 | 溢价（%） | 买方营业部 | 卖方营业部 | | 股） | | （元） | | | | | 159.97 | 4776.67 | 29.86 | -0.80 | 机构专用 | 中信证券华南股份有限公司 广州万博证券营业部 | | 7.00 | 210.70 | 30.10 | 0.00 | 华泰证券股份有限 | 中信证券股份有限公司上海 | | | | | | 公司泰州分公司 | 分公司 | （文章来源：证券时报网） 康龙化成8月22日大宗交易平台共发生2笔成交，合计成交量166.97万股，成交金额4987.37万元。以折溢 价进行统计，今日有1笔为折价交易，折价率最高达0.80%。从参与大宗交易营业部来看，机构专用席 位共出现在1笔成交的买方或卖方营业部中，合计成交金额为4776.67万元 ...

Core Viewpoint - Kanglong Chemical achieved significant growth in revenue and non-net profit in the first half of the year, despite a decrease in net profit due to a one-time gain from a previous equity transfer [1][2][4] Financial Performance - In the first half of the year, Kanglong Chemical reported revenue of 6.441 billion yuan, a year-on-year increase of 14.93%, and a non-net profit of 637 million yuan, up 36.66% year-on-year [1] - The company's net profit attributable to shareholders was 701 million yuan, a decrease of 37% year-on-year, primarily due to a large equity transfer gain in the same period last year [1] - Revenue for Q1 and Q2 of this year was 3.099 billion yuan and 3.342 billion yuan, respectively, with non-net profits of 292 million yuan and 345 million yuan, both showing positive growth [1] Historical Context - Kanglong Chemical's average quarterly revenue over the past 22 quarters is approximately 2.4135 billion yuan, with an average non-net profit of about 310 million yuan, indicating current performance is significantly above historical averages [4] - The company has consistently generated over 3 billion yuan in quarterly revenue for four consecutive quarters, suggesting a recovery towards historical best performance [2] Market Position - As of August 22, Kanglong Chemical's A-shares closed at 30.1 yuan per share, with a market capitalization of 53.524 billion yuan, while H-shares closed at 21.68 HKD per share, with a market capitalization of 38.394 billion HKD [5] - The company is one of the leading players in the domestic pharmaceutical outsourcing industry, which has experienced fluctuations in performance over the past five years [5] Business Segments - Kanglong Chemical's main business includes laboratory services, small molecule process development, clinical research services, and large molecule and cell and gene therapy services, with the latter being a focus since 2019 [8] - As of mid-2025, the large molecule and cell and gene therapy segment generated revenue of 211 million yuan, with a year-on-year growth of 0.13%, but a negative gross margin of -54.71% [8] Industry Trends - The domestic pharmaceutical outsourcing industry is showing signs of recovery, with leading companies like WuXi AppTec reporting significant revenue growth [9] - Kanglong Chemical's revenue from North American clients was 4.073 billion yuan, a year-on-year increase of 11.02%, accounting for 63.23% of total revenue [9] - The global pharmaceutical investment landscape is recovering, with projections indicating a rise in investment scale from 71 billion USD in 2023 to 102 billion USD in 2024 [10]

Summary of Key Points Core Viewpoint - Kanglong Chemical experienced a slight increase in stock price, closing at 30.10 yuan, with significant trading activity noted in the form of two block trades totaling approximately 4.99 million yuan [1]. Trading Activity - The first block trade occurred at a price of 30.10 yuan for 70,000 shares, amounting to 2.11 million yuan, with a premium rate of 0.00%. The buyer was Huatai Securities, and the seller was CITIC Securities [1]. - The second block trade was executed at a price of 29.86 yuan for 1.60 million shares, totaling 47.77 million yuan, with a premium rate of -0.80%. The buyer was an institutional entity, and the seller was CITIC Securities' South China branch [1]. - Over the past three months, Kanglong Chemical has recorded three block trades with a cumulative transaction value of 73.91 million yuan [1]. Stock Performance - In the last five trading days, the stock has seen a cumulative decline of 0.43%, with a net outflow of 260 million yuan in principal funds [1].

Core Viewpoint - 康龙化成 reported a strong performance in the first half of 2025, with a revenue increase of 14.9% year-on-year, driven by significant growth in orders and robust demand from top pharmaceutical clients [1][4]. Financial Performance - The company achieved a revenue of 6.441 billion yuan in the first half of 2025, reflecting a year-on-year growth of 14.9% [4]. - The net profit attributable to shareholders was 701 million yuan, a decrease of 37.0% year-on-year, primarily due to last year's substantial gains from the disposal of PROTEOLOGIX, INC. shares [4]. - Adjusted net profit under non-IFRS standards was 756 million yuan, representing a year-on-year increase of 9.5% [4]. - New orders signed in the first half of 2025 increased by over 10% year-on-year [4]. Client and Market Dynamics - Revenue from MNC (Top 20 pharmaceutical companies) clients grew significantly by 48.0% year-on-year, attributed to the maturity of CMC project pipelines and deepened collaboration in laboratory services [2][4][9]. - The company added over 480 new clients, with active clients exceeding 2,600 [4]. Strategic Development - 康龙化成 is committed to its long-term development strategy, having established 21 R&D centers and production bases globally, including in China, the UK, and the US [5]. - The company has a workforce of 22,908 employees, with over 1,700 based overseas, and more than 90% of employees engaged in R&D, production, and clinical services [5]. Business Segment Performance - Laboratory services generated revenue of 3.89 billion yuan, up 15.5% year-on-year, with a gross margin of 45.2% [6]. - CMC (small molecule CDMO) services achieved revenue of 1.39 billion yuan, reflecting an 18.2% increase year-on-year, with a gross margin of 30.5% [6]. - Clinical research services reported revenue of 940 million yuan, a year-on-year growth of 11.4% [7]. - Revenue from large molecule and cell & gene therapy services was 210 million yuan, showing a slight increase of 0.1% [8]. Technological and Operational Advancements - The company is enhancing its AI capabilities by integrating clinical data resources with AI technology, aiming to improve service efficiency [6]. - Continuous investments in various technologies, including continuous flow technology and high-throughput experimentation, are being made to support the CMC service segment [11]. Industry Outlook - The company perceives good resilience in overseas client demand, while domestic client demand is expected to gradually recover [3][12].

Investment Rating - The report assigns a "Buy" rating for Kanglong Chemical (300759) based on its performance and growth potential [13]. Core Views - The overall performance of the company shows steady growth, with laboratory services and CMC services contributing significantly to revenue increases [2][3]. - The company maintains a full-year revenue growth guidance of 10-15% for 2025, supported by stable new order growth across its four main business segments [3]. Summary by Sections Financial Performance - In H1 2025, the company achieved revenue of 6.441 billion yuan, a year-on-year increase of 14.9%, and a net profit attributable to shareholders of 700 million yuan, a decline of 37.0% [1]. - The adjusted net profit attributable to shareholders was 756 million yuan, up 9.5% year-on-year, with operating cash flow increasing by 28.06% to 1.408 billion yuan [1]. Business Segments - **Laboratory Services**: Revenue reached 3.892 billion yuan, up 15.5% year-on-year, with a gross margin of 44.9%, an increase of 0.9 percentage points. New orders in this segment grew by over 10% [2]. - **CMC Services**: Revenue was 1.390 billion yuan, an 18.2% increase year-on-year, with a gross margin of 30.2%, up 2.4 percentage points. New orders in this segment grew by approximately 20% [2]. - **Clinical Research Services**: Revenue was 939 million yuan, an 11.4% increase year-on-year, with a gross margin of 12.3%, slightly down by 0.3 percentage points [3]. - **Large Molecule and Cell & Gene Therapy Services**: Revenue was 211 million yuan, remaining stable year-on-year, but with a gross margin of -54.7%, indicating losses due to high operational costs [3]. Customer and Regional Analysis - The company added over 480 new clients in H1 2025, contributing 128 million yuan, while existing clients generated 6.313 billion yuan, accounting for 98.01% of total revenue [4]. - Revenue from the top 20 global pharmaceutical companies was 1.168 billion yuan, a significant increase of 47.98% year-on-year [5]. - Revenue distribution by region showed North America contributing 4.073 billion yuan (up 11.02%), Europe 1.234 billion yuan (up 30.52%), and China 973 million yuan (up 15.48%) [5]. Financial Projections - Revenue projections for 2025-2027 are 13.865 billion yuan, 15.591 billion yuan, and 17.560 billion yuan, respectively, with net profits of 1.718 billion yuan, 1.985 billion yuan, and 2.302 billion yuan [7]. - The expected EPS for the same period is 0.97 yuan, 1.12 yuan, and 1.29 yuan, with corresponding P/E ratios of 31.16, 26.96, and 23.25 [7].