Core Viewpoint - First Shanghai maintains a "buy" rating for Kangchen Pharmaceutical (01681) and adjusts the profit forecast for 2025-2027, setting a target price of HKD 25.20, indicating a potential upside of 59.50% from the current price [1] Financial Performance - Kangchen Pharmaceutical reported a revenue of RMB 1.569 billion for the first half of 2025, representing a year-on-year growth of 23.7% [2] - Gross profit increased by approximately 27.6% to RMB 1.209 billion, with a gross margin of 77.1%, up 2.4 percentage points from the same period in 2024, mainly due to a decrease in raw material prices [2] - Shareholders' profit attributable to the company was approximately RMB 498 million, a year-on-year increase of 24.6% [2] - The company continues its high dividend policy, proposing an interim dividend of HKD 0.33 per share, with a payout ratio exceeding 51% [2] Product and Business Development - The sales revenue of nephrology drugs reached approximately RMB 1.131 billion, a year-on-year increase of about 28.0%, driven by the core product, Uremia Qing granules, which maintains a leading position in the modern Chinese medicine category for kidney diseases [3] - Sales revenue from pediatric and women's drugs was approximately RMB 172 million, up about 17.5% year-on-year, with the unique oral iron supplement, Yuanlikang, entering the national essential drug and medical insurance catalog [3] - The medical imaging contrast agent series generated sales of approximately RMB 95 million, a year-on-year increase of about 22.0% [3] - The company has launched new CT contrast agents and has a rich pipeline of products under development [3] Market Position and Competitive Advantage - Uremia Qing granules are the flagship product of Kangchen Pharmaceutical, holding a leading position in the kidney disease Chinese medicine market, with a significant target market due to the high prevalence of chronic kidney disease (CKD) in China [4] - The product is the first kidney disease Chinese medicine to complete evidence-based medical research and has received strong recommendations in multiple clinical guidelines [4] - Despite the expiration of the product's patent in 2024, the complexity of its compound formulation and stringent drug approval processes are expected to maintain high market barriers and a concentrated competitive landscape [5]
第一上海：维持康臣药业“买入”评级 目标价25.2港元