XJZY(SZ:002332) HTSC·2025-08-27 11:43Investment Rating - The investment rating for the company is maintained at "Buy" with a target price of RMB 14.02 [1]. Core Views - The company's performance has been negatively impacted by domestic formulation centralized procurement and a decrease in raw material prices, leading to a revenue decline of 12.6% year-on-year in the first half of 2025 [1]. - Despite the challenges, the report anticipates a recovery due to the clearance of procurement risks, accelerated approval of specialty formulations, and the upcoming market launch of a new drug, Omakesong Sodium [1]. Summary by Sections Financial Performance - In the first half of 2025, the company achieved revenue of RMB 1.869 billion, a decrease of 12.6% year-on-year, and a net profit attributable to the parent company of RMB 308 million, down 9.3% year-on-year [1]. - The second quarter of 2025 saw revenue of RMB 861 million, a decline of 21.7% year-on-year, with a net profit of RMB 164 million, down 12.9% year-on-year [1]. Raw Material Segment - The raw material segment generated revenue of RMB 730 million in the first half of 2025, a decrease of 20% year-on-year [2]. - The self-operated raw materials accounted for RMB 423 million, down 13.6% year-on-year, while the Italian subsidiary reported revenue of RMB 305 million, an increase of 2.7% year-on-year [2]. Formulation Segment - The formulation segment's revenue was RMB 1.127 billion in the first half of 2025, down 7.2% year-on-year [3]. - The gynecology segment reported revenue of RMB 207 million, down 11% year-on-year, primarily due to the impact of regional procurement [3]. - The respiratory segment showed growth, with revenue of RMB 446 million, up 13% year-on-year, and is expected to achieve nearly 20% revenue growth in 2025 [3]. R&D Pipeline - The company is approaching a period of intensive product launches, with several exclusive or first-generic products expected to hit the market soon [4]. - Key upcoming products include long-acting contraceptive Gengsu Acetate and new anesthetics, with peak sales potential ranging from RMB 5 billion to over RMB 20 billion for various products [4]. Profit Forecast and Valuation - The company's net profit forecasts for 2025-2027 have been adjusted to RMB 575 million, RMB 629 million, and RMB 752 million, respectively, reflecting a downward revision of 10.7%, 15.6%, and 15.2% [5]. - The overall valuation of the company is estimated at RMB 13.871 billion, corresponding to a target price of RMB 14.02, based on a sum-of-the-parts (SOTP) valuation method [5][11].