Core Insights - The company maintains a "buy" rating, with revenue for Q1-Q3 2025 at 4.16 billion yuan (up 4.92% year-on-year) and net profit attributable to shareholders at 748 million yuan (up 18.51% year-on-year) [2] - The company is expanding its CDMO business and enhancing its presence in emerging fields, with a steady increase in orders and projects [3] - The improvement in profitability is attributed to stabilized prices in the raw material drug sector and the continued growth of the high-margin CDMO segment [2][3] Financial Performance - For Q3 2025, revenue reached 1.29 billion yuan (up 7.37% year-on-year) and net profit attributable to shareholders was 222 million yuan (up 42.30% year-on-year) [2] - The gross margin for Q1-Q3 2025 was 37.55% (up 2.80 percentage points year-on-year), and the net profit margin was 17.97% (up 2.06 percentage points year-on-year) [2] - The company has adjusted its EPS forecasts for 2025-2027 to 1.09, 1.28, and 1.48 yuan, respectively, and raised the target price to 28.16 yuan based on a PE of 22X for 2026 [2] Business Development - As of H1 2025, the company has undertaken 38 projects in the raw material CDMO sector, covering various therapeutic areas including oncology and cardiovascular diseases [3] - The company has successfully provided services to over 80 clients in the formulation CDMO business, covering more than 100 active formulation projects [3] - The company has introduced over 20 new clients in the peptide and conjugate business, with a focus on diabetes and cancer treatments, and has seen rapid growth in overseas orders [3] Catalysts - The improvement in raw material drug prices has exceeded expectations, and the terminal demand for new businesses has also surpassed forecasts [4]

Investment Rating - The industry investment rating is "Overweight" (maintained) [5] Core Insights - The report highlights the recent policy issued by the Ningxia Hui Autonomous Region government aimed at enhancing the regulatory framework for pharmaceuticals and medical devices, which is expected to promote high-quality development in the pharmaceutical industry [5] - The policy emphasizes support for the entire chain of traditional Chinese medicine (TCM) innovation, particularly focusing on the protection and development of local resources such as goji berries and licorice, which will benefit local TCM enterprises [6] - The report suggests that the policy will significantly improve the efficiency of product approvals for innovative drugs and medical devices, with specific measures to shorten approval timelines [6] - The report recommends focusing on companies with existing operations in Ningxia, especially those involved in the deep processing of local TCM resources, as well as innovative drug and medical device developers [6] Summary by Sections Recent Industry Performance - The industry has shown relative returns of -4.75% over the past month, -17.32% over the past three months, and -7.19% over the past year compared to the CSI 300 index [3] Policy Impact - The Ningxia policy includes measures to enhance the approval process for innovative drugs and medical devices, reducing the approval time for medical device production licenses from 30 to 20 working days and for second-class medical device renewals from 60 to 50 working days [6] - The policy encourages collaboration among local enterprises, universities, research institutions, and medical organizations to foster innovation in drug and medical device development [6] Investment Recommendations - The report advises investors to pay attention to companies that have a strong presence in Ningxia, particularly those involved in the development of local TCM resources, as well as those engaged in innovative drug and medical device research [6] - Specific companies mentioned for potential investment include Tongrentang, Dong'e Ejiao, Mindray Medical, Jiuzhoutong, and Tigermed [6]