Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The company has increased its R&D investment, and its innovative pipeline is gradually entering a harvest period. The FDA has approved the clinical trial for the YKYY018 aerosol inhalation agent for the prevention and treatment of RSV infections. Despite facing pressure on its operating performance in 2025, the company is optimistic about its long-term growth potential due to its innovative layout and small nucleic acid technology platform [3][4] Financial Performance Summary - For the first three quarters of 2025, the company achieved revenue of 1.759 billion yuan, a year-on-year decrease of 41.20%. The net profit attributable to the parent company was -148 million yuan, down 170.56% year-on-year. The non-recurring net profit attributable to the parent company was -168 million yuan, a decrease of 182.95% year-on-year [3][4] - The company has adjusted the price of its "Ginkgo Leaf Extract Injection" at the end of 2024, which has impacted its performance. The R&D expenses have increased significantly, contributing to the net profit decline [3][4] - The sales expense ratio for the first three quarters of 2025 was 28.64%, down 7.37 percentage points; the management expense ratio was 10.67%, up 5.18 percentage points; the R&D expense ratio was 18.00%, up 9.27 percentage points; and the financial expense ratio was 0.59%, up 0.47 percentage points [3][4] Earnings Forecast - The revised earnings forecast for the company indicates net profits attributable to the parent company of -183 million yuan, -53 million yuan, and 69 million yuan for 2025, 2026, and 2027 respectively. The original forecasts were 51 million yuan, 206 million yuan, and 561 million yuan [3][4] - The expected EPS for 2025, 2026, and 2027 is -0.41 yuan, -0.12 yuan, and 0.15 yuan respectively, with the current stock price corresponding to P/E ratios of -60.6, -208.5, and 161.2 times [3][4] Innovative Pipeline Progress - The company is advancing its innovative drug pipeline, with key traditional Chinese medicine (TCM) drugs in the final review stage for NDA. The small nucleic acid innovative drugs YKYY015 and YKYY029 have received approval for clinical trials in the US and China, with ongoing Phase I trials domestically [4] - The RSV mRNA vaccine YKYY025 and VZV mRNA vaccine YKYY026 have also received approval for clinical trials in the US. The company has completed the Phase IIa clinical trial for its first domestic antisense nucleic acid drug for primary liver cancer [4]

Investment Rating - The investment rating for the company is "Buy" [5][11]. Core Views - The company reported a revenue of 2.871 billion yuan in the first half of 2025, representing a year-on-year increase of 3.86%, and a net profit attributable to shareholders of 526 million yuan, up 10.70% year-on-year [1][5]. - The CDMO segment showed strong growth with a revenue of 2.291 billion yuan, an increase of 16.27%, and a gross margin of 41.0% [2]. - The company is expanding its project pipeline, with 38 projects already on the market and 90 in Phase III clinical trials, indicating a robust growth trajectory [2][3]. - The company is also enhancing its capabilities in peptide and conjugated drugs, as well as small nucleic acid technology platforms, which are expected to contribute to future growth [3]. Summary by Sections Financial Performance - In Q2 2025, the company achieved a revenue of 1.381 billion yuan, a year-on-year increase of 7.15%, and a net profit of 276 million yuan, up 15.70% year-on-year [1][5]. - The company’s revenue for the first half of 2025 was 2.871 billion yuan, with a net profit of 526 million yuan, reflecting a positive trend in profitability [1][5]. CDMO Business - The CDMO segment's revenue reached 2.291 billion yuan, growing by 16.27%, with a gross margin of 41.0% [2]. - The company has a diverse project pipeline, including 1,086 projects in Phase I and II clinical trials, covering various therapeutic areas [2][3]. Future Projections - Revenue projections for 2025-2027 are estimated at 5.879 billion yuan, 6.319 billion yuan, and 6.731 billion yuan, respectively, with growth rates of 13.9%, 7.5%, and 6.5% [3][4]. - Net profit forecasts for the same period are 919 million yuan, 1.086 billion yuan, and 1.148 billion yuan, with growth rates of 51.6%, 18.2%, and 5.7% [3][4].

R&D Progress and Key Projects - LZM012, targeting IL-17A/F, is the first IL-17A/F inhibitor to complete Phase III clinical trials in China, showing a PASI100 response rate of 49.5%, outperforming the control group at 40.2% [6][7] - LZHN2408, for gout with hyperuricemia, has received clinical approval and is currently in Phase I trials, demonstrating safety and efficacy in preclinical studies [3][8] - H001, an anticoagulant for post-surgical venous thromboembolism, has completed patient enrollment in Phase II trials, showing comparable efficacy to enoxaparin with lower bleeding risks [3][4] New Drug Development - NS-041, a new generation KCNQ2/3 activator for epilepsy, has completed Phase I trials and is set to enroll over 280 patients in Phase II, with no similar drugs currently on the market [4] - SG1001, targeting invasive fungal infections, has completed Phase I trials and is expected to address drug resistance issues [5] - JP-1366, a P-CAB product, has completed Phase III trials and will soon submit for market approval, filling a gap in the domestic P-CAB injection market [5] Strategic Initiatives - The company plans to introduce 6 new drug projects in 2024, with 5 being innovative drugs, focusing on consolidating its leading position in gastrointestinal and neurological fields [9][10] - The acquisition of Vietnam's IMP Company aims to enhance market presence in Southeast Asia, leveraging local production capabilities and distribution networks [11] Clinical Data and Market Potential - LZM012's Phase III data indicates a low adverse reaction rate compared to the control drug, with ongoing evaluations for additional indications and potential overseas licensing [7][10] - The small RNA technology platform is being developed to enhance drug delivery systems, with a focus on the gout project as a leading initiative [8] Efficiency Improvements - The company has reformed its R&D system to improve efficiency through strategic project management and resource allocation, focusing on high-quality advancements in key therapeutic areas [11]