Investment Rating - The investment rating for the company is "Buy" (maintained) [5] Core Views - Short-term performance is under pressure, but international expansion of innovative products opens up long-term growth opportunities [5] - The company reported a significant decline in revenue and net profit in the first half of 2025, primarily due to reduced demand in its large infusion and intermediate products business [7] - The company has a leading global ADC (Antibody-Drug Conjugate) R&D platform, with substantial potential in overseas markets [7] - The company has successfully transitioned from generic to innovative drug development, with significant R&D investments expected to yield returns [7] Financial Performance Summary - In the first half of 2025, the company achieved revenue of 9.08 billion (RMB), a year-on-year decrease of 23.2%, and a net profit of 1.0 billion (RMB), down 44.4% [7] - The revenue forecast for 2025 is 19.376 billion (RMB), with a year-on-year growth rate of -11.17% [6] - The projected net profit for 2025 is 2.417 billion (RMB), with a year-on-year decline of 17.67% [6] - The company’s gross margin for the first half of 2025 was 49.76%, a decrease of 4.07 percentage points year-on-year [7] - The company’s R&D expenses as a percentage of revenue increased to 11.54%, up 2.42 percentage points year-on-year [7] Business Segment Performance - Revenue from large infusion products in the first half of 2025 was 3.75 billion (RMB), a decline of 19.65% year-on-year [7] - Revenue from non-infusion pharmaceuticals was 1.955 billion (RMB), down 3.18% year-on-year [7] - Revenue from antibiotic intermediates and raw materials was 2.282 billion (RMB), a decrease of 30.29% year-on-year [7] - Overseas revenue was 1.13 billion (RMB), down 39.69% year-on-year, mainly due to a decline in overseas licensing income [7] Future Outlook - The company is expected to see a recovery in revenue from its two main business segments in 2026 [7] - The projected net profit for 2026 is 2.943 billion (RMB), with a year-on-year growth rate of 21.74% [6] - The company is positioned to become a leading global pharmaceutical enterprise, with significant growth potential in innovative drugs [7]

Core Viewpoint - Lyon's report indicates that Rongchang Biologics (09995) achieved a 39.1% year-on-year increase in sales for the second quarter, which, while below market expectations, exceeded the company's annual guidance [1] - The net loss narrowed by 54.7% year-on-year, outperforming market expectations [1] - The management maintains its annual sales guidance, anticipating over 30% year-on-year growth, and expects to achieve breakeven by 2026 [1] Financial Performance - Second quarter sales increased by 39.1% year-on-year [1] - Net loss reduced by 54.7% year-on-year [1] - Annual sales guidance remains unchanged, with expectations of over 30% growth [1] Business Development - The indications for RC18 and RC48 are gradually expanding [1] - The company's new immunotherapy (I/O) and ADC research and development pipeline is taking shape [1] Profit Forecast and Target Price - Profit forecasts for 2025, 2026, and 2027 have been raised by 79.6%, 106.9%, and 116.4% respectively [1] - Target price has been significantly increased from HKD 33.7 to HKD 103, while maintaining an "outperform" rating [1]

Core Viewpoint - The report from Credit Lyonnais indicates that Rongchang Biologics (09995) achieved a 39.1% year-on-year increase in sales for the second quarter, which, while below market expectations, exceeded the company's annual guidance [1]. Financial Performance - The net loss narrowed by 54.7% year-on-year, outperforming market expectations [1]. - The management maintained the annual sales guidance, projecting a year-on-year increase of over 30% [1]. Business Development - The indications for RC18 and RC48 are gradually expanding, and the company's new immunotherapy (I/O) and ADC research and development pipeline is taking shape [1]. - Credit Lyonnais has raised its net profit forecasts for 2025, 2026, and 2027 by 79.6%, 106.9%, and 116.4% respectively [1]. Target Price Adjustment - The target price has been significantly raised from HKD 33.7 to HKD 103, while maintaining an "outperform" rating [1].

Market Position and Growth Potential - Kanghong Pharmaceutical has established a leading position in the Chinese ophthalmic anti-VEGF market, competing against three major global brands [2] - The company has successfully navigated market challenges over the past decade, demonstrating confidence in continuing to outperform international competitors [2] - The incidence rates of the five major indications for anti-VEGF products are stable, suggesting that Kanghong's growth will align with the overall market trend [2] Research and Development Strategy - The company focuses on key therapeutic areas: ophthalmology, psychiatry/neuroscience, and oncology, with a diversified R&D system covering traditional Chinese medicine, antibody drugs, gene therapy (AAV), and small molecule drugs [3] - Kanghong is advancing multiple innovative projects, including the "Shu Gan Jie Yu Capsule" for anxiety disorders, which is currently in phase III clinical trials [3][7] - The company plans to disclose clinical data for its gene therapy products through international academic journals and conferences [4] Financial Outlook - For 2025, Kanghong anticipates a revenue growth of 5%-15% compared to 2024, with a similar net profit growth forecast [7] - The "Shu Gan Jie Yu Capsule" is expected to see double-digit growth in 2024, outpacing the overall antidepressant market [7] Competitive Landscape and Policy Impact - The competitive landscape for anti-VEGF products has intensified, with four innovative drugs and two biosimilars entering the market following successful negotiations with national health insurance [5] - Kanghong is adapting to national procurement policies, with a significant portion of its chemical drugs selected for national procurement [4] Talent and Collaboration - The company emphasizes talent acquisition and development to support its R&D needs, particularly in gene therapy and advanced drug delivery systems [6] - External collaborations are viewed as a core strategy for long-term value growth, focusing on complementary technologies and commercial synergies [6]