Investment Rating - The report assigns a "Hold" rating for the stock, indicating that the stock price is expected to fluctuate within ±5% of the benchmark [13]. Core Views - The report highlights that the company's performance is under pressure due to industry cyclicality, but there is a marginal acceleration in order growth, suggesting potential improvement in future financial results [2][3]. - The company is focusing on expanding its overseas market presence, with international revenue showing a year-on-year increase of 7.13% in the first half of 2025, accounting for 37.69% of total revenue [4][5]. Summary by Sections Financial Performance - In the first half of 2025, the company reported total revenue of 669 million yuan, a year-on-year decline of 21.29%. The net profit attributable to the parent company was 61 million yuan, marking a return to profitability [1][2]. - The laboratory services segment experienced a significant decline in profit, with a net loss of approximately 97 million yuan, primarily due to increased competition leading to a drop in gross margin [2]. - The company had an order backlog of approximately 2.3 billion yuan as of the first half of 2025, indicating a recovery from the previous quarter [2]. Market Expansion - The company has signed nearly 500 projects for international submissions over the past two and a half years, with over 90% of these projects being dual submissions in China and the United States [4]. - The internationalization strategy is supported by comprehensive industry qualifications, enabling smooth operations in global markets [4]. Earnings Forecast - The company is projected to achieve revenues of 1.812 billion yuan, 2.087 billion yuan, and 2.406 billion yuan for the years 2025, 2026, and 2027, respectively. The net profit attributable to the parent company is expected to be 230 million yuan, 296 million yuan, and 367 million yuan for the same years [7].

Summary of Preclinical CRO Industry Conference Call Industry Overview - The preclinical CRO industry is experiencing a decline in demand and increased competition since the second half of 2023, leading to a price war. The overall industry is expected to remain sluggish in 2024, with only slight growth anticipated in 2025, recovering slowly [1][2] - Large pharmaceutical companies now account for 70% of orders, while biotechnology companies have seen their share drop to 30% [5] Key Trends and Insights - There has been a slight increase in domestic project demand, but foreign orders remain scarce. Expanding into international markets, particularly in monkey resources, could enhance profit margins [1][6] - The fastest-growing drug types are concentrated in ADC, bispecific antibodies, and small nucleic acids, while orders for cell and gene therapies have decreased significantly [7][8] - The average cost of monkeys in China is currently around 80,000 yuan, expected to rise to approximately 100,000 yuan in the second half of the year due to reduced supply. However, this price increase is seen as temporary, with potential declines anticipated by 2026 as import channels open [11][12] Pricing and Competition - The preclinical CRO industry entered a price war in the second half of 2023, with prices dropping by 20% in the first half of 2023 and reaching a 50% decline by the end of the year. Prices stabilized at around 40-50% of original levels in 2024 [3][28] - Some leading companies, such as WuXi AppTec, have begun raising prices for animal testing to maintain profit margins, indicating a potential recovery trend [9][10] Market Dynamics - The competitive landscape remains intense, with approximately 70 companies holding GLP certification, but only about 20 capable of handling projects. Market orders are primarily concentrated among a few top-tier companies [16] - Companies are optimizing non-core segments and downsizing to improve efficiency, a trend expected to continue into 2026 [17] Regulatory and Cost Factors - Rising tariffs have increased the cost of testing reagents by less than 10%, primarily affecting project scheduling rather than pricing. Companies are seeking domestic alternatives to mitigate cost pressures [18][19] - The improvement in the domestic investment environment is expected to reflect in order volumes by the second or third quarter of the following year [22] Future Outlook - The industry is actively exploring alternatives to animal testing, such as organoids and organ-on-chip technologies, although complete replacement of animal testing is not yet feasible [23][24] - The opening of import channels for monkeys could lead to a decrease in domestic prices, contingent on government policy [13][14] Conclusion - The preclinical CRO industry is navigating a challenging landscape characterized by declining demand, price competition, and evolving regulatory requirements. Companies are adapting by optimizing operations and exploring new technologies to remain competitive in the long term [2][23]

Investment Rating - The report rates Thermo Fisher as "Buy" with a target price indicating a potential upside of 31.8% [2] Core Insights - The performance of C(D)MO and life sciences upstream companies is showing positive trends, while clinical CRO companies are experiencing a decline in demand [1][4] - The overall revenue and profit growth for the tracked companies in 2024 remains under pressure, but half of them showed improvement in the second half of 2024 compared to the first half [6][7] - The demand outlook for 2025 varies significantly across different segments, with C(D)MO and life sciences upstream companies being optimistic, while clinical CRO companies maintain a cautious stance [1][4][38] Summary by Sections Profit Recovery - Profit recovery is outpacing revenue recovery, with the median and average profit growth rates for the industry in 2024 at +2.4% and +3.5%, respectively, compared to -6.2% and -7.2% in 2023 [7][24] - The average gross margin for the tracked companies decreased from 46.4% in 2022 to 41.7% in 2024, indicating pressure from demand weakness [24][25] Demand Trends - C(D)MO companies are witnessing strong commercial production demand, with Lonza and Samsung Bio reporting significant growth in their C(D)MO revenues [38][39] - Life sciences upstream companies are benefiting from the completion of inventory destocking by downstream clients, leading to a recovery in demand [39][40] 2025 Performance Guidance - C(D)MO and life sciences upstream companies are providing improved performance guidance for 2025, while clinical CRO companies are showing a notable deterioration in their outlook [1][4][39] - Lonza expects its C(D)MO revenue growth to approach 20% in 2025, while Samsung Bio anticipates a continued growth of 20-25% [1][4] Long-term Growth Support - The global healthcare financing is stabilizing, with a 1.4% year-on-year increase in 2024, marking the first positive growth since 2021 [1][4] - Pharmaceutical companies' strong free cash flow will continue to support innovation and research and development [1][4] Market Reactions - Following the 4Q24 earnings releases, stock price reactions varied significantly across different segments, with C(D)MO and clinical pre-CRO stocks performing better than life sciences upstream and clinical CRO stocks [30][31]