Core Viewpoint - The market is becoming increasingly cautious as the Spring Festival approaches, with a focus on performance as a safe haven for investments, rather than speculative stories [1][2] Group 1: Investment Strategy - Investors should avoid the misconception that good performance guarantees profits; key factors include valuation, institutional holdings, and industry trends [1][2] - The correct investment logic involves looking for marginal performance improvement, low valuation (below 30% percentile), concentrated institutional holdings, and industry catalysts [2] Group 2: Key Sectors to Explore - **AI Power and Computing Infrastructure**: Strong demand driven by energy supply constraints; significant investments expected during the "14th Five-Year Plan" period [1][2] - **Semiconductors and AI Applications**: Anticipated market growth to $697 billion in 2025, with a focus on companies with solid order backlogs [6] - **Robotics**: Institutions are increasing allocations in this sector, with a focus on core components and automation penetration [6] - **Non-bank Financials**: Valuation recovery potential in brokerage firms, with a projected net profit of 30.05 billion yuan for CITIC Securities in 2025 [11] - **CXO in Pharmaceuticals**: Focus on companies with solid order books and revenue growth, particularly in ADC segments [16] - **Cash Flow Stable and Dividend Stocks**: High dividend yield stocks with stable cash flow are essential for risk management [18] - **Overseas Expansion**: Companies with strong overseas channels and brand power are positioned to benefit from global market growth [20] Group 3: Stock Selection Criteria - Stocks should have substantial orders, performance support, and clean ownership structures, avoiding those reliant solely on concepts without fundamentals [7] - Prioritize stocks with marginal performance improvement, low valuations, and institutional accumulation, while confirming the resolution of negative factors [20]

Core Viewpoint - The article emphasizes the importance of focusing on performance metrics rather than speculative stories in the current cautious market environment, especially as the Chinese New Year approaches. It suggests that investors should look for stocks with solid earnings forecasts, but also consider valuation, institutional holdings, industry trends, and potential catalysts before making investment decisions [5][6]. Group 1: Investment Strategy - Investors should avoid the misconception that good performance guarantees profitability, as demonstrated by a case where a CXO company saw a 40% increase in net profit but had already experienced an 80% stock price increase prior to the announcement, leading to a sell-off [6][8]. - Key selection criteria for stocks include marginal performance improvement, low valuation (below the 30th percentile), concentrated institutional holdings, and industry catalysts, supported by favorable policies [8]. Group 2: Sector Analysis - **AI Power and Computing Infrastructure**: The demand for AI-related power and computing infrastructure is strong, with a projected 40% increase in investment from the State Grid during the 14th Five-Year Plan. Companies in this sector are expected to have stable earnings and low valuations [10]. - **Semiconductors and AI Applications**: The semiconductor market is expected to recover in 2025, with a projected global market size of $697 billion, driven by domestic substitution and AI infrastructure needs. Companies with solid order backlogs should be prioritized [13]. - **Robotics**: The robotics sector is gaining attention from institutional investors, with a focus on companies that have substantial orders and clean shareholding structures. The sector is expected to benefit from increased automation in manufacturing by 2026 [14]. - **Non-Ferrous Chemicals**: The non-ferrous sector is linked to the demand for new energy and AI infrastructure, with potential recovery in demand for industrial metals like copper and aluminum by 2025 [15]. - **Commercial Aerospace and Satellites**: Despite recent stock price corrections, the long-term outlook for the aerospace sector remains positive, with upcoming satellite launches and applications expected to drive performance [16]. - **Non-Bank Financials**: The brokerage sector is expected to benefit from increased market activity, with estimates of net profit for CITIC Securities reaching 30.05 billion yuan in 2025, a 38.46% increase [18]. - **CXO in Pharmaceuticals**: The pharmaceutical sector should focus on CXO companies with solid performance metrics, as the global biopharmaceutical investment is expected to reach $63.88 billion in 2025, a 10.13% increase [20]. - **Cash Flow and Dividend Stocks**: In a cautious market, stocks with stable cash flow and high dividend yields (over 4%) are recommended as defensive positions [23]. - **Overseas Expansion**: Companies with strong overseas channels and brand power are positioned to benefit from global market growth, particularly in manufacturing sectors [24]. Group 3: Portfolio Management - Investors are advised to diversify their portfolios, suggesting a mix of 50% growth stocks, 30% defensive value stocks, and 20% turnaround opportunities to mitigate risks in a volatile market [28].

交银国际发表研报指，药明合联发布2025年正面盈利预告，其中收入年增45%以上，得益于订单高速增 长及无锡DP3的投产；毛利大幅增长70%以上，产能利用率和生产效率的提升、有效的成本控制持续推 动利润率改善。订单表现同样亮眼，2025年内，公司共新签70个综合CMC项目，年末综合CMC项目数 达到252个，在全球XDC/XDCCRDMO赛道中位居第一。 根据公司去年业绩预告、更进取的产能扩张计划和管理层最新指引，该行上调公司今明两年净利润预测 2%至3%、提高2027年以后的盈利及资本开支预测。以现金流折现率计，该行上调对其目标价至91港 元，维持"买入"评级及CXO行业首推，看好高景气度赛道龙头的长期高成长确定性。 ...

Core Viewpoint - The recent share reduction by WuXi AppTec should be understood in the context of a long-term capital partnership spanning over a decade, reflecting the characteristics of typical long-term capital investment [1] Group 1: Share Reduction Context - The shares being reduced were acquired before WuXi AppTec's A-share IPO, with the involved institutions having supported the company for 11 years [1] - The reduction process was clear and executed swiftly, with well-known international investment institutions successfully taking over the shares, indicating a re-evaluation of the company's certainty in the market [1][2] Group 2: Market Reaction - The share reduction did not disturb the stock price due to the "certainty" of the transaction structure, with discussions shifting from "who is selling" to "who is buying" [2] - International capital's choice to acquire shares during a cautious asset allocation phase reflects recognition of WuXi AppTec's fundamental resilience and long-term competitiveness [2] Group 3: Financial Performance - WuXi AppTec's projected revenue for 2025 is expected to reach 45.5 billion yuan, a year-on-year increase of 15.84%, with the growth rate of ongoing business significantly outpacing overall revenue growth [2] - The company's net profit attributable to shareholders is expected to grow by over 100% year-on-year, with profit growth significantly outpacing revenue growth, maintaining a high net profit margin within the global CXO industry [2] Group 4: Business Model and Future Outlook - The quality of profitability is supported by WuXi AppTec's integrated CRDMO business model, which enhances customer stickiness and project stability during industry demand fluctuations [3] - Despite tightening global pharmaceutical investment conditions, the company continues to achieve record levels of order backlog, providing higher visibility for future performance and boosting long-term capital confidence in its cash flow and operational safety [3] - The share reduction has not weakened the long-term investment logic for WuXi AppTec; instead, it has clarified the company's operational resilience, profitability, and strategic determination in the market [3]

Investment Rating - The report maintains an "Outperform" rating for several companies, including Jiangsu Heng Rui Medicine, Hansoh Pharmaceutical Group, 3SBio, Sichuan Kelun Pharmaceutical, and Jiangsu Nhwa Pharmaceutical [6][7]. Core Insights - The annual J.P. Morgan Healthcare Conference concluded successfully, with positive information from global pharmaceutical companies, including new pipeline disclosures and major deals. The report highlights the high prosperity in the innovative drug sector and recommends continuous investment in innovative drugs and the industry chain [25][26]. - The A-Shares pharmaceutical sector underperformed the market in the third week of January 2026, with the Shanghai Composite Index falling by 0.4% and the SW Pharmaceutical and Biological sector declining by 0.7% [8][27]. - The Hong Kong stock pharmaceutical sector performed in line with the market, while the U.S. pharmaceutical sector underperformed. The Hang Seng Healthcare index increased by 2.4%, and the S&P 500 Healthcare Select Sector decreased by 1.1% [28]. Summary by Sections Section 1: Continuous Recommendation of Innovative Drugs and Industry Chain - The report emphasizes the high prosperity of innovative drugs and maintains overweight ratings for key pharmaceutical companies. It also recommends Biopharma/Biotech companies with promising pipelines and volume increases, as well as CXO and upstream companies benefiting from innovation [6][25]. Section 2: A-Shares Pharmaceutical Sector Performance - In the third week of January 2026, the A-Shares pharmaceutical sector's performance was ranked 17th among Shenwan primary industries, with a decline of 0.7%. The medical service sub-sector showed a positive performance of +3.3% [8][12][27]. Section 3: Hong Kong and U.S. Pharmaceutical Sector Performance - The Hong Kong pharmaceutical sector performed similarly to the market, while the U.S. sector underperformed. Notable gainers in the U.S. included MODERNA (+22%) and QUEST DIAGNOSTICS (+9%), while major decliners included BIOGEN (-12%) and BOSTON SCIENTIFIC (-10%) [28].

Investment Rating - The industry rating is "Outperform the Market" indicating that the overall return of the industry is expected to exceed the market benchmark index by more than 5% in the next 6 months [69]. Core Insights - The report highlights a strong recovery in investment and financing activities in the CXO sector, with significant increases in both primary and secondary market financing in the biotech industry [4][18][23]. - The JPM conference revealed that many CXO companies expressed optimism for 2026, driven by project structure optimization, improved operational efficiency, and sustained customer demand [4][28]. - The report emphasizes the importance of technological innovation in the pharmaceutical sector for 2026, with a focus on innovative drugs and medical devices [5]. Summary by Sections Investment and Financing Trends - Since September 2025, overseas primary market financing has shown strong recovery, with a total of $8.72 billion in Q4 2025, a year-on-year decrease of 2.4% but a quarter-on-quarter increase of 21% [4][18]. - In January 2026, the total financing amount reached $3.34 billion, indicating a significant recovery compared to previous months [4][18]. - The secondary market for biotech also saw a robust recovery, with Q4 2025 financing totaling $19.28 billion, a year-on-year increase of 111% and a quarter-on-quarter increase of 149.5% [23][26]. Market Performance Review - During the week of January 12-16, 2026, the CITIC Pharmaceutical Index fell by 0.72%, underperforming the CSI 300 Index by 0.2 percentage points, ranking 16th among CITIC's primary industry classifications [3][32]. - The pharmaceutical sector has shown a year-to-date increase of 6.9% in 2026, outperforming the CSI 300 Index by 4.7 percentage points, ranking 7th among industry classifications [3][32]. - The top-performing stocks during this week included Baolait (up 48.8%), Hualan Biological (up 32.7%), and Tianzhihang (up 27.7%) [47]. Company Highlights from JPM Conference - WuXi AppTec reported a revenue of 45.5 billion yuan in 2025, a year-on-year increase of 21.4%, and a net profit of 15 billion yuan, up 41.3% [30]. - WuXi Biologics achieved significant growth with a revenue increase driven by its dual antibody business, which saw a year-on-year growth of 120% [30]. - Lonza expects a revenue growth of 20-21% in 2025, with a core EBITDA margin of 30-31% [30]. Investment Strategy - The report suggests focusing on innovative drugs, particularly those with revenue realization and unexpected business development outcomes, as well as cutting-edge technology platforms like gene therapy and CAR-T [5]. - In the medical device sector, attention should be given to equipment replenishment and bidding, particularly in surgical robots and endoscopes [5].

Investment Rating - The industry rating is "Outperform the Market" [7] Core Insights - The report highlights a strong recovery in investment and financing activities in the CXO sector, with significant growth in both primary and secondary markets for biotech [4][18][23] - The JPM conference indicated a positive outlook for 2026, with companies expressing optimism about demand recovery and operational efficiency improvements [4][28] - The report emphasizes the importance of technological innovation in the pharmaceutical sector for 2026, focusing on innovative drugs and medical devices [5][32] Summary by Sections Investment Opportunities and Trends - Primary market financing for overseas biotech reached $8.72 billion in Q4 2025, showing a year-on-year decrease of 2.4% but a quarter-on-quarter increase of 21% [4][18] - In January 2026, primary market financing totaled $3.34 billion, indicating a strong recovery [4][18] - Secondary market financing for overseas biotech in Q4 2025 was $19.28 billion, a year-on-year increase of 111% and a quarter-on-quarter increase of 149.5% [4][23] - The report notes that companies like WuXi AppTec and Danaher exceeded performance expectations, with a general recovery in demand for Pharma and Biotech orders [4][28] Market Performance Review - The CITIC Pharmaceutical Index fell by 0.72% from January 12 to January 16, 2026, underperforming the CSI 300 Index by 0.2 percentage points [3][32] - The pharmaceutical sector has seen a 6.9% increase since the beginning of 2026, outperforming the CSI 300 Index by 4.7 percentage points [3][32] - The top-performing stocks during this period included Baolai Te (+48.8%), Hualan Biological Engineering (+32.7%), and Tianzhihang (+27.7%) [3][47] Company Performance and Recommendations - The report suggests focusing on companies such as WuXi AppTec, Beigene, and others for potential investment opportunities in 2026 [5][54] - The report outlines a strategy for innovative drugs, emphasizing revenue realization, unexpected business development, and cutting-edge technology platforms [5][32] - The medical device sector is highlighted for its potential in equipment replenishment and innovative consumables benefiting from centralized procurement [5][32]

Core Viewpoint - The Hong Kong stock market continues to adjust, with the pharmaceutical sector declining alongside the market, particularly affected by a short-term cooling of AI medical concepts [1][12]. Group 1: Market Performance - The Hong Kong Medical ETF Huabao (159137) fell by 0.93%, marking two consecutive days of decline, while the Hong Kong Innovation Drug ETF (520880) dropped by 1.08% [1][12]. - The medical sector saw 13 stocks rise and 37 fall, with Ark Health, a hot stock in AI medical concepts, leading the decline at 6.98%, and Alibaba Health also falling by 5.16% [2][13]. - The Hong Kong Medical Theme Index achieved a record nine consecutive days of gains before experiencing a pullback, with the Medical ETF Huabao having a cumulative increase of 6.9% in its first week, outperforming the Hang Seng Index [3][14]. Group 2: Sector Analysis - The Hong Kong Medical ETF Huabao covers 50 leading stocks across various medical fields, including CXO, AI medical, medical devices, and innovative drugs, indicating a comprehensive approach to capturing market trends [5][16]. - The medical sector has shown significant recovery since 2026, driven by hot themes like brain-computer interfaces and AI medical, with increasing investment value [6][17]. - The CXO sector is expected to see a "Davis Double Play" with both profit and valuation improvements, as demand gradually recovers and supply has been cleared over the past three years [18]. Group 3: Future Outlook - Analysts predict that by 2026, key areas of growth will include innovative overseas expansion and hard technology sectors such as AI medical and brain-computer interfaces, with a focus on monitoring the expansion of medical insurance and essential drug directories [18]. - The Medical ETF Huabao is positioned as a high-elasticity tool for capturing new opportunities in the medical field, particularly in AI medical, brain-computer interfaces, and innovative drug supply chains [18]. - The total scale of the medical ETF fund reached 27 billion yuan, making it the largest in the market for medical-related ETFs [19].

Investment Rating - The investment rating for WuXi AppTec (2268 HK) is maintained at "Buy" with a target price of HKD 82.24 [8][14]. Core Insights - WuXi AppTec is expected to see significant revenue growth in 2025, with revenue, gross profit, net profit, and adjusted net profit projected to increase by over 45%, 70%, 38%, and 65% year-on-year, respectively [1][2]. - The company plans to acquire Dongyao Pharmaceutical for approximately HKD 3.09 billion, which is anticipated to enhance its competitive edge and capacity [5][6]. - The demand for Contract Research, Development, and Manufacturing Organization (CRDMO) services is expected to rise as global Antibody-Drug Conjugate (ADC) pipelines commercialize [1][3]. Revenue and Profit Forecast - Revenue for 2025 is estimated at approximately HKD 59.6 billion, with a gross profit of HKD 21.1 billion and a net profit of HKD 14.7 billion [2][12]. - The gross margin is projected to be around 35.4%, an increase of about 5 percentage points from 2024, indicating strong operational efficiency [2][12]. - Adjusted net profit is expected to grow by over 65% for the year, despite a decline in profit margins in the second half of 2025 due to foreign exchange impacts and rising expense ratios [2][12]. Project Pipeline - The company signed 70 new iCMC projects in 2025, with 22 being molecular projects, contributing to a total of 252 iCMC projects [3]. - WuXi AppTec is expected to lead in the development of new conjugated molecules, with over half of the new projects being innovative types [3]. - The global market share is projected to increase from 21.7% in 2024 to over 24% in 2025 [3]. Capacity Expansion - The company is expanding its production capacity, with existing DP capacity in Wuxi being maintained and expanded in 2025 [4]. - New production facilities in Singapore are expected to be operational by mid-2025, with additional overseas capacity coming online in 2026 [4]. - The acquisition of the Hefei base is expected to enhance peptide development and production capabilities, with an annual capacity exceeding 40 kg [4]. Acquisition of Dongyao - The acquisition of Dongyao Pharmaceutical is expected to strengthen WuXi AppTec's existing competitive position, as Dongyao has significant production capabilities and a strong client base [5][6]. - Dongyao operates two antibody bulk production lines and three independent ADC bulk production workshops, which will complement WuXi AppTec's offerings [5]. Earnings Forecast and Valuation - Adjusted net profit forecasts for 2025, 2026, and 2027 are revised to HKD 15.9 billion, HKD 22.4 billion, and HKD 31.6 billion, respectively, reflecting a CAGR of 39% [6][12]. - The target price is based on a PEG ratio of 1.06x for 2026, aligning with comparable companies in the sector [6][14].

Core Viewpoint - The CXO sector is experiencing growth driven by new molecular developments, improved market sentiment, and the increasing demand for innovative drug research in the domestic market, alongside advancements in AI-enabled drug development [1] Group 1: Market Trends - In the first half of 2024, the CXO sector continued to decline due to the impact of the U.S. Biosecurity Act and adjustments in corporate earnings growth expectations [2] - By September 2024, a policy-driven bull market emerged in the domestic stock market, leading to a simultaneous rise in CXO stock prices as geopolitical risks temporarily eased [2] - In March 2025, some leading CXO companies reported better-than-expected order data, injecting valuation into the secondary market [2] Group 2: Macroeconomic Environment - The Federal Reserve's interest rate cut cycle is expected to improve the financing environment for the pharmaceutical and biotechnology sectors, benefiting outsourcing service demand from pharmaceutical companies [3] - Geopolitical uncertainties are gradually being released, with the U.S. Fiscal Year 2026 National Defense Authorization Act already enacted, and updates to the SEC 1260H list expected to further reduce risks for leading CXO companies [3] Group 3: Industry Dynamics - Domestic demand is accelerating recovery, with the number of new drug IND applications in China steadily increasing in 2025, reaching 395, 410, 526, and 509 for Q1, Q2, Q3, and Q4 respectively [4] - The total investment in China's healthcare sector in 2025 is projected to be 93.54 billion yuan, a year-on-year increase of 83.7%, with 626 investment events recorded, up 26.7% year-on-year [4] - Globally, the healthcare sector's investment in 2025 is expected to total 591.19 billion yuan, a year-on-year decrease of 20.9%, but the decline is expected to narrow over the quarters [4]