Core Viewpoint - The new Nasdaq listing rules implemented on January 17, 2026, significantly raise the financial thresholds for IPOs, prompting more Chinese companies to consider the U.S. OTC market as a key platform for cross-border capital deployment [1] Group 1: Nasdaq New Rules - The net income standard has increased from $5 million to $15 million, a 200% increase [6] - The revenue standard has risen from $8 million to $15 million, an 87.5% increase [6] - A minimum fundraising threshold of $25 million has been set for companies primarily operating in China, prohibiting them from listing directly on Nasdaq [6] - The review authority has been upgraded, allowing exchanges to reject listing applications even if companies meet written financial standards if they are deemed to have potential risks of securities manipulation [6] Group 2: OTC Market Developments - In January 2026, only one Chinese company successfully listed on the OTCQX Best Market, highlighting the challenges faced by Chinese firms in the U.S. capital market [1] - Over 800 Chinese companies have already established a presence in the U.S. OTC market by the end of 2025, covering various sectors such as new energy, biomedicine, intelligent manufacturing, and new materials [1] - The OTC market is becoming a preferred choice for Chinese companies due to its flexible processes, moderate thresholds, and suitable regulatory environment [4] Group 3: Company Listings - Boray Pharmaceutical Co., Ltd. successfully listed on the OTCQX on January 7, 2026, becoming the first issuer from Taiwan to do so, leveraging its main board listing in Taiwan to simplify the U.S. market approval process [2] - Yichang Keli Sheng Group utilized a shell company acquisition to list on the OTC, demonstrating a model for small and medium enterprises to enter the U.S. market [3] - The shell company acquisition model significantly shortens the listing cycle and avoids the lengthy review process associated with traditional IPOs, providing a platform for small enterprises with core technologies [3] Group 4: Pathways for Chinese Companies - Direct application for listing on OTCQX is one pathway for companies with established business and compliance systems, laying the groundwork for future transitions to the main board [8] - The shell company acquisition and asset injection method allows for quick and cost-effective listings, suitable for small enterprises seeking cross-border financing [8] - The current mainstream strategy for Chinese companies involves initial fundraising in the OTC market, followed by compliance upgrades and eventual transition to Nasdaq or NYSE [8]

Investment Rating - The report assigns a "Buy-A" investment rating to the company [5] Core Views - The company is focused on building a leading innovative drug CDMO platform centered on technological innovation, providing comprehensive services to global pharmaceutical companies [13][21] - The sales of the company's key product, Entresto, have shown significant growth, with sales increasing from $507 million in 2017 to $7.822 billion in 2024, reflecting a CAGR of 47.83% [49] - The company is expanding its capabilities in peptide conjugates and small nucleic acid technologies, enhancing its TIDES business [2][50] Summary by Sections 1. Company Overview - The company specializes in small molecule drugs, peptide drugs, conjugated drugs, and small nucleic acid drug R&D and production, offering a one-stop solution from preclinical CMC to commercialization [13] - The management team possesses international experience and a strong background in pharmaceuticals, which supports the company's expansion in the innovative drug CDMO sector [17] 2. Business Segments Small Molecule CDMO - The company has established a leading technology platform to support global pharmaceutical companies, particularly in supplying raw materials for key products like Entresto [3][49] Peptide Conjugate CDMO - The TIDES division is actively expanding its peptide production capacity, with significant investments made to meet growing customer demands [2][50] API Business - The company has strategically positioned itself in the market for specialty APIs, including anti-infectives, CNS drugs, NSAIDs, and antidiabetic drugs, with stable sales growth across these categories [3][55] 3. Financial Projections - The company is projected to achieve net profits of 921 million, 1.052 billion, and 1.158 billion yuan from 2025 to 2027, with respective growth rates of 52.0%, 14.2%, and 10.0% [4][62] - Revenue is expected to grow from 5.635 billion yuan in 2025 to 6.711 billion yuan in 2027, reflecting a steady increase in demand for its services [62] 4. Market Dynamics - The demand for CDMO services is anticipated to recover due to ongoing investments in innovative drug development, particularly in oncology, hypertension, and weight loss sectors [35] - The company has established long-term partnerships with major pharmaceutical firms, which provides a solid foundation for future growth [41]