Investment Rating - The investment rating for the company is "Buy" with a target price of RMB 57.07 [1][5]. Core Views - The company reported a steady revenue growth in 1H25, achieving revenue of RMB 21.67 billion (up 3.4% YoY) and a net profit of RMB 1.81 billion (up 7.0% YoY) [1]. - The report highlights the gradual improvement of the company's self-developed innovative drug pipeline and the limited impact of the 2025 centralized procurement [1][2]. - The domestic innovative drugs are expected to see rapid growth, with several products already gaining market traction [2][4]. Summary by Sections Financial Performance - In 1H25, the company achieved revenue of RMB 21.67 billion, with a net profit of RMB 1.81 billion and a non-GAAP net profit of RMB 1.76 billion [1]. - For 2Q25, revenue was RMB 10.94 billion (up 3.6% YoY) and net profit was RMB 0.90 billion (up 8.0% YoY) [1]. Industrial Growth - The company’s industrial revenue in East China reached RMB 7.32 billion in 1H25, up 9.2% YoY, with a net profit of RMB 1.58 billion, up 14.1% YoY [2]. - The report anticipates double-digit growth in industrial revenue for 2025, driven by limited impact from generic drug procurement and the rapid approval of domestic innovative drugs [2]. Innovative Drug Pipeline - The company has a comprehensive GLP-1 innovative drug portfolio, with several products in various stages of clinical trials [4]. - Notable products include BCMA CAR-T, which received approval in March 2024, and is expected to reach a peak domestic revenue of over RMB 1 billion [2][4]. Business Segments - The commercial segment reported revenue of RMB 13.95 billion in 1H25, up 2.9% YoY, while the medical aesthetics segment faced challenges with a revenue decline of 17.5% YoY [3]. - The medical aesthetics segment is expected to see a slight decline in revenue due to increased competition [3]. Profit Forecast and Valuation - The company’s net profit forecasts for 2025-2027 have been slightly adjusted downwards to RMB 3.88 billion, RMB 4.49 billion, and RMB 4.95 billion respectively [5]. - The overall valuation using the SOTP method is estimated at RMB 100.1 billion, with a target price of RMB 57.07 [5][12].

Core Viewpoint - The company achieved its best-ever performance in 2024, with significant growth in net profit and revenue, marking a recovery from previous years' stagnation due to market pressures [2][4]. Financial Performance - In 2024, the company reported total revenue of 41.91 billion yuan, a year-on-year increase of 3.16% [4]. - The net profit attributable to shareholders reached 3.51 billion yuan, reflecting a growth of 23.72% compared to the previous year [4]. - The basic earnings per share increased by 23.60% to 2.0046 yuan [4]. - Total assets at the end of 2024 amounted to 37.88 billion yuan, up 13.04% from the previous year [4]. Business Segments - The company focuses on three core therapeutic areas: oncology, endocrinology, and autoimmune diseases, with its subsidiary, Sino-American East China, being a key revenue driver [2]. - Sales from the pharmaceutical commercial segment reached 27.09 billion yuan, a slight increase of 0.41% [2]. - The medical aesthetics segment reported a revenue of 2.33 billion yuan, down 4.94% due to macroeconomic factors [2]. Innovation and R&D - The company has made significant strides in its innovation pipeline, particularly in the endocrinology sector, with promising results from clinical trials for its GLP-1 receptor agonist [5][8]. - R&D investment increased by 12.2% to 1.43 billion yuan, with over 80 innovative drug projects currently in development [8]. - The company has introduced new products, including CAR-T therapies and ADC drugs, which are expected to contribute significantly to future revenues [7][8]. Market Challenges and Opportunities - The company faced challenges from market competition and regulatory pressures, particularly affecting its older products [6]. - The entry into the pet pharmaceutical market is seen as a growth opportunity, with significant sales potential from newly acquired products [3][7].