Core Viewpoint - Kexing Biopharmaceutical Co., Ltd. (referred to as "Kexing Pharmaceutical") has officially listed in Hong Kong after nearly five years of being on the A-share market, marking the beginning of its "A+H" dual-platform financing strategy. However, the company faces multiple challenges, including operational bottlenecks, increasing debt pressure, and governance issues that have raised market confidence concerns [1][2]. Financial Performance - Kexing Pharmaceutical's revenue has shown limited growth in recent years, with significant fluctuations in net profit. The operating revenues for 2022, 2023, 2024, and the first half of 2025 were 1.316 billion, 1.259 billion, 1.407 billion, and 700 million respectively, while net profits were -93 million, -195 million, 27 million, and 79 million respectively. Notably, in the first three quarters of 2025, the revenue reached 1.148 billion, a year-on-year increase of 10.54%, with a net profit of 111 million, marking a staggering year-on-year growth of 547.7% [3][5]. Product and Market Dynamics - The sustainability of Kexing Pharmaceutical's growth is questioned, as 80% of its revenue comes from four core products. The revenue from these products has remained stagnant between 1.2 billion and 1.3 billion from 2022 to 2024. The company's gross margin has also been declining, from 75.4% in 2022 to 63.6% in the first half of 2025 [7][8]. Governance and Compliance Issues - Kexing Pharmaceutical has faced significant governance and compliance issues, including receiving a regulatory warning for inaccurate information disclosure. The company had discrepancies in its earnings forecasts and failed to maintain consistent voluntary disclosures. Additionally, it mismanaged raised funds by investing in non-principal-protected products, which is against regulatory guidelines [9][10]. Shareholder Actions - Prior to the IPO, Kexing Pharmaceutical's controlling shareholder, Deng Xueqin, significantly reduced his holdings, cashing out over 1 billion in just five months. This raised concerns about shareholder intentions and market trust, especially as the company's total market value is only 6.78 billion [11][15].

Core Viewpoint - The article discusses the recent IPO of Kexing Pharmaceutical Co., Ltd. in Hong Kong, highlighting the challenges it faces in gaining market trust due to governance issues, financial performance, and the actions of its controlling shareholder [1][5][19]. Financial Performance - Kexing Pharmaceutical's financial data shows a transition from continuous losses to a turnaround, with revenues of 1.316 billion, 1.259 billion, 1.407 billion, and 700 million yuan for the years 2022, 2023, 2024, and the first half of 2025 respectively, while net profits fluctuated from -93 million to 79 million yuan during the same period [6][7]. - In the first three quarters of 2025, the company reported a revenue of 1.148 billion yuan, a year-on-year increase of 10.54%, and a net profit of 111 million yuan, reflecting a significant growth of 547.7% [7]. - The growth in revenue is attributed to the expansion into overseas markets, with overseas revenue increasing from 160 million yuan in 2022 to 224 million yuan in 2024, and reaching 177 million yuan in the first three quarters of 2025, accounting for 25.9% of total revenue [8]. Product and Market Challenges - Kexing Pharmaceutical's core products, which account for 80% of its revenue, are facing growth limitations, with a significant reliance on four main products that contributed 98.9%, 96.1%, 89.5%, and 79.5% of revenue from 2022 to the first half of 2025 [9][10]. - The overall gross margin has been declining, with rates of 75.4%, 70.8%, 68.7%, and 63.6% from 2022 to the first half of 2025 [11]. Governance and Compliance Issues - The company has faced regulatory scrutiny, receiving a warning letter for issues related to information disclosure and improper use of raised funds, including investing in non-principal-protected products [13][17]. - There were significant discrepancies in performance forecasts, with the 2023 annual profit forecast being significantly off from the actual results, leading to regulatory concerns about the accuracy of disclosures [14][15]. Shareholder Actions - Prior to the IPO, the controlling shareholder, Deng Xueqin, sold shares worth over 1 billion yuan, raising concerns about potential shareholder cash-out and its impact on market confidence [19][22][23].

Company Overview - Kexing Bio-Pharmaceutical Co., Ltd. is an innovative international biopharmaceutical company focused on the research, development, production, and sales of recombinant protein drugs and micro-ecological preparations, targeting areas such as antiviral, oncology, immunology, hematology, and degenerative diseases [4][9] - The company has established a national marketing network covering approximately 8,000 hospitals and has achieved market access and sales in over 70 countries, including the EU, Brazil, and Egypt [4][8] Financial Performance - For the first half of 2025, the company reported a revenue of approximately 700.46 million yuan, a decrease of 7.82% compared to the same period last year [2][3] - The total profit reached approximately 84.13 million yuan, representing a significant increase of 100.40% year-on-year [2][3] - The net profit attributable to shareholders was approximately 80.34 million yuan, a remarkable increase of 576.45% compared to the previous year [2][3] Key Financial Indicators - Basic earnings per share for the first half of 2025 were 0.41 yuan, up 578.63% from the previous year [3] - The weighted average return on equity was 4.80%, compared to 0.73% in the same period last year [3] - Research and development expenses accounted for 13.70% of revenue, an increase from 11.52% year-on-year [3] Business Model and Operations - The company employs a "sales-driven production and demand-based procurement" model, ensuring production aligns with sales forecasts [7][8] - Kexing Bio has a complete and controllable R&D, procurement, production, and marketing system, allowing for independent operations [7][8] Industry Context - The biopharmaceutical industry in China is undergoing significant transformation, with a shift towards innovation-driven growth supported by government policies and technological advancements [9] - The overall pharmaceutical manufacturing industry has seen a slight decline in revenue, but is expected to stabilize and recover as innovation policies take effect [9]

Investment Rating - The report maintains a "Buy" rating for the company, expecting the stock price to outperform the industry index by more than 15% in the next six months [4][17]. Core Insights - The company is experiencing rapid growth in overseas revenue, with a projected 61.96% year-on-year increase in overseas sales to approximately 224.37 million yuan in 2024, primarily driven by the sales growth of albumin paclitaxel in the EU [2]. - The company is actively pursuing an "internationalization" strategy, enhancing its overseas marketing structure and focusing on key disease areas, which has established it as a model for the domestic pharmaceutical industry's expansion abroad [2]. - The company has a strong pipeline of innovative drugs, particularly in oncology, immunology, and degenerative diseases, with several projects showing promising preclinical results and progressing towards clinical trials [3]. Financial Summary - The company is projected to achieve a revenue of 1.407 billion yuan in 2024, representing a year-on-year growth of 11.7%, and is expected to turn a profit with a net profit of 31 million yuan [1]. - The company's revenue is expected to grow significantly over the next few years, reaching 2.701 billion yuan by 2027, with a compound annual growth rate (CAGR) of 19.5% from 2024 to 2027 [1]. - The return on equity (ROE) is expected to improve from -12.0% in 2023 to 14.1% by 2027, indicating a recovery in profitability [1]. Market Position - The company has established a strong presence in over 40 emerging market countries, covering regions such as Central and South America, Southeast Asia, and the Middle East and North Africa [2]. - The company maintains leading market shares in several domestic products, including "Sai Ruojin" in the short-acting interferon market and "Lai Ting" in the infliximab market [8].