Investment Rating - The report assigns a "Buy" rating for the stock of the company, indicating a strong performance relative to the benchmark index [14]. Core Insights - The company's revenue for H1 2025 reached 920 million yuan, a year-on-year increase of 23.48%, while the net profit attributable to the parent company was 72 million yuan, a decline of 26.54% [1]. - The overall gross margin for H1 2025 was 31.05%, down 9.82 percentage points year-on-year, primarily due to downward pressure on order prices and depreciation from new capacity [2]. - The CDMO (Contract Development and Manufacturing Organization) business showed significant growth, with revenue increasing by 60.92% year-on-year to 548 million yuan in H1 2025 [3]. - Domestic demand is beginning to recover, with revenue from Chinese clients growing by 25.00% to 261 million yuan in H1 2025 [4][5]. - The company is strategically expanding into high-growth areas such as targeted protein degradation drugs, peptides, and ADC (Antibody-Drug Conjugates) [6]. Financial Summary - The company is projected to achieve total revenue of 1.987 billion yuan in 2025, with a year-on-year growth rate of 17.6% [7]. - The estimated net profit attributable to the parent company for 2025 is 177 million yuan, reflecting a year-on-year decline of 19.5% [8]. - The gross margin is expected to be 33.4% in 2025, down from 42.5% in 2023 [7].

Core Insights - The company reported a revenue of 920 million yuan for the first half of the year, representing a year-on-year increase of 23.48%, while the net profit attributable to shareholders decreased by 26.54% to 72 million yuan [1] Group 1: Business Performance - The front-end business (drug research) generated revenue of 154 million yuan, down 7.59%, with block revenue at 136 million yuan (down 4.71%) and CRO revenue at 18 million yuan (down 24.69%) [2] - The back-end business (drug development and commercialization) achieved revenue of 765 million yuan, an increase of 32.27%, with block revenue at 217 million yuan (down 8.80%) and CDMO revenue at 548 million yuan (up 60.92%) [2] - The gross margin for the front-end business was 57.29%, down 7.45 percentage points, while the back-end business gross margin was 25.69%, down 8.30 percentage points [2] Group 2: Strategic Focus and Financial Management - The company is focusing on revenue scale expansion and nurturing strategic clients and key projects, leading to a higher increase in operating costs compared to revenue growth [2] - The company improved cash flow management, with net cash flow from operating activities totaling 467 million yuan, an increase of 240.62% [3] - Revenue from multinational corporations (MNCs) reached 367 million yuan, up 69.73%, enhancing business sustainability [3] Group 3: Future Outlook - The company anticipates a recovery in performance as the pharmaceutical investment and financing environment improves, with adjusted net profit forecasts for 2025-2027 being 172 million, 228 million, and 297 million yuan respectively [3] - The company is shifting its project focus towards the back-end, with over 1,100 early-stage projects and 53 phase 3 and commercialization projects serviced in the first half of the year [2]

Financial Performance - Total revenue for 2024 was 1.689 billion CNY, a decrease of 2.12% year-on-year [6] - Operating cash flow increased by 22.68% to 303 million CNY [6] - Net profit attributable to shareholders rose by 11.24% to 220 million CNY [6] - Earnings per share reached 1.10 CNY, an increase of 12.43% [6] - Gross margin was 38.06%, down by 4.46 percentage points year-on-year [6] Revenue Breakdown - Revenue from drug development and commercialization was 1.354 billion CNY, down 1.83% year-on-year [8] - Revenue from drug research stage products and services was 331 million CNY, a decrease of 4.06% [8] - Revenue from molecular building blocks for drug discovery was 281 million CNY; for drug development and production, it was 491 million CNY [9] Customer Segmentation - Revenue sources by type: 28% from large multinational pharmaceutical companies and 72% from small and medium-sized biopharmaceutical companies [12] - Revenue sources by region: North America contributed 58% (979 million CNY), Europe 11% (193 million CNY), China 27% (449 million CNY), and Japan/Korea and others 4% (68 million CNY) [12] Project Pipeline - Over 2,400 projects in various stages, with 78 projects in clinical phases [15] - Focus on early clinical projects to strengthen later-stage project growth [14] Innovation and Technology - Cumulative design of over 200,000 novel molecular building blocks, with over 45,000 compounds synthesized [23] - Development of unique solutions to accelerate new drug research, including an AI-driven drug discovery platform [27] - Continuous flow chemistry and low-carbon technology innovations are key to sustainable development [50] ESG Commitment - Achieved AA rating in Wind ESG assessment and joined the UN Global Compact [72] - Received multiple awards for sustainability and green chemistry excellence [52] Future Strategy - Focus on enhancing customer value creation and strengthening technology transformation capabilities [75] - Aim to improve delivery quality and build trust with customers [76]