Core Viewpoint - The company reported a stable revenue growth in the first half of 2025, driven by the recovery from previous negative impacts and the strong performance of innovative products Group 1: Financial Performance - In the first half of 2025, the company achieved a revenue of 4.002 billion yuan, representing a year-on-year increase of 10.8% [1] - The net profit attributable to shareholders was 941 million yuan, reflecting a growth of 3.38% [1] Group 2: Product Development and Innovation - The sales of exclusive/brand and innovative products increased by 20.6% year-on-year, accounting for 62.1% of total revenue, up from 56.1% in the same period last year [2] - The company is advancing its innovative drug pipeline, with several products in various stages of clinical trials, including NDA reviews and Phase III trials [2] - The company has recently acquired rights for new products targeting Alzheimer's disease and asthma, enhancing its product matrix in cardiovascular, central nervous system, digestive, and renal fields [2] Group 3: Segment Performance - The dermatology segment (Demey Pharmaceutical) showed significant growth, with revenue reaching 498 million yuan, a remarkable increase of 104.3% [3] - Demey Pharmaceutical has a strong pipeline with three marketed products and four in clinical stages, indicating potential for continued high growth [3] - The company plans to spin off Demey Pharmaceutical for independent listing, which is expected to help in the revaluation of its dermatology products and pipeline [3] Group 4: Revenue and Profit Forecast - Revenue projections for 2025 to 2027 are 8.053 billion yuan, 9.439 billion yuan, and 11.651 billion yuan, with year-on-year growth rates of 7.8%, 17.2%, and 23.4% respectively [4] - Net profit forecasts for the same period are 1.685 billion yuan, 1.956 billion yuan, and 2.465 billion yuan, with growth rates of 4.0%, 16.1%, and 26.1% respectively [4] - The company is rated with a "buy" recommendation based on its projected PE ratios of 17.7, 15.3, and 12.1 for the years 2025, 2026, and 2027 respectively [4]

Investment Rating - The investment rating for the company is "Buy" [1] Core Views - The company has shown continuous growth in innovative products, with a notable performance in the skin health line [4] - The company reported a revenue of 4.002 billion yuan in the first half of 2025, representing a year-on-year increase of 10.8%, and a net profit attributable to shareholders of 941 million yuan, up 3.38% [5] - The sales of exclusive/brand and innovative products increased by 20.6% year-on-year, accounting for 62.1% of total revenue [5] - The company is advancing its innovative drug pipeline, with several products in various stages of clinical trials [5] - The skin health line (Demeg Pharmaceuticals) achieved a revenue of 498 million yuan, a significant increase of 104.3% [5] - The company plans to spin off Demeg Pharmaceuticals for independent listing, which is expected to help in the revaluation of its skin care product line [5] - Revenue forecasts for 2025 to 2027 are 8.053 billion yuan, 9.439 billion yuan, and 11.651 billion yuan, with corresponding net profits of 1.685 billion yuan, 1.956 billion yuan, and 2.465 billion yuan [6] Summary by Sections Company Overview - The company is focused on innovative pharmaceuticals, particularly in cardiovascular, central nervous system, digestive, and renal fields [5] Financial Performance - The company’s current P/E ratio is 18.12, with a market capitalization of 32.787 billion HKD [5] - The projected revenue growth rates for 2025, 2026, and 2027 are 7.8%, 17.2%, and 23.4% respectively [6] Product Pipeline - The company has a robust pipeline with several innovative drugs under development, including those for chronic kidney disease and asthma [5] Market Position - The company has established a strong market presence with a comprehensive product matrix and experienced commercialization capabilities [5]

Core Viewpoint - CICC maintains its earnings forecast for Kangzheng Pharmaceutical (00867) and keeps the target price at HKD 11.00, corresponding to adjusted P/E ratios of 14.6x and 13.1x for 2025 and 2026 respectively, while the stock is currently trading at 10.8x and 9.7x [1] Group 1: Spin-off Proposal - The company announced a proposal to spin off its subsidiary, Demai Pharmaceutical, for independent listing on the Hong Kong Stock Exchange, pending approvals from relevant authorities and boards [1] - The proposed spin-off will be executed through a physical distribution of shares to existing shareholders, ensuring no dilution of original shareholders' rights [2] Group 2: Demai Pharmaceutical Overview - Demai Pharmaceutical focuses on skin health, with a rich product pipeline including prescription drugs and skincare products [3] - Currently marketed products include Turekizumab (IL-23 for psoriasis), Anshuxi (for varicose veins), and Xiliaotuo (for superficial venous inflammation and bruises), with significant products in development [3] - The company expects to achieve revenue of CNY 618 million in 2024, representing a year-on-year growth of 30.7% [3] Group 3: Potential Benefits of Spin-off - The spin-off is expected to allow Demai Pharmaceutical to conduct independent financing activities, potentially improving operational and financial performance [4] - It is anticipated that the independent listing will enhance Demai Pharmaceutical's business status and market image, supported by two equity incentive plans to motivate employees [4]