Core Insights - The Chinese government is prioritizing the development of innovative drugs as a key strategic emerging industry, with significant policy support and a comprehensive support system established for the entire drug development chain [1][4]. - Baiaosaitu (02315.HK) stands out in the industry due to its "dual business line" strategy, positioning itself as a representative of high-tech barrier products [2][6]. Business Lines - The first business line, "Baiao Animals," focuses on humanized animal models, addressing industry pain points by offering over 4,000 innovative animal models, significantly improving research efficiency and controllability for pharmaceutical companies [4][7]. - The second business line, "Thousand Mice, Ten Thousand Antibodies," centers on the development of fully human antibody molecules, utilizing the RenMice® platform to create a vast library of antibody candidates, thus shortening the research and development cycle [5][8]. Competitive Advantages - Baiaosaitu has established a complete integrated research and development platform, breaking foreign technology monopolies and creating a closed-loop system from target validation to molecular discovery [7][9]. - The company’s model allows for sustainable output of standardized and scalable products, differentiating it from traditional biotech firms reliant on single drug pipelines [7][9]. Impact on Healthcare - The innovative drug value ultimately benefits patients, with Baiaosaitu's dual business lines accelerating the global development of innovative drugs, aligning with national health strategies [8][9]. - The company aims to transform China from a "follower" to a "leader" in the innovative drug sector, contributing to global healthcare advancements [8][9]. Future Vision - Baiaosaitu envisions becoming a global source of new drugs, expanding its animal product line and enhancing the RenMice platform with AI and automation technologies [9]. - The company plans to embed itself in multinational pharmaceutical research pipelines through various collaboration models, ensuring long-term growth [9].

Investment Rating - The industry investment rating is "Positive" [1] Core Viewpoints - The report indicates that the turning point has been reached, and there is optimism regarding the elasticity of the scientific services sector [3][6] - The sector has experienced significant adjustments in funding, and with the combination of fundamental turning points and policy support, a valuation reversal is expected [4] Summary by Sections 1. Funding Situation - As of Q1 2025, the total market value of institutional holdings in the scientific services sector is 3.286 billion, accounting for 0.11% of total fund holdings, indicating a low allocation by institutions [4][12] - From January 1, 2025, to May 7, 2025, the average increase in the scientific services sector was 9%, outperforming the pharmaceutical index by 7.7 percentage points [4][13] 2. Fundamentals - **Revenue**: The average year-on-year revenue growth for core scientific service targets in 2024 is 7.17%, with significant recovery in low-consumption categories [5][23] - **Gross Margin**: The average gross margin for core targets in 2024 is 47.99%, with a gradual recovery expected as cost control and capacity utilization improve [5][25] - **Capital Expenditure**: The total capital expenditure for the sector in 2024 is 4.643 billion, a decrease of 35% year-on-year, indicating a shift towards an investment harvest period [5][29] - **Inventory**: The average inventory turnover rate for core targets in 2024 is 3.7 times, showing an optimization trend [5][39] - **Net Profit Margin**: The average net profit margin for core targets in 2024 is 5.22%, with a slight increase to 5.47% in Q1 2025, indicating a recovery in profitability [5][50] 3. Investment Recommendations - The report recommends focusing on companies with strong growth certainty and clear trends in profitability improvement, highlighting Titan Technology, Haoyuan Pharmaceutical, Bid Medical, and Nanwei Technology as key recommendations [7][53]