Investment Rating - The report maintains a "Strong Buy" rating for Dongcheng Pharmaceutical (002675.SZ) with an expected stock performance exceeding the market by over 20% within the next six months [1][11]. Core Views - The company is expected to see a recovery in the growth of its key product, 18F-FDG, driven by policy adjustments that separate examination fees from drug costs, leading to a reduction in overall PET/CT examination costs [6]. - The company is advancing its nuclear medicine research and development, with multiple new products entering clinical stages, indicating a potential for significant commercial value realization in the near future [6]. - Despite a decrease in profit forecasts for 2025-2027, the decline is not attributed to core business issues, and the company is anticipated to enter a value realization phase for its nuclear medicine segment [6]. Financial Performance Summary - For the first half of 2025, the company reported revenue of 1.384 billion yuan, a year-on-year decrease of 2.60%, and a net profit of 88.65 million yuan, down 20.70% [3]. - The second quarter of 2025 showed a revenue of 697 million yuan, a decline of 9.92%, but a net profit increase of 34.68% due to a low base effect from asset impairment losses [6]. - The nuclear medicine segment generated revenue of 503 million yuan in the first half of 2025, with 18F-FDG contributing 212 million yuan, reflecting an 8.72% increase [6]. Financial Projections - Revenue projections for 2025-2027 are set at 3.007 billion yuan, 3.391 billion yuan, and 3.844 billion yuan, respectively, with expected growth rates of 4.8%, 12.7%, and 13.4% [5][9]. - Net profit forecasts for the same period are adjusted to 220 million yuan, 299 million yuan, and 385 million yuan, with growth rates of 19.9%, 35.7%, and 28.7% [5][9]. - The gross margin is expected to improve from 48.8% in 2025 to 49.6% in 2027, while the net margin is projected to rise from 7.3% to 10.0% over the same period [5][9].

Core Insights - The company reported a decline in revenue and net profit for the first half of 2025, with total revenue at 1.384 billion yuan, down 2.6% year-on-year, and net profit attributable to shareholders at 89 million yuan, down 20.7% [1] Financial Performance - Revenue for the nuclear medicine segment reached 503 million yuan, a year-on-year increase of 0.78%, with a gross margin of 67.27% [2] - The core product, 18F-FDG, generated revenue of 212 million yuan, reflecting an 8.72% increase year-on-year [2] - The raw material drug segment reported revenue of 611 million yuan, down 7.02%, primarily due to a decline in heparin sodium sales prices [2] Development Trends - The company has invested in 7 operational nuclear pharmacies focused on single-photon drugs and 22 on positron emission drugs, with 31 nuclear drug production centers currently in operation [2] - The company’s innovative nuclear drug pipeline is progressing, with the approval of sodium fluoride [18F] injection in May 2025 and ongoing clinical trials for several other products [3] Profit Forecast and Valuation - The company maintains its EPS forecast for 2025 and 2026 at 0.32 yuan and 0.40 yuan, respectively, with the current stock price corresponding to a P/E ratio of 55.1 times for 2025 and 43.9 times for 2026 [4] - The target price has been raised by 16.4% to 19.2 yuan, indicating an 8.8% upside potential from the current stock price [4]