Core Viewpoint - The announcement of the second employee stock ownership plan by TianKang aims to enhance long-term incentive mechanisms, improve employee cohesion and corporate competitiveness, and deeply bind the interests of the company, shareholders, and employees [1] Summary by Relevant Sections Employee Stock Ownership Plan - The scale of the employee stock ownership plan is set between RMB 150 million and RMB 200 million, with an average purchase price based on the closing price of RMB 33.77 per share on June 20, 2025, leading to a minimum of approximately 4.44 million shares and a maximum of about 5.92 million shares, accounting for no more than 1.39% of the total share capital as of the announcement date [1] - The holding period for the stock is strictly regulated, with a minimum of 12 months required [1] Market Confidence and Stock Performance - Industry insiders highlight three key points regarding TianKang's equity incentive: the stock will be sourced through secondary market purchases, the buy-in scale is significant, and the plan reflects strong confidence in future development [2] - TianKang's stock price has surged by 130% this year, ranking fourth among innovative drug concept stocks [2] Innovation and Clinical Development - The collective rise of innovative drug leaders reflects a systematic re-evaluation of the long-term value of R&D investments, driven by expectations of industry upgrades rather than solely academic data disclosures [3] - TianKang's innovative drug CKBA for vitiligo has completed 100% subject enrollment in its Phase II clinical trial, with plans to explore additional indications in the next 3-5 years [3] Growth Areas - The company is focusing on several growth areas, including gastrointestinal drugs, sexual health, and ophthalmology [4] - In the gastrointestinal sector, TianKang aims to expedite the registration process for its product and target over RMB 1 billion in sales within 3-5 years [4] - The sexual health segment features leading products with significant market presence, and a new product is expected to enhance the company's portfolio [4] - In ophthalmology, the company is progressing with clinical trials for a product aimed at treating presbyopia, which could become the first of its kind in China [4] Overall Outlook - TianKang's employee stock ownership plan reflects the company's strong confidence in future growth, driven by innovation and clinical needs, while building high-value competitive barriers in core areas [5] - As key projects move towards commercialization, the company is expected to generate new performance growth points and enter a new growth cycle [5]

Group 1: Financial Performance - In 2024, the company achieved a revenue of 721 million CNY and a net profit of 108 million CNY, with a first-quarter revenue of 185 million CNY and a net profit of 31.55 million CNY in 2025 [3][10] - R&D investment for 2024 was 158 million CNY, accounting for 21.96% of total revenue [10] Group 2: Product Development and Market Potential - The innovative drug CKBA for vitiligo has completed 100% of subject enrollment in Phase II clinical trials, with results expected in July 2025, indicating significant market potential [2][11] - The company aims to develop 1-2 major indications for CKBA within the next 3-5 years [11] - The "He Wei Zheng Chang Wan" product registration is under review, with production capacity ready to meet domestic demand once approved [3][4] Group 3: Strategic Growth Areas - The company plans to expand its gastrointestinal drug segment, targeting over 1 billion CNY in sales within 3-5 years [4][11] - In the sexual health sector, the company is enhancing its product lineup, including the clinical trial of lidocaine and procaine aerosol, with a goal to strengthen market competitiveness [5][8] - The ophthalmic product "Woli Ting" is expected to grow significantly, with the potential to become the first drug for presbyopia treatment in China [5][7] Group 4: Cost Management and Operational Efficiency - Sales expenses increased by 14.15% and management expenses by 12.64%, but the company plans to optimize its cost structure while maintaining R&D and brand promotion investments [6][10] - The company is focusing on budget management and strict control of expenditures to enhance profitability [6] Group 5: Market Challenges and Responses - The sexual health drug segment faced a revenue decline of 20.87%, prompting the company to increase brand promotion and patient education efforts [8][9] - The company is addressing the impact of healthcare policy changes on product sales, with a strategy to enrich its product portfolio and increase revenue sources [8]

Investment Rating - The report assigns an "Accumulate" rating for the company, with a target price of 21.06 CNY based on a 54 times P/E ratio for 2025 [3][6]. Core Views - The company is expected to experience rapid progress in its core business or key products over the next 1-2 years, with projected earnings per share of 0.26, 0.39, and 0.62 CNY for 2024-2026 [3]. - The company has a solid foundation as a comprehensive pharmaceutical enterprise, having established a research and development platform and acquired a pipeline of high-potential products [10][15]. - The treatment for vitiligo is scarce, and the company's CKBA product is anticipated to stand out in the market due to its unique mechanism and promising clinical trial results [10][50]. Financial Summary - The company's revenue for 2022 was 783 million CNY, with a projected decline to 757 million CNY in 2024, followed by a recovery to 951 million CNY in 2025 and 1,214 million CNY in 2026, reflecting a growth rate of 25.7% and 27.6% respectively [5]. - The net profit attributable to the parent company is expected to decrease from 175 million CNY in 2022 to 111 million CNY in 2024, before increasing to 165 million CNY in 2025 and 262 million CNY in 2026 [5]. - The gross margin is projected to improve from 58.2% in 2022 to 69.7% in 2026, indicating a positive trend in profitability [5]. Business Overview - The company started as an agent for gastrointestinal and ophthalmic medications and has gradually expanded into various fields, establishing a robust R&D platform since 2015 [10][15]. - The core business segments include gastrointestinal medications, sexual health products, and ophthalmic drugs, with stable growth in revenue from these areas [10][23]. - The company has significantly increased its R&D investment, leading to the development of important products such as dapoxetine and a rich pipeline of innovative drugs [32]. Market Opportunity - The prevalence of vitiligo is high, with over 12.33 million patients in China, and the demand for effective treatments is unmet, creating a significant market opportunity for CKBA [10][37]. - The competitive landscape for vitiligo treatments is favorable, with CKBA being the only non-JAK inhibitor drug in the domestic pipeline, currently in Phase II clinical trials [50][51].

Group 1 - The company, established in 1999 and listed on the Growth Enterprise Market in 2022, has developed a comprehensive pharmaceutical business starting from agency operations and has built a strong R&D platform through self-construction and acquisitions [1] - The main business segments include gastrointestinal, sexual health, and ophthalmic medications, with overall revenue and profit growth slowing, but core business continuing to grow [1] - Significant increases in R&D investment have been noted, leading to the development of key products such as Dapoxetine Hydrochloride Tablets, along with a rich pipeline of potential products [1] Group 2 - The treatment for vitiligo is scarce, with a high prevalence and strong patient treatment willingness, as evidenced by 12.33 million patients in China in 2021 [2] - The main treatment options currently available include hormones and topical calcineurin inhibitors, but there is a significant unmet clinical need as no new drugs have been approved domestically [2] - CKBA is the only non-JAK inhibitor drug in development for vitiligo, with promising results from its Phase II clinical trials and plans to expand into other indications such as psoriasis and atopic dermatitis [2] Group 3 - The core business includes gastrointestinal medications, with the company planning to shift to self-production to overcome limitations and achieve rapid growth [3] - In the sexual health segment, Dapoxetine Hydrochloride Tablets have become a leading brand, with additional products in development that are expected to drive growth [3] - The ophthalmic segment shows stable sales with growth potential, particularly with the upcoming application for a new drug for presbyopia, which could be the first approved in the domestic market [3] - The company forecasts earnings per share of 0.26, 0.39, and 0.62 yuan for 2024-2026, respectively, and sets a target price of 21.06 yuan based on a 54 times P/E ratio for 2025 [3]