Group 1: Financial Performance Overview - The company achieved a sales revenue of 427.42 million CNY, a year-on-year increase of 11.88% [2] - Foreign sales amounted to 348.34 million CNY, growing by 6.66%, while domestic sales reached 79.09 million CNY, up by 42.59% [2] - New products generated sales of 195.19 million CNY, reflecting a growth of 7.16%, whereas mature products contributed 232.24 million CNY, increasing by 16.17% [2] - CMO/CDMO business saw a revenue decline of 19.05%, totaling 32.30 million CNY [2] - Net profit was reported at 58.49 million CNY, a decrease of 15.91%, with a net profit margin of 13.68%, down by 4.52 percentage points [2] Group 2: Cost and Profitability Analysis - Gross margin stood at 31.45%, down by 3.08 percentage points [2] - Sales expenses decreased by 8.92%, while management expenses increased by 1.04% [2] - R&D expenses rose by 20.14% due to an increase in R&D personnel [2] - The decline in gross margin was attributed to low prices of mature products and increased depreciation costs [3] Group 3: Market and Product Insights - Non-contract custom business revenue increased by 15.48%, while contract custom project revenue fell by 19.05% [2] - Sales of pharmaceutical raw materials rose by 20.06%, despite a gross margin decline of 3.70 percentage points [3] - Domestic sales saw a significant increase of 42.59%, with a gross margin improvement of 9.30 percentage points [3] - The company plans to enhance its domestic raw material market presence and increase the number of API registrations [4] Group 4: Future Growth Strategies - The company aims to continue launching new products, with a focus on becoming a leading supplier of generic drugs [4] - CMO/CDMO business is expected to grow significantly by 2027-2028, with new projects being actively pursued [6] - The second-phase construction of the second plant is ongoing, expected to contribute to production capacity by 2026 [6] - The company anticipates a total production capacity of 2 billion CNY in the next 3-5 years [10] Group 5: Investor Q&A Highlights - New products are projected to generate 195 million CNY in the first half of 2025, with 160 million CNY from high-end regulated markets [7] - The company is focusing on high-difficulty specialty formulations and will not pursue general solid oral formulations [10] - Future R&D investments will prioritize raw materials, CMO/CDMO, and specialty formulations [11]

Investment Rating - The report maintains a "Buy" rating for the company [1][7] Core Views - The company's Q2 performance exceeded market expectations, driven by new product launches that significantly boosted revenue and profit [1][11] - In H1 2025, the company achieved revenue of 427 million yuan, a year-on-year increase of 11.88%, while net profit attributable to shareholders was 58 million yuan, a year-on-year decrease of 15.91% [4][5] - Q2 2025 saw revenue of 241 million yuan, a year-on-year increase of 36.98%, and net profit of 38 million yuan, a year-on-year increase of 45.08% [4][5] Financial Performance - The gross margin for Q2 2025 was 34.46%, up 2.45 percentage points year-on-year and 6.88 percentage points quarter-on-quarter [4] - The net profit margin for Q2 2025 was 15.68%, an increase of 0.88 percentage points year-on-year and 4.56 percentage points quarter-on-quarter [4] - The company's raw materials and intermediates business generated revenue of 395 million yuan in H1 2025, a year-on-year increase of 15.48% [5] Production Capacity - The first phase of the company's second plant has been operational since 2024, with a potential full production value of 500 million yuan [6] - The company raised 800 million yuan in a private placement to fund the second phase of the second plant, which is expected to have a full production value of 1.9 billion yuan [6] Future Projections - The company anticipates rapid growth in new products in the regulatory market over the next three years, forecasting revenues of 850 million yuan, 980 million yuan, and 1.17 billion yuan for 2025, 2026, and 2027 respectively [7][10] - The projected net profit for 2025, 2026, and 2027 is 131 million yuan, 159 million yuan, and 199 million yuan respectively [10]

Group 1: Impact of Tariffs and Sales Distribution - The company's direct exports to the U.S. are low, so the impact of U.S. tariffs on raw material exports is minimal [1] - Domestic sales account for nearly 20% of total revenue; high-end markets contribute approximately 60% to overseas sales, while emerging markets account for around 20% [1] Group 2: Future Product Potential and Profit Margins - High-potential new products include Rivaroxaban, Apixaban, Empagliflozin, Canagliflozin, Vildagliptin, Febuxostat, and Azilsartan [2] - An improvement in gross margin is expected in the upcoming quarters compared to Q1 [2] Group 3: Depreciation and Raw Material Sales - Two new workshops in the second phase of the second plant will start depreciation after process validation in 2026, with an estimated annual depreciation of around 10 million [2] - Raw materials typically account for about 10% of the sales revenue from generic drug formulations [2] Group 4: Supplier Selection and Competitive Advantage - Generic drug companies usually start looking for qualified raw material suppliers 6-7 years before patent expiration; the company often initiates projects 10 years in advance [2] - The company has established a strong reputation and competitive edge through rigorous quality management and successful audits in high-end markets [2] Group 5: Pricing Trends and Investment - More than half of mature product prices have stabilized, with some still declining but at a reduced rate; raw material capacity is being cleared, preventing long-term price drops [3] - The investment in Boya Biotech focuses on developing high-difficulty specialty formulations, which have high industry entry barriers [3]

Group 1: Sales and Revenue Projections - The projected revenue for the new pharmaceutical raw materials market in 2024 is 180 million, with expectations for 2025 being similarly optimistic [1] - The total sales revenue for the company in 2025 is estimated to be around 850 million, with a growth rate of approximately 10% expected due to new capacity being released [3] - The revenue from old products may see a slight decline in 2025, but overall income is expected to grow in 2026 after the expansion of Celecoxib [2] Group 2: Production Capacity and Utilization - The production capacity for Celecoxib is set to increase from 170 tons to 500-600 tons by the end of this year [1] - The utilization rate for the first phase of the second plant is expected to be around 60-70% in 2025, with one workshop having completed expansion in May [2] - Two workshops in the second phase of the second plant are expected to begin trial production in the second half of this year, with full capacity release anticipated in 2026 [2] Group 3: Market and Competitive Landscape - The company faces competition from Indian firms, with varying cost advantages across different products; however, the company excels in synthesis process maturity and R&D speed [3] - The company anticipates strong sales performance for new products such as Rivaroxaban, Apixaban, and others in the future [3] Group 4: Research and Development - The company plans to maintain a high level of R&D investment, projected to be over 7% of revenue in 2025 and beyond [2] - The new R&D building is expected to be operational this year, leading to an increase in personnel and corresponding R&D expenditure [2]

Investment Rating - The report maintains a "Strong Buy" rating for the company, expecting it to outperform the benchmark index by over 20% in the next six months [4][22]. Core Views - The company is entering a growth cycle driven by new product launches, despite facing profit pressure in 2024. The revenue for 2024 is projected at 759 million yuan, a 5.09% increase, with a net profit of 107 million yuan, reflecting a 0.57% growth [1][2]. - In Q1 2025, the company reported a revenue of 187 million yuan, down 9.47%, and a net profit of 21 million yuan, down 52.30% [1][2]. - The non-contract custom business saw a robust growth of 17.27% in 2024, reaching 676 million yuan, while the contract custom business declined by 43% due to early contract terminations by some clients [2][3]. Financial Summary - The total revenue for 2024 is 759 million yuan, with a projected growth rate of 5.1% for the following years, reaching 850 million yuan in 2025 and 982 million yuan in 2026 [3][9]. - The net profit for 2024 is 107 million yuan, with expected growth rates of 14.8% in 2025 and 21.2% in 2026, leading to 122 million yuan and 148 million yuan respectively [3][9]. - Earnings per share (EPS) is projected to increase from 0.25 yuan in 2024 to 0.29 yuan in 2025 and 0.35 yuan in 2026 [3][9]. - The target price for the stock is set at 10.55 yuan, with the current price at 7.09 yuan, indicating a potential upside [3][4].