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]

Investment Rating - The report maintains an investment rating of "Outperform the Market - A" [4] Core Insights - The innovative drug sector has seen a significant increase in institutional interest, with the total heavy positions in Biotech innovative drugs reaching 80.371 billion yuan, a quarter-on-quarter growth of 39% [7][18] - The proportion of heavy positions in Biotech innovative drugs relative to the overall market has increased to 2.39%, up by 0.49 percentage points, indicating sustained enthusiasm from institutions towards the innovative drug sector [19][25] - The heavy positions in Biotech innovative drugs account for 24.93% of the total heavy positions in the pharmaceutical industry, reflecting a rise of 5.49 percentage points [19][25] Summary by Sections Weekly Review of New Drug Market - From July 28 to August 1, 2025, the top five companies in the new drug sector by stock price increase were: Zhongsheng Pharmaceutical (29.53%), WuXi AppTec (17.72%), CSPC Pharmaceutical Group (14.60%), Maiwei Biotech (12.08%), and Haizhi Pharmaceutical (11.76%) [14][15] - The top five companies by stock price decrease were: Kintor Pharmaceutical (-19.09%), Hualing Pharmaceutical (-16.19%), Junsheng Pharmaceutical (-13.24%), Kintor Pharma (-12.70%), and Yunding New Drug (-11.29%) [14][15] Key Analysis of New Drug Industry - The report analyzed the latest heavy positions of all funds in the innovative drug sector as of June 30, 2025, focusing on A-share and Hong Kong Biotech companies [18] - The heavy positions in Biotech innovative drugs accounted for 7.05% of the total market capitalization, an increase of 0.93 percentage points [23][28] New Drug Approval and Acceptance - This week, 13 new drug or new indication applications were approved, including drugs such as Risperidone orally disintegrating film and Nivolumab injection [33][34] - Additionally, 6 new drug or new indication applications were accepted, including drugs like Eptinezumab injection and Edaravone tablets [35][36] Clinical Application Approval and Acceptance - A total of 50 new drug clinical applications were approved this week, while 44 new drug clinical applications were accepted [37]