Core Viewpoint - Tianfeng Securities maintains a "Buy" rating for Shiyao Group, forecasting revenue and net profit growth from 2025 to 2027 despite a decline in 2025H1 performance due to comprehensive procurement execution and pressure on traditional medicine sales [1] Group 1: Financial Performance - In 2025H1, the company reported revenue of 13.273 billion yuan, a year-on-year decrease of 18.5%, and a net profit of 2.548 billion yuan, down 15.6% [1] - The traditional medicine business revenue was 10.248 billion yuan, including 1.075 billion yuan from licensing income, representing a year-on-year decline of 24.4% [2] - Excluding licensing income, product sales revenue fell by 32.3%, with significant declines in various therapeutic areas [1][2] Group 2: Licensing Income and Business Development - Licensing income has become a strong source of revenue and profit for the company, with a 120 million USD upfront payment for SYH2086 expected to contribute to future income [2] - The company has successfully executed six business development projects in 2024, highlighting the value of its eight R&D platforms [2] Group 3: Clinical Developments and Drug Approvals - SYS6010 has initiated overseas Phase III clinical trials, with positive early data recognized by regulatory authorities in both China and the U.S. [2] - The first domestic HER2 bispecific antibody, KN026, has had its new drug application accepted by the Chinese National Medical Products Administration, showing promising clinical trial results [3] - Multiple clinical data readouts are expected in 2025, with several ongoing trials across various cancer types [4]

Investment Rating - The report maintains a "Buy" rating for the company [6][8]. Core Viewpoints - The company experienced a revenue decline of 18.5% year-on-year, with total revenue of 13.273 billion yuan and a net profit decrease of 15.6% to 2.548 billion yuan, primarily due to the impact of centralized procurement [1]. - The sales of traditional pharmaceutical products faced significant pressure, with a 24.4% decline in revenue to 10.248 billion yuan, and a 32.3% drop in product sales when excluding licensing income [2]. - The company is expected to enter a new growth phase with multiple innovative drugs set to be launched between 2025 and 2027, including SYS6010, KN026, and others [2]. - Licensing income has become a strong revenue and profit source, with a notable 120 million USD upfront payment for SYH2086 expected to contribute to future earnings [2]. - The company has initiated overseas clinical trials for SYS6010, which has received multiple regulatory recognitions, including Fast Track Designation from the FDA [3]. - The HER2 bispecific antibody KN026 has had its new drug application accepted by the Chinese National Medical Products Administration, showing promising clinical trial results [4]. Summary by Sections Financial Performance - For the first half of 2025, the company reported revenues of 13.273 billion yuan and a net profit of 2.548 billion yuan, reflecting a year-on-year decrease of 18.5% and 15.6%, respectively [1]. Traditional Pharmaceutical Business - The traditional pharmaceutical business generated 10.248 billion yuan in revenue, down 24.4% year-on-year, with a 32.3% decline in product sales when excluding licensing income [2]. Innovative Drug Pipeline - The company plans to submit multiple innovative drugs for approval from 2025 to 2027, including SYS6010 and KN026, which are expected to drive future revenue growth [2][4]. Licensing Income - Licensing income has significantly increased, with the company securing 6 business development deals and expecting continued contributions from these agreements [2]. Clinical Trials and Regulatory Approvals - SYS6010 has received Fast Track Designation from the FDA and Breakthrough Therapy Designation from NMPA, indicating strong regulatory support for its clinical development [3]. - The KN026 application is based on positive results from a pivotal clinical trial, demonstrating improved efficacy and safety compared to existing treatments [4]. Profit Forecast - The company is projected to achieve revenues of 28.398 billion yuan, 30.145 billion yuan, and 32.242 billion yuan, with net profits of 5.521 billion yuan, 5.940 billion yuan, and 6.457 billion yuan from 2025 to 2027 [6].