Group 1 - The company, Norsg (Beijing) Pharmaceutical Technology Co., Ltd., has attracted significant attention in the industry, as evidenced by recent investor relations activities [1] - The investor relations activity was a targeted research event held from August 28 to September 11, 2025, with participation from over 50 securities, fund, and asset management institutions [2] - Key personnel from the company included Chairman and General Manager Wu Jie, Board Secretary and Vice General Manager Li Shuq, and Chief Financial Officer Zhao Qian [2] Group 2 - Order situation in August 2025 remained stable compared to the previous year and has begun to recover, correlating with the rebound in the Hong Kong biopharmaceutical sector [3] - The company's SMO business covers major cities in China with a workforce of approximately 1,500, focusing on long-term foreign enterprise clients while ensuring profit margins [3] - Gross margin is recovering due to controlled price decline in the industry and improved personnel efficiency, with potential for further increase if prices rise [3] - The first half of 2025 saw strong momentum in innovative drugs, driven by the recovery of the Hong Kong stock market and a prosperous overseas market [3] - New order volume in the first half of 2025 was comparable to the previous year, with slight increases in contract amounts and service fees [3] - The pricing for overseas statistical orders remains stable, while domestic statistical business prices are expected to stabilize and potentially recover [3] - The clinical trial hotspots include ADC, CAR-T, PD-1, and cell therapy products, with GLP-1 being a popular area [3] - The industry is witnessing increased investment in high-quality products and projects, with the company potentially benefiting from the recognition of Chinese data by multinational corporations [3]

Group 1: Market Trends and Order Situation - The CRO industry is showing signs of recovery, with an increase in order volume and stabilization of prices, particularly in August 2025, which is consistent with the rebound in the Hong Kong biopharmaceutical market [1][2] - The SMO business has expanded to major cities in China, with a workforce of approximately 1,500, focusing on long-term foreign clients for higher order ratios and reasonable profit margins [2] - The gross profit margin is expected to improve due to controlled price declines and the application of refined management and AI technology, which enhances personnel efficiency [2] Group 2: Client and Order Characteristics - Growth in new clients is primarily seen in innovative drug companies, driven by a strong market recovery in Hong Kong and overseas, shifting from a funding-driven model to a more rational investment approach [2] - The volume and pricing of new orders in the first half of 2025 remained stable compared to the previous year, with slight growth in contract amounts and service fees [3] - The statistical business's gross profit margin decreased due to price reductions in domestic clinical and statistical services, but overseas orders remained stable [3] Group 3: Investment and Market Dynamics - The recovery in the secondary market and active BD transactions positively influence primary market financing, reflected in increased client confidence and a rise in financing activities [3] - Current hot areas in clinical trials include ADC, CAR-T, PD-1, and GLP-1 therapies, indicating a diversification in treatment methods and targets [3] - There is a noticeable increase in industry investment, with a shift from reduced investment over the past year to heightened interest in high-quality products and projects [3] Group 4: International Collaboration and Future Outlook - MNCs are increasingly recognizing the value of data generated by Chinese CROs, which may lead to continued collaboration in global projects [4] - The expansion into overseas markets is beneficial for the company, indicating a positive outlook for future growth [4]

Summary of the Conference Call Company and Industry Overview - The conference call pertains to the CRO (Contract Research Organization) industry, specifically focusing on the company 诺思格 (Norseg) and its performance in 2025 [2][4]. Key Financial Metrics - In the first half of 2025, the company's net profit after non-recurring gains increased by 9.52% to 50.91 million yuan, while the net profit attributable to shareholders decreased by approximately 17% to 70.61 million yuan when excluding share-based payment impacts [2][3]. - Total assets at the end of the period slightly decreased, while shareholders' equity increased by 3.02% to 1.888 billion yuan [3]. Business Segment Performance - Clinical trial operation service revenue decreased by 7.6% to 149 million yuan, accounting for 39.25% of total revenue [3]. - SMO (Site Management Organization) business revenue increased by 31.23% to 129 million yuan, rising to 34.10% of total revenue [3]. - Data management and statistical analysis revenue remained stable at 50.49 million yuan, while biological sample testing service revenue fell by 27.3% to 32.09 million yuan [3]. Industry Trends and Insights - The CRO industry began to show signs of recovery in 2025, with increased order volumes and stabilized prices, particularly in high-end projects [2][6]. - The SMO sector is experiencing positive price trends, prompting the company to strengthen its presence in this area and target high-quality foreign clients [7][8]. - The company has initiated projects in Australia and the United States, with plans to expand into Japan and Europe [10]. Strategic Initiatives - The company is accelerating its acquisition plans, focusing on targets with stable profits, low risks, and strong cultural alignment [4][14]. - The 中金诺斯格产业基金 (CICC Norseg Industry Fund) has completed its first phase of investments and is preparing to launch a second phase, primarily targeting the innovative drug sector [14]. Future Outlook - The company's profitability is expected to improve due to market recovery and price increases, alongside enhanced internal management and AI tool utilization [15]. - The CRO industry is undergoing a cleansing process, with smaller companies facing significant challenges, leading to a shift in client preferences towards established firms like Norseg [12][13]. - The investment enthusiasm for innovative drugs is high in China, contrasting with the U.S. market, where there is a preference for later-stage drug purchases [17][18]. Emerging Trends - Popular disease areas include GLP-1 targets and cell therapy products, with a diversification in treatment methods and focus points [28]. - The recognition of Chinese clinical data is increasing, benefiting domestic CROs in expanding their overseas market presence [29]. Additional Insights - The company emphasizes a controlled expansion strategy, avoiding blind growth while ensuring profitability [9]. - The overall investment environment is becoming healthier and more stable, with a focus on high-quality projects [22]. This summary encapsulates the key points discussed during the conference call, highlighting the company's performance, industry trends, strategic initiatives, and future outlook.

Investment Rating - The investment rating for the company is "Outperform the Market" [5][3][29] Core Views - The company's revenue has shown a quarter-on-quarter increase, with rapid growth in new molecular business. The overall revenue for 2024 is 39.241 billion yuan, a decrease of 2.7%, but a 5.2% increase when excluding COVID-19 commercialization projects. The net profit attributable to the parent company is 9.450 billion yuan, down 1.6%, while the adjusted Non-IFRS net profit is 10.58 billion yuan, down 2.5% [6][3][5] - The CRDMO business model is driving growth, with revenue from chemical, testing, and biological services at 29.052 billion yuan (-0.4%, with an 11.2% increase excluding COVID-19 projects), 5.671 billion yuan (-13.3%), and 2.544 billion yuan (-0.3%) respectively [16][5] Summary by Sections Financial Performance - In Q4 2024, the company achieved a single-quarter revenue of 11.539 billion yuan (+6.9%) and a net profit of 2.917 billion yuan (+90.6%). The adjusted Non-IFRS net profit for the same quarter was 3.240 billion yuan (+20.4%) [6][3][5] - The gross profit margin for 2024 is 41.48% (+0.3pp), and the net profit margin is 24.38% (+0.3pp) [11][5] Business Segments - The small molecule CRO/CDMO business has shown strong growth, with over 460,000 new compounds synthesized and delivered in 2024 (+10%). The small molecule D&M business generated revenue of 17.87 billion yuan, with a 6.4% increase when excluding specific commercialization projects [23][5] - The TIDES business has also experienced rapid growth, achieving revenue of 5.80 billion yuan (+70.1%) and a 103.9% increase in orders on hand by the end of 2024 [23][5] Future Outlook - The company maintains a solid industry position, with steady quarterly performance improvements expected. The profit forecasts for 2025-2027 are adjusted upwards, with net profits projected at 11.162 billion yuan, 12.732 billion yuan, and 14.506 billion yuan respectively, reflecting year-on-year growth rates of 18.11%, 14.07%, and 13.93% [3][5][4]