Core Viewpoint - China Biopharmaceutical reported a 10.7% year-on-year revenue growth in 1H25, reaching 17.57 billion yuan, with adjusted net profit increasing by 101.1% to 3.09 billion yuan [1] Group 1: Financial Performance - 1H25 revenue and adjusted net profit accounted for 54.6% and 79.6% of the full-year forecast, respectively, with revenue proportion consistent with historical ranges [1] - The adjusted profit proportion significantly exceeded historical ranges due to the recognition of 1.35 billion yuan in dividends from Sinovac Biotech; excluding this, adjusted net profit would have grown approximately 13% year-on-year [1] - Revenue from innovative products grew robustly by 27.2% year-on-year to 7.80 billion yuan, representing 44.4% of total revenue, indicating sustained rapid growth in innovative products [1] Group 2: Innovation and R&D Pipeline - China Biopharmaceutical has built a rich innovation pipeline, with several candidates having global Top 3 or Best in Class potential; the acquisition of Lixin Pharmaceutical further strengthens its R&D capabilities [2] - TQB2868 (PD-1/TGF-β dual antibody) shows remarkable efficacy in first-line treatment of pancreatic cancer, with an ORR of 63.9%, significantly higher than first-line chemotherapy at 41.8% [2] - TQB6411 (EGFR/c-Met dual antibody ADC) has entered Phase I clinical trials, targeting the EGFR+ lung cancer market [2] Group 3: Overseas Licensing Potential - The company has multiple products with potential for overseas licensing collaborations, including TQC3721 (PDE3/4), TQB2868 (PD-1/TGF-β dual antibody), and others [3] - The recent acquisition of Verona Pharma by Merck for $10 billion highlights the significant market potential for PDE3/4 inhibitors, with TQC3721 being the second globally in development [3] Group 4: Upcoming Clinical Data - Several important clinical data readouts are expected in 2H25, including TQC3721 (PDE3/4) Phase II data for COPD and TQB2102 (HER2 dual antibody ADC) Phase Ib data for HER2+ breast cancer [4] - The company maintains a buy rating with a target price of 9.40 HKD, expecting revenue growth rates of +19.1% for 2025E and adjusted net profit growth of +81.3% for the same year [4]

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 9.40, representing a potential upside of 27.2% from the current price of HKD 7.39 [3][6]. Core Insights - The company reported a revenue growth of 10.7% year-on-year to RMB 17.57 billion in 1H25, with adjusted net profit increasing by 101.1% to RMB 3.09 billion. The revenue and adjusted net profit for 1H25 accounted for 54.6% and 79.6% of the full-year forecasts, respectively [1][6]. - The revenue from innovative products grew strongly by 27.2% year-on-year to RMB 7.80 billion, representing 44.4% of total revenue, indicating sustained rapid growth in innovative products [1][6]. - The management maintains a full-year guidance for double-digit organic growth based on the rapid growth of innovative products and stable expectations for generic drug business [1][6]. Financial Summary - For FY25E, the company is projected to achieve sales revenue of RMB 34.38 billion, reflecting a year-on-year growth of 19.1% [2][7]. - Adjusted net profit for FY25E is expected to reach RMB 6.27 billion, with a significant growth rate of 81.3% compared to the previous year [2][7]. - The adjusted earnings per share (EPS) for FY25E is forecasted at RMB 0.33, with an adjusted price-to-earnings (P/E) ratio of 20.5 times [2][7]. Pipeline and Market Potential - The company has a rich and differentiated pipeline, with several products showing potential for global top-tier status. The acquisition of Lixin Pharmaceutical has further strengthened its R&D capabilities [6][9]. - Key products such as TQB2868 (PD-1/TGF-β dual antibody) have shown impressive efficacy in clinical trials, with an overall response rate (ORR) of 63.9% in Phase II trials for pancreatic cancer, significantly higher than traditional chemotherapy [6][9]. - The company is expected to announce multiple important clinical data releases in 2H25, which could further enhance its market position [6][9].