Core Viewpoint - Federal Pharmaceutical (03933) shows a stock increase of over 4%, currently at 16.96 HKD with a trading volume of 96.8 million HKD, indicating positive market sentiment despite mixed financial performance [1] Financial Performance - Revenue for the first half of 2025 is projected to grow by 5% year-on-year, while net profit is expected to increase by 27% [1] - Excluding business development income, there is a significant decline of 50% in net profit [1] - Sales of intermediates and active pharmaceutical ingredients decreased by 23% and 27% respectively, primarily due to falling product prices [1] Product Development - The GLP-1/GIP/GCG tri-target receptor agonist UBT251 completed patient recruitment for obesity phase II trials in April and diabetes trials in May, with ongoing recruitment for metabolic-associated fatty liver disease and chronic kidney disease phase II trials [1] - Management aims to submit a clinical trial application for the innovative drug UBT48128 by the first half of 2026 [1] - New production capacity for high-barrier active pharmaceutical ingredients and Inner Mongolia's active pharmaceutical ingredients is set to commence in October this year [1]

Group 1 - Federal Pharmaceutical (03933) saw a stock increase of over 4%, currently trading at 16.96 HKD with a transaction volume of 96.8 million HKD [1] - According to a report by Jefferies, Federal Pharmaceutical's revenue is expected to grow by 5% year-on-year in the first half of 2025, while net profit is projected to increase by 27%. However, excluding business development income, there is a 50% decline [1] - Sales of intermediates and active pharmaceutical ingredients decreased by 23% and 27% year-on-year, respectively, primarily due to falling product prices [1] Group 2 - The company's GLP-1/GIP/GCG tri-target receptor agonist UBT251 completed patient recruitment for obesity phase II trials in April and diabetes trials in May, with ongoing recruitment for phase II trials related to metabolic-associated fatty liver disease and chronic kidney disease [1] - Management indicated that a new innovative drug UBT48128 is targeted for clinical trial application submission in the first half of 2026 [1] - New production capacity for high-barrier active pharmaceutical ingredients and Inner Mongolia's active pharmaceutical ingredients is set to commence in October this year [1]

Group 1 - The company reported a revenue of 7.519 billion yuan in H1 2025, representing a year-on-year increase of 4.8%, and a net profit of 1.894 billion yuan, up 27.02% [1] - The demand for antibiotics has impacted the main business profits, with intermediate revenue declining by 23.1% to 1.01 billion yuan and raw material drug revenue down 27% to 2.53 billion yuan [1] - The flu incidence rate has returned to pre-public health event levels since 2024, leading to a significant drop in demand for certain raw materials and intermediates starting from H2 2024 [1] Group 2 - The company has validated its innovative R&D capabilities, with a rich pipeline including UBT251, which has been successfully licensed to Novo Nordisk, indicating potential clinical effectiveness [2] - UBT48128 has shown significant weight loss potential in preclinical data, with a projected peak domestic sales of 4.3 billion yuan [2] - UBT37034 has received Phase 1 clinical approval in the U.S. for targeting neuropeptide Y2 receptor in overweight/obesity indications [2] Group 3 - The company maintains its revenue forecasts for 2025-2027 at 13.86 billion, 15 billion, and 16.26 billion yuan, with corresponding net profits of 3.11 billion, 3.1 billion, and 3.38 billion yuan [3] - The company expects stable pricing for antibiotic raw materials and intermediates, supporting a "buy" rating based on the progress of UBT251 and other pipeline projects [3]

Investment Rating - The report maintains a "Buy" rating for the company [1] Core Views - The company's innovative research and development capabilities have been validated, with a comprehensive advancement in its metabolic pipeline [7][15] - The company has successfully authorized UBT251 to Novo Nordisk, indicating strong clinical potential and efficient overseas clinical progression [15][27] - The company is expected to achieve peak domestic sales of UBT251 for weight loss indications at 4.3 billion yuan by 2032 [18][19] Summary by Sections 1. Short-term Pressure on Main Business - In the first half of 2025, the company reported revenue of 7.519 billion yuan (+4.8% YoY) and net profit of 1.894 billion yuan (+27.02% YoY) [12] - The demand for antibiotics has impacted main business profits, but the negative effects are expected to diminish as high base effects are eliminated [12][14] 2. Comprehensive Innovative Pipeline Layout - UBT251 has been successfully authorized to Novo Nordisk, showcasing the company's validated R&D capabilities [15] - UBT48128, based on the structure of Eli Lilly's orforglipron, has shown significant weight loss potential in preclinical studies [24] - UBT37034 has received FDA approval for clinical trials, targeting the neuropeptide Y2 receptor, which is crucial for obesity treatment [27] 3. Earnings Forecast and Investment Rating - The company is projected to achieve revenues of 138.6 billion yuan, 150.0 billion yuan, and 162.6 billion yuan for 2025-2027, with YoY growth rates of 0.7%, 8.2%, and 8.4% respectively [31] - The net profit is expected to be 31.1 billion yuan, 31.0 billion yuan, and 33.8 billion yuan for the same period, with YoY growth rates of 17.0%, -0.3%, and 9.1% respectively [31] - The report maintains the "Buy" rating based on the successful R&D progress of UBT251 and the robust pipeline of UBT48128 and UBT37034 [31]

Core Viewpoint - The company reported a mixed performance in its mid-year results for 2025, with a decline in antibiotic-related revenues but an unexpected strong performance in insulin exports [1][2]. Group 1: Financial Performance - In H1 2025, the company achieved a revenue of 7.52 billion yuan, representing a year-on-year increase of 4.8% [1]. - Gross profit for H1 2025 was 3.92 billion yuan, up 17.3% year-on-year [1]. - Net profit attributable to shareholders reached 1.89 billion yuan, reflecting a year-on-year growth of 27.0% [1]. - Revenue from intermediates was 1.01 billion yuan, down 23.1% year-on-year, while raw material drug revenue was 2.53 billion yuan, down 27.0% [1]. - The combined revenue from formulation products and external licensing was 3.98 billion yuan, showing a significant increase of 65.9% [1]. Group 2: Product Performance - Revenue from antibiotic formulations, including semi-synthetic penicillins and cephalosporins, totaled 799 million yuan, down 10.0% year-on-year [1]. - Insulin products generated 961 million yuan in revenue, marking a substantial increase of 74.5% year-on-year [1]. - The animal health business reported revenue of 565 million yuan, down 15.9% year-on-year [1]. - Other formulations generated 221 million yuan, down 28.9% year-on-year [1]. - External licensing revenue was 1.43 billion yuan [1]. Group 3: Future Outlook - The company has a comprehensive layout in the weight loss sector, with successful launches and applications for GLP-1 products [2]. - The company expects to submit clinical applications for its oral GLP-1 drug UBT48128 in 2026, which shows promising preclinical results [2]. - Revenue projections for 2025-2027 are adjusted to 13.50 billion, 13.90 billion, and 14.75 billion yuan, with expected year-on-year growth rates of -1.86%, 2.97%, and 6.08% respectively [2]. - Net profit forecasts for the same period are set at 2.40 billion, 2.47 billion, and 2.74 billion yuan [2].