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Core Viewpoint - Haitong International slightly adjusted the revenue forecast for Kangzheng Pharmaceutical (00867) for 2025-26E to 8.33/9.30 billion HKD, representing a year-on-year increase of 11.5%/11.6% [1] - The net profit forecast for the same period was adjusted to 1.67/1.88 billion HKD, reflecting a year-on-year growth of 3.4%/12.9% [1] - The valuation model was changed to a discounted cash flow (DCF) model to better reflect the long-term value of the pipeline cash flow from Demy Pharmaceutical, with a target price of 18.38 HKD (+85%) [1] Financial Performance - Kangzheng Pharmaceutical achieved a revenue of 4 billion HKD in the first half of the year, a year-on-year increase of 11% [2] - The revenue from major exclusive/brand products and innovative products was 2.9 billion HKD, up 21% year-on-year, which is the core driver of the company's performance recovery [2] - The gross profit margin was 72%, with R&D expenses of 570 million HKD (down 8% year-on-year) and a net profit of 940 million HKD (up 3% year-on-year) [2] Business Growth Drivers - The recovery in revenue is attributed to the clearance of the impact from existing centralized procurement products and the steady growth of core products such as Weifurui and Meitai Tong [3] - Exclusive/brand and innovative product sales accounted for 62.1% of total revenue, up from 56.1% in the same period last year [3] - Revenue by segment includes 2.2 billion HKD from cardiovascular, 1.4 billion HKD from digestive/immunity, 500 million HKD from skin health (up 104%), and 360 million HKD from ophthalmology [3] Innovation and Pipeline - The company has three NDA applications under review and approximately ten clinical trials progressing in China, including treatments for ischemic stroke and atopic dermatitis [4] - Potential products in development include Povorcitinib and CMS-D001, targeting various conditions [4] Spin-off Plans - Kangzheng Pharmaceutical plans to spin off Demy Pharmaceutical for independent listing on the Hong Kong Stock Exchange by April 2025 [5] - Demy Pharmaceutical's pipeline addresses significant unmet clinical needs in skin diseases and has over 650 sales professionals covering more than 10,000 hospitals [5]

Core Viewpoint - 康哲药业 reported a revenue of 40.02 billion yuan for the first half of 2025, representing a year-on-year increase of 10.83%, and a net profit of 9.41 billion yuan, up 3.38% year-on-year, indicating positive growth in both revenue and profit [1] Financial Performance - The company's expense ratio was 56.75%, an increase of 1.52 percentage points year-on-year; gross margin was 72.26%, down 2.41 percentage points year-on-year; R&D expenses reached 2.02 billion yuan, up 91.79% year-on-year, with an R&D expense ratio of 5.06%, up 2.14 percentage points year-on-year [1] - Sales expense ratio was 35.59%, down 3.19 percentage points year-on-year; management expense ratio was 15.82%, up 2.89 percentage points year-on-year; financial expense ratio was 0.28%, down 0.32 percentage points year-on-year [1] Business Segments - Traditional business in cerebrovascular disease generated sales of 22.16 billion yuan, up 0.6% year-on-year, accounting for 47.5% of total sales; sales from digestive and autoimmune disease lines were 14.11 billion yuan, up 4.9% year-on-year, accounting for 30.2% [1] - New business in dermatology and aesthetics (德镁医药) achieved sales of 4.98 billion yuan, up 104.3% year-on-year, accounting for 10.7%; ophthalmology sales were 3.58 billion yuan, up 17.7% year-on-year, accounting for 7.7% [1] - The company has five innovative drugs commercialized, including 莱芙兰, 美泰彤, 维福瑞, 益路取, and 维图可, with rapid commercialization progress [1] Product Development - Three products are currently under NDA review: 德昔度司他片 for anemia treatment in CKD patients, 芦可替尼乳膏 for vitiligo, and ZUNVEYL for Alzheimer's disease [2] - Two self-developed innovative drugs have received IND approval and are set to begin clinical trials: CMS-D001片 for psoriasis and CMS-D003胶囊 for obstructive hypertrophic cardiomyopathy [2] International Expansion - The company is in the process of splitting 德镁健康 for independent listing on the Hong Kong Stock Exchange, enhancing its position in the dermatology sector [3] - 康哲药业 is advancing its international commercial system, with a focus on Singapore as a regional hub, and has submitted product registration applications in several Southeast Asian countries [3] Investment Outlook - Revenue projections for 康哲药业 from 2025 to 2027 are 83.20 billion yuan, 94.54 billion yuan, and 110.43 billion yuan, with year-on-year growth rates of 11%, 14%, and 17% respectively; net profit estimates are 16.28 billion yuan, 18.92 billion yuan, and 22.52 billion yuan, with growth rates of 0%, 16%, and 19% respectively [3]

Core Viewpoint - CICC maintains the profit forecast for Kangzheng Pharmaceutical (00867) for 2025 and 2026, with a target price increase of 40% to HKD 15.40, indicating a potential upside of 14.9% from the current stock price [1] Financial Performance - The company reported 1H25 revenue of CNY 4.002 billion, a year-on-year increase of 10.8%, with total pharmaceutical sales revenue of CNY 4.670 billion, up 8.9%, and net profit attributable to shareholders of CNY 941 million, up 3.4%, slightly exceeding market expectations [2] - The sales revenue breakdown for 1H25 shows cardiovascular and related diseases line revenue of CNY 2.216 billion (YoY +0.6%), digestive/immunological diseases line revenue of CNY 1.411 billion (YoY +4.9%), dermatology line (Demei Pharmaceuticals) revenue of CNY 498 million (YoY +104.3%), ophthalmology line revenue of CNY 358 million (YoY +17.7%), and other products revenue of CNY 187 million (YoY -2.3%) [3] Product Innovation and Pipeline - The company is driving product innovation through overseas licensing, domestic partnerships, and independent R&D, with significant products like Tongyan Needle (Lizhenran) approved in July 2025, and expected approvals for Lucofenib Cream (for vitiligo) in 2H25 and Dexamethasone Tablets (for renal anemia) by year-end [4] - The company has submitted a listing application for ZUNVEYL (AD) and completed Phase III clinical trials for Y-3 (stroke), with ABP-671 (gout) and IL-4Rα monoclonal antibody (asthma) in ongoing clinical phases [4] Strategic Developments - The company announced plans to spin off Demei Pharmaceuticals for independent listing, which is expected to unlock the value of its rapidly growing dermatology business [5] - In July 2025, the company achieved a secondary listing on the Singapore Stock Exchange, which is anticipated to capture growth opportunities in emerging markets [5]

Core Viewpoint - 康哲药业 is entering a new growth phase, with management expressing confidence in the upcoming long-term growth cycle driven by innovative products [1] Financial Performance - For the first half of 2025, 康哲药业 reported revenue of approximately 4.0 billion yuan, a year-on-year increase of 10.8% [1] - The net profit for the same period was approximately 930 million yuan, reflecting a year-on-year growth of 3.1% [1] - The company's total market capitalization exceeded 33 billion HKD following the earnings announcement [1] Product Development and Market Position - 康哲药业 has five innovative drugs successfully commercialized in China, with sales from major non-national procurement exclusive/brand products and innovative products totaling approximately 2.9 billion yuan, a year-on-year increase of 20.6%, accounting for 62.1% of total revenue [2] - The company anticipates the approval of two innovative products, 芦可替尼乳膏 and 德昔度司他片, by the end of the year, with the former being a significant potential treatment for vitiligo [2] - The management highlighted that 芦可替尼乳膏 is the first and only topical JAK inhibitor approved by the FDA and EMA for non-segmental vitiligo, expected to fill a market gap in China [2] Strategic Initiatives - 德镁医药 is working towards independent listing on the Hong Kong Stock Exchange to unlock its growth potential [3] - 康哲药业 successfully completed a secondary listing on the Singapore Exchange, marking a step forward in its internationalization strategy [3] - The company aims to launch three to five innovative products annually and is also looking to achieve investment returns through IPOs of associated companies [3]

Core Viewpoint - China Medical System Holdings Limited (CMS) reported positive interim results for the first half of 2025, indicating successful strategic transformation with year-on-year growth in both revenue and profit [1][2][3] Financial Performance - Revenue for the six months ended June 30, 2025, was approximately RMB4.00 billion, a year-on-year increase of 10.8% [1] - If all medicines were directly sold by the company, revenue would be approximately RMB4.67 billion, reflecting an 8.9% year-on-year growth [1] - Net profit was approximately RMB0.93 billion, representing a 3.1% year-on-year increase [1] Strategic Transformation - CMS has emerged from the impact of National Volume-based Procurement (National VBP), with expectations for sustainable growth [2] - Revenue from key non-National VBP exclusive/branded products and innovative products reached approximately RMB2.90 billion, up 20.6% year-on-year, accounting for 62.1% of total revenue [2] - The company’s strategic upgrade has been confirmed through solid operating results and innovation outcomes [3] Innovation and Product Development - The "product innovation" strategy is a key growth engine, utilizing overseas licensing, domestic collaboration, and in-house R&D [4] - CMS has successfully commercialized five innovative drugs in China, with additional products expected to receive marketing approvals by 2025 [5] - The innovative pipeline includes several blockbuster candidates in late-stage clinical development, expected to be commercialized within the next one to three years [6] Market Expansion and Commercial Model Reform - CMS is advancing its "New Models" strategy, focusing on specialty therapeutic fields and expanding into new retail and media channels [10][11] - The company completed a secondary listing on the Main Board of the Singapore Exchange, marking a milestone in its internationalization strategy [12] - The skin health business, Dermavon, has shown strong potential and is proposed to be spun off for separate listing to unlock its value [11] Future Outlook - The growth logic of "New CMS" is expected to accelerate, improving profitability and performance resilience [13] - The company aims to deliver quality pharmaceutical products and services globally, generating sustainable returns for shareholders [13]

Group 1 - In the first half of 2025, the company achieved revenue of approximately 4.0 billion yuan, a year-on-year increase of 10.8%, and a net profit of about 930 million yuan, up 3.1% year-on-year [1] - The company's main exclusive/brand products and innovative products generated sales revenue of approximately 2.9 billion yuan, a year-on-year increase of 20.6%, accounting for 62.1% of total sales revenue [1] - The company has successfully commercialized five innovative drugs and expects two more innovative products to be approved for market launch within 2025 [1] Group 2 - On April 22, 2025, the company announced plans to spin off its skin health business, Dermay Pharmaceuticals, for independent listing on the Hong Kong Stock Exchange to unlock its independent value and high growth potential [2] - On July 15, 2025, the company successfully completed a secondary listing on the Singapore Exchange, marking a new milestone in its "industrial internationalization" strategy [2] - The company aims to build a sustainable second growth curve based on three strategic pillars: product innovation, business innovation, and international expansion [2]

Core Viewpoint - 康哲药业's 2025 mid-year performance report shows revenue and profit growth, indicating the effectiveness of its strategic transformation [1] Financial Performance - The company achieved approximately 4.0 billion RMB in revenue, a year-on-year increase of 10.8% [1] - Revenue from drug sales was about 4.67 billion RMB, up 8.9% year-on-year [1] - Net profit reached approximately 930 million RMB, reflecting a 3.1% year-on-year growth [1] Strategic Transformation - 康哲药业 has successfully moved past the challenges posed by national procurement, with a significant portion of revenue coming from exclusive/brand products and innovative products, totaling about 2.9 billion RMB, which is a 20.6% increase and accounts for 62.1% of total revenue [1] - The company has been implementing a "New 康哲" transformation strategy since 2018, focusing on product innovation, business innovation, and international expansion [1] Product Innovation - The "product innovation" strategy is a key driver of growth, utilizing a three-dimensional innovation mechanism of overseas licensing, domestic collaboration, and independent research and development [2] - Five innovative drugs have been commercialized in China, with two more expected to be approved within 2025 [2] - The innovative drug 芦可替尼乳膏 is set to be the first treatment for non-segmental vitiligo in China, filling a market gap [2] Clinical Development - The company has several promising candidates in late-stage clinical development, expected to enter commercialization in the next 1-3 years [2][3] - The injection product Y-3 has completed Phase III clinical trials and is positioned as a dual-function neuroprotective drug [3] - The oral small molecule drug ABP-671 is progressing through clinical trials and aims to provide a safer and more effective treatment for gout [3] Business Model and International Expansion - 康哲药业 is advancing its "new model" and "new region" strategies to create a multi-dimensional growth framework [4] - The company is focusing on specialized fields and expanding into new retail and media channels, establishing a comprehensive marketing system [4] - The company successfully completed a secondary listing on the Singapore Exchange, marking a significant step in its internationalization strategy [4][5] Future Outlook - The growth logic of "New 康哲" is expected to accelerate, enhancing profitability and performance resilience [5] - The company is building a growth system centered on differentiated innovation, supported by a multi-ecosystem and international layout, aiming for high-quality development and sustainable returns for shareholders [5]

Group 1 - The company achieved revenue of approximately 4.0 billion yuan in the first half of 2025, representing a year-on-year growth of 10.8%, and a net profit of about 930 million yuan, up 3.1% year-on-year [1] - The sales revenue from the company's major exclusive/brand products and innovative products reached approximately 2.9 billion yuan, a year-on-year increase of 20.6%, accounting for 62.1% of the total sales revenue of approximately 4.67 billion yuan [1] - The company has successfully commercialized five innovative drugs and expects two more innovative products to be approved for market in 2025 [1] Group 2 - The company announced plans to spin off its skin health business, Dermay Pharmaceuticals, for independent listing on the Hong Kong Stock Exchange to unlock its independent value and high growth potential [2] - The company successfully completed a secondary listing on the Singapore Exchange on July 15, 2025, marking a new milestone in its "industrial internationalization" strategy [2] - The company aims to build a sustainable second growth curve supported by three strategic pillars: product innovation, business innovation, and international expansion [2]

Core Viewpoint - China Medical System Holdings Limited (CMS) has received acceptance for the New Drug Application (NDA) of ZUNVEYL, an improved new drug for treating mild-to-moderate Alzheimer's dementia, by the National Medical Products Administration of China (NMPA) [1] Product Overview - ZUNVEYL is a new generation acetylcholinesterase inhibitor (AChEI) approved by the U.S. FDA in July 2024 for the same indication [2] - The drug works by inhibiting the breakdown of acetylcholine, thereby increasing its levels in the central nervous system, which may alleviate cognitive and memory impairments [2] - ZUNVEYL is designed to have a better gastrointestinal safety profile, with GI adverse events reported at less than 2% and no insomnia observed [2] - The product is expected to improve patient compliance and address the urgent need for safer therapies in Alzheimer's treatment [2][4] Alzheimer's Disease Context - Alzheimer's disease is a leading cause of dementia, accounting for 50% to 70% of all dementia cases, with approximately 9.83 million patients in China, of which 7.93 million have mild-to-moderate forms [3] - The aging population is expected to increase the burden of Alzheimer's disease in the future [3] Market Need and Challenges - Current treatments for Alzheimer's primarily focus on improving cognitive symptoms, but high incidences of side effects lead to a significant discontinuation rate of 55% among patients after one year [4] - The need for safer therapies is critical to improve adherence and reduce the burden on patients and caregivers [4] Licensing and Collaboration - CMS entered into a License, Collaboration, and Distribution Agreement with Alpha Cognition Inc. for ZUNVEYL, granting CMS exclusive rights to develop and commercialize the product in Asia (excluding Japan and the Middle East), Australia, and New Zealand [5] - The agreement has a term of twenty years, with potential automatic renewals every five years [5] Strategic Impact - The swift submission of the NDA in China reflects CMS's efficient resource allocation and robust registration capabilities [6] - ZUNVEYL is expected to diversify CMS's innovative drug portfolio and enhance its competitiveness in the market [6][7] - The product will complement CMS's existing central nervous system products, potentially improving treatment options for Alzheimer's patients in China [7]