CICC has released a research report stating that considering operational efficiency optimization and increased dividend income, it has raised SINO BIOPHARM's (01177) adjusted net profit forecasts for 2025/2026 by 16.9%/17.2% to RMB 4.47 billion/RMB 4.921 billion respectively. The current stock price corresponds to 30.4x/27.2x adjusted P/E ratios for 2025/2026. The firm maintains its outperform rating and simultaneously raises the target price by 17.1% to HK$8.90, corresponding to 34.2x 2025 P/E and 30.6x 2026 adjusted P/E, indicating 12.5% upside potential from the current stock price.
CICC's main viewpoints are as follows:
**H1 2025 Performance Exceeds Expectations**
The company announced H1 2025 results: revenue of RMB 17.575 billion, up 10.7% year-on-year; net profit attributable to shareholders of RMB 3.389 billion, up 12.3% year-on-year; adjusted net profit of RMB 3.088 billion, up 101.1% year-on-year, exceeding expectations, mainly due to higher-than-expected innovative product revenue growth and dividend income.
**Innovative Products Drive Growth, Achieving Double-Digit Revenue Growth in H1 2025**
According to the announcement, the company achieved innovative product revenue of RMB 7.799 billion in H1 2025, up 27.2% year-on-year, accounting for 44.4% of revenue (up 5.8 percentage points year-on-year), while generic drugs achieved positive growth. By business segment, H1 2025 anti-tumor drug revenue reached RMB 6.694 billion (up 24.9% year-on-year), and surgical analgesic drug revenue reached RMB 3.105 billion (up 20.2% year-on-year).
In July 2025, recombinant factor VII received approval, and meloxicam injection was approved for market in May. The company expects CDK2/4/6 inhibitor and BI's collaborative Zongertinib (HER2 monoclonal antibody) to receive approval in H2 2025. The company projects that innovative products will account for over 50% of total revenue for the full year 2025. CICC expects the company's innovative product approval pace to accelerate over the next three years, contributing more revenue growth.
**Continuous Management Efficiency Improvement, Sustained Gross Margin Enhancement**
In H1 2025, the company continued to promote scaled, centralized and refined management, achieving a gross margin of 82.5% (up 0.4 percentage points year-on-year) and selling and administrative expense ratio of 42.9% (down 0.2 percentage points year-on-year). The group's marketing personnel decreased by 8.6% year-on-year, while per capita output of major enterprise marketing staff increased by 21.8% year-on-year, with team efficiency steadily improving.
**Acquisition of Lexin Pharmaceutical Accelerates Global Innovation**
The company's innovative pipeline focuses on oncology, hepatic metabolic diseases, respiratory infections, and surgical analgesia. After acquiring Lexin Pharmaceutical, the oncology portfolio has been upgraded significantly:
1) Comprehensive NSCLC coverage: TQB2922 (EGFR/c-Met dual antibody) is about to commence Phase III clinical trials for NSCLC, TQB6411 (EGFR/c-Met dual antibody ADC) Phase I clinical enrollment is ongoing, and LM-168 (CTLA-4 monoclonal antibody) has entered Phase I/II clinical trials, with preclinical data showing reduced toxicity and enhanced efficacy;
2) Deep breast cancer coverage across three major subtypes: The company expects CDK2/4/6 inhibitor to receive approval for 2L/1L HR+ patients this year and next year respectively, and HER2 dual antibody ADC has entered Phase III clinical trials;
3) Coverage of core gastrointestinal cancers: Gastric cancer with CCR8 monoclonal antibody and Claudin18.2 ADC as key products, pancreatic cancer PD-1/TGF-β has initiated Phase III clinical trials.
Additionally, the company's PDE3/4 inhibitor clinical progress leads globally, having initiated Phase III clinical trials. CICC looks forward to more excellent efficacy data readouts and overseas BD licensing deals.
**Risk Factors:** Product launch progress falling short of expectations, medical insurance cost control exceeding expectations.