CICC: Maintains SINO BIOPHARM outperform industry rating, raises target price to HKD 8.90

According to the Zhitong Finance APP, China International Capital Corporation (CICC) has released a research report stating that considering the optimization of operational efficiency and the increase in dividend income, it has raised the adjusted net profit forecast for SINO BIOPHARM (01177) for 2025/2026 by 16.9%/17.2% to RMB 4.47 billion/RMB 4.92 billion. The current stock price corresponds to an adjusted price-to-earnings ratio of 30.4 times/27.2 times for 2025/2026. The rating is maintained as outperforming the industry, with a simultaneous target price increase of 17.1% to HKD 8.90, corresponding to a price-to-earnings ratio of 34.2 times for 2025 and 30.6 times for 2026, indicating an upside potential of 12.5% compared to the current stock price. CICC's main views are as follows: 1H25 performance exceeded expectations The company announced its 1H25 performance: revenue of RMB 17.575 billion, a year-on-year increase of 10.7%; net profit attributable to shareholders of RMB 3.389 billion, a year-on-year increase of 12.3%; adjusted net profit of RMB 3.088 billion, a year-on-year increase of 101.1%, exceeding expectations mainly due to higher-than-expected revenue growth from innovative products and dividend income. Innovative products drive growth, achieving double-digit revenue growth in 1H25 According to the announcement, in 1H25, the company achieved innovative product revenue of RMB 7.799 billion, a year-on-year increase of 27.2%, accounting for 44.4% of total revenue (YoY +5.8ppt), with positive growth in generic drugs. Specifically, in terms of business segments, revenue from anti-tumor drugs was RMB 6.694 billion (YoY +24.9%), and revenue from surgical analgesics was RMB 3.105 billion (YoY +20.2%). The reorganization of the seven factors was approved in July 2025, and the approval for the market launch of Meloxicam injection was granted in May. The company expects that in 2H25, there will also be approvals for CDK2/4/6 inhibitors and BI collaboration Zongertinib (HER2 monoclonal antibody), with innovative product revenue expected to exceed 50% for the entire year of 2025. The firm anticipates that the approval speed for innovative products will accelerate over the next three years, contributing further revenue growth. Management efficiency continues to improve, gross margin continues to enhance In 1H25, the company continued to promote scaled, centralized, and refined management, achieving a gross margin of 82.5% (YoY +0.4ppt), with a sales management expense ratio of 42.9% (YoY -0.2ppt). The number of group marketing personnel decreased by 8.6% year-on-year, while the per capita output of major corporate marketers increased by 21.8% year-on-year, indicating steady improvement in team efficiency. Acquisition of Li Xin Pharmaceutical accelerates global innovation pace The company's innovation pipeline focuses on oncology, liver disease metabolism, respiratory infections, and surgical analgesics. After acquiring Li Xin Pharmaceutical, the layout in the oncology field has accelerated. 1) Comprehensive coverage of lung cancer NSCLC: TQB2922 (EGFR/c-Met dual antibody) is about to start Phase III clinical trials for NSCLC, TQB6411 (EGFR/c-Met dual antibody ADC) is in Phase I clinical enrollment, and LM-168 (CTLA-4 monoclonal antibody) has entered Phase I/II clinical trials, with preclinical data showing reduced toxicity and increased efficacy; 2) Deep layout of three major subtypes in breast cancer: the company expects CDK2/4/6 inhibitors to be approved for 2L/1L HR+ patients in the next two years, and HER2 dual antibody ADC has entered Phase III clinical trials 3) Core cancers covered by the digestive tract: Gastric cancer is targeted with CCR8 monoclonal antibodies and Claudin18.2 ADC, while pancreatic cancer PD-1/TGF-β has initiated Phase III clinical trials. In addition, the company's PDE3/4 inhibitors are leading globally in clinical progress, with Phase III clinical trials already initiated. The firm looks forward to more excellent efficacy data readouts and overseas business development licensing deals. Risk Warning: Product launch progress may be slower than expected, and medical insurance cost control may exceed expectations