China Post Securities: Initiates "Buy" rating on UNITED LAB, insulin formulation business performs impressively

According to the Zhitong Finance APP, China Post Securities has released a research report stating that UNITED LAB (03933) is one of the leading comprehensive pharmaceutical companies, with its business extending into biopharmaceuticals and animal health, and its research and development layout is entering a harvest period. It is expected that the company's revenue for 2025/26/27 will be 13.42/12.65/13.84 billion yuan, with year-on-year growth of -2.5%/-5.7%/9.4%, and net profit attributable to the parent company will be 2.36/2.02/2.41 billion yuan, with year-on-year growth of -11.4%/-14.2%/19.4%. The corresponding PE (exchange rate at 1 HKD = 0.92 RMB) is 10/12/10 times. This is the first coverage, and a "buy" rating is given.

The main points from China Post Securities are as follows:

Event

The company announced its performance for the first half of 2025, achieving revenue of 7.52 billion yuan (+4.8% year-on-year growth, same below), EBITDA of 2.75 billion yuan (+23.3%), and net profit attributable to the parent company of 1.89 billion yuan (+27.0%).

Demand affects the performance of APIs and intermediates, insulin formulation business performs well

Looking at the breakdown for the first half of 2025, the intermediate business had external revenue of 1.01 billion yuan (-23.1%), with segment profit of 630 million yuan (including inter-segment sales, same below), corresponding to a profit margin of 27.5% (-7.2 pct). The API external revenue was 2.53 billion yuan (-27.0%), with segment profit of 250 million yuan, corresponding to a profit margin of 27.5% (-4.9 pct); the formulation external revenue was 2.54 billion yuan (+6.1%), with segment profit of 160 million yuan, corresponding to a profit margin of 6.1% (-4.0 pct); licensing fee income was 1.43 billion yuan (mainly from the UBT251 licensing upfront payment to Novo Nordisk).

In the formulation business, the revenue from human antibiotics in the first half of 2025 was 890 million yuan (-12.1%), mainly expected to be affected by centralized procurement and demand decline; the animal health business revenue was 560 million yuan (-15.9%), with the construction of new bases and overseas registrations, it is expected to recover rapid growth in the future; insulin formulation revenue was 960 million yuan (+74.5%), of which second-generation insulin was 460 million yuan (+110.2%), glargine insulin was 290 million yuan (+33.7%), and aspart insulin was 190 million yuan (+74.0%), corresponding to a 90.4% increase in the sales volume of insulin analogs, mainly benefiting from the renewal of centralized procurement contracts for all products in Class A and procurement orders from the Brazilian Ministry of Health.

R&D focuses on endocrine/metabolism and autoimmune fields, gradually entering the harvest period from 2026

In the first half of 2025, the company's R&D investment was 550 million yuan (+14.9%), and in March, liraglutide was approved for marketing in China; the new drugs targeting GLP-1/GIP/GCG, UBT251, have been licensed to Novo Nordisk for overseas rights. Currently, the Phase II trials for weight loss and glycemic control indications in China have completed enrollment, and the Phase II trials for MAFLD and CKD indications have also completed the initiation of the first center. Previous Phase I data showed that the highest dose group administered subcutaneously once a week for 12 weeks had an average weight loss of 16.6% after placebo correction; the neuropeptide Y2 receptor agonist UBT37034 received clinical approval for weight loss indications in the U.S. in July, and animal experiments showed significant weight loss effects when used in combination The small molecule GLP-1 drug UBT48128 is expected to submit IND applications in China and the United States in 2026. Preclinical data shows that its weight loss effect is superior to Eli Lilly's Orforglipron. The company has a rich pipeline, with an expectation of 6 new products or indications approved for market launch in both 2026 and 2027, and an increase in approved products after 2030.

Risk Warning: Sales performance may be below expectations; new drug development progress may be slower than expected; competitive pressure may exceed expectations; geopolitical risks