Daiwa Raises SBP GROUP TP to HKD7.2 as Interim Adjusted NP Far Beats Forecasts
I'm LongbridgeAI, I can summarize articles.Daiwa raised SBP GROUP's target price to HKD7.2 and reiterated a 'Buy' rating, citing interim adjusted net profit of RMB3.34 billion, a 92.3% YoY surge far exceeding forecasts. This performance was driven by an expanded product gross margin (88.6%) and nearly RMB1.2 billion in selling expense savings attributed to AI integration. Revenue grew 10.6% YoY to RMB19.44 billion, with innovative drug sales up 29.2%. Daiwa increased 2026-2028 EPS forecasts by 30%-31%.
Daiwa issued a report stating that SBP GROUP (01177.HK) +0.775 (+16.180%) Short selling $72.66M; Ratio 31.567% 's adjusted net profit for 1H (excluding dividend income) far exceeded expectations, mainly driven by significant savings in selling expenses. The broker reiterated its "Buy" rating and raised its TP from HKD7 to HKD7.2.
Daiwa noted that SBP GROUP's total revenue for 1H increased 10.6% YoY to RMB19.44 billion, broadly in line with the broker's expectations and 4% above market consensus. Product revenue rose 5.6% YoY to RMB18.22 billion, among which innovative drug sales performed strongly at RMB7.81 billion, up 29.2% YoY and ahead of the broker's expectations. Adjusted net profit (excluding dividend income) surged 92.3% YoY to RMB3.34 billion, far exceeding both the broker's and market expectations, mainly benefiting from product gross margin expansion to 88.6% from 84% in the same period last year, as well as nearly RMB1.2 billion in savings in selling expenses, which came as a surprise.
The broker also said SBP GROUP is among the earliest pioneers in the pharmaceutical industry to adopt and promote AI applications. After several years of investment, AI has significantly reduced costs and improved efficiency, including substantially improving early-stage drug discovery efficiency. The OAPD platform shortened the R&D cycle for PCC (preclinical candidate compounds) from 24 months to at least 8 months, while more than 70% of PCC compounds can be effectively screened out. The Phase III clinical trial timeline for TQC3721 was shortened by about 15%, while PD-L1 antibody output increased 20% alongside a 20% reduction in production costs. On the marketing side, AI improved the promotion efficiency of commercial teams by 30%. The integrated benefits of AI applications across departments reduced the sales and administrative expense ratio from 41.3% in 2025 to 32% in 1H26, with management expecting a long-term target ratio of 30%.
Daiwa raised its 2026-2028 EPS forecasts by 30%-31% to reflect cost savings and gross margin improvement, while largely maintaining its long-term forecasts unchanged. (ad/u)(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2026-08-19 16:25.)