CICC: Maintains "Outperform" rating for CSPC Pharma (01093) with stabilized performance and continuous advancement in research and development pipeline.

CICC issued a research report stating that CSPC PHARMA (01093) maintains an "outperform industry" rating. The company's traditional Chinese medicine business has improved, with strong growth in respiratory, cardiovascular, and other fields. The company continues to advance in innovative research and development, with smooth progress in small nucleic acid pipelines, and has successfully realized value through overseas licensing (such as the overseas launch of GLP-1 drugs), bringing substantial income. Key points from CICC are as follows: Performance The company released its financial results for 1-3Q25: revenue was 19.891 billion yuan, YoY -12.3%, net profit attributable to mother was 3.511 billion yuan, YoY -7.1%, and adjusted net profit was 3.079 billion yuan, YoY -23.0%, meeting expectations. Revenue in 3Q25 was 6.618 billion yuan, YoY +3.4%, QoQ +5.7%, achieving minor positive growth and stabilizing performance. Improvements were seen in traditional Chinese medicine revenue in 3Q25. Looking at business segments, traditional Chinese medicine revenue in 3Q25 was 5.202 billion yuan (YoY +1.6%/QoQ +9.6%), with revenue from neurological disorders at 1.914 billion yuan (YoY -4.2%), oncology at 0.594 billion yuan (YoY -47.2%), anti-infection at 0.826 billion yuan (YoY -8.6%), cardiovascular diseases at 0.474 billion yuan (YoY +17.8%), respiratory diseases at 0.32 billion yuan (YoY +72.7%), digestive system at 0.248 billion yuan (YoY +13.7%), and other areas at 0.362 billion yuan (YoY +25.6%). The company's API revenue in 3Q25 was 1.415 billion yuan (YoY +10.5%/QoQ -6.4%). Research and Development Driven by innovation, the research and development pipeline continues to advance. The company's small nucleic acid pipeline is progressing smoothly, with PCSK9 (expected to enter phase III by the end of 25), LPa, AGT, ANGPTL3, and C5 all in clinical trials, covering key chronic diseases such as lipids/blood pressure. The company is also gradually exploring targeted delivery to the eye/lung/fat/muscle. In addition, the company's key research pipeline progress is smooth for anirudin monoclonal antibody (HER2 dual-site), SYS6010 (EGFR ADC), and SYS6091 (HER2 ADC). Overseas Business Development Deepening its BD strategy, the company has built an international licensing platform. The company achieved licensing revenue of 1.54 billion yuan in 1-3Q25, and in 3Q25, the company licensed SYH2086 (oral small molecule GLP-1) to Madrigal Pharmaceuticals for global development, manufacturing, and commercialization rights outside of China, including an initial payment of 120 million US dollars, potential milestones of up to 1.955 billion US dollars, and double-digit sales royalties. The company's research pipeline also includes innovative in-progress products such as EGFR ADC and SiRNA series, and the bank believes that there is potential to realize more foreign licensing agreements and subsequent milestone revenue confirmation. Earnings Forecast and Valuation Considering increased research and development investment, the bank lowered the net profit for 25/26 by 12%/15% to 4.76 billion yuan/5.353 billion yuan. The current stock price corresponds to a PE ratio of 17.1 times/15.0 times for 25/26. Maintaining an outperform industry rating, the target price was simultaneously lowered by 15% to 11.00 Hong Kong dollars, corresponding to PE ratios of 24.4/21.4 times for 2025/2026, implying an upside potential of 42.5%. Risk Warning Risk factors include price reduction in centralized procurement, research and development failures, commercialization falling short of expectations, and unexpected delays in overseas licensing agreements.