Sinolink: Initiate coverage on SIMCERE PHARMA (02096) with a "buy" rating and a target price of HK$20.16.

Sinolink released a research report stating that SIMCERE PHARMA (02096) short-term pipeline volume and long-term innovation iteration resonate, with strong growth certainty. It is predicted that the revenue will reach 7.63 billion/9.10 billion/11.04 billion in 2025/2026/2027, with a year-on-year growth of +15.0%/+19.3%/+21.4%, and the net profit attributable to the parent will be 1.15 billion/1.38 billion/1.66 billion, with a year-on-year growth of +57.3%/+19.4%/+20.5%, corresponding to an EPS of 0.44/0.53/0.64 yuan (taking into account the allotment of 112 million shares in September 2025). According to the DCF valuation, the corresponding fair target price is 20.16 Hong Kong dollars. The first coverage is given a "buy" rating. Sinolink's main views are as follows: Significant effects of innovation transformation, the proportion of innovative drug revenue continues to increase to 77%. The company focuses on four core treatment areas: neurology, oncology, self-immunity, and anti-infection, and has been deeply cultivating the market for thirty years. With the dual drive of self-research and BD, commercialized innovative drugs have increased to 10, and the proportion of innovative drug revenue has increased from 45% in 2020 to 77% in the first half of 2025. The revenue structure continues to optimize, and the significant results of innovation transformation are obvious. In the short term, the core pipeline enters a period of intensive harvest, and the performance is realized by accelerating medical insurance access; the heavyweight insomnia drug has both consumption attributes and huge market potential. In the short term, the core pipeline is intensively harvested, and medical insurance is accelerating in volume: In the oncology field: Kesala and Enritu will be included in the medical insurance catalog at the end of 2024, Enzeshu will be included in the medical insurance catalog at the end of 2025, and is expected to rapidly increase in volume. In the neurology field: the heavyweight insomnia drug Dalilesheng, as a non-Class II controlled variety, has a fast onset, non-addictive properties, scarce competitors, and consumption attributes; Xianbishin sublingual tablets have been approved for acute ischemic stroke. Neural protection, can significantly extend DOT when used sequentially with injection liquid, and actively promote Xianbishin sublingual tablets in post-stroke cognitive impairment clinical trials, which are expected to further expand application scenarios. Maddow Novososv and Ludeqibaidankang and other products are clinically advancing in an orderly manner and are expected to cooperate with existing channels to accelerate volume. Core products are intensively entering a period of harvest, and revenue and non-net profit growth rates are expected to achieve stable progress. In the long term, the self-developed pipeline focuses on differentiation, many products have achieved BD, and innovation capabilities continue to be verified. The technology platform and pipeline are expected to continue to BD overseas. The NMTiADC new technology platform is expected to overcome ADC resistance, and subsequent related products entering clinical trials are expected to accelerate the verification of the platform's strength. The self-developed pipeline focuses on differentiated targets, such as SIM0709 (TL1A/IL-23p19 dual anti-) and SIM0613 (LRRC15-ADC), which are all potential targets. In recent years, the company has launched many early research pipelines overseas, and the partners are not lacking in large MNCs. The innovation capabilities continue to be recognized; investment in early research is being vigorously carried out, and many products have the potential for BD and advancement to the late clinical stage. Stable growth of series varieties continue to contribute to stable cash flow. Xianbishan injection liquid deepens the market in ischemic stroke market, Envida and Endu deepen their layout in the field of oncology, Xianonxin focuses on the anti-infection field, and is expected to achieve stable growth; Aidexin establishes a brand advantage in the rheumatology and immune field, although facing potential group procurement risks, mature sales channels are expected to support the subsequent volume expansion of self-immunity pipelines.