Lion: Raised CMS (00867) target price to HK$16.5, reiterates "outperform" rating.

Lyon released a research report stating that CMS (00867) saw a 9% year-on-year growth in revenue in the second half of last year, but due to one-time tax items, net profit declined by 23%, in line with market expectations. The bank believes that the company has basically absorbed the impact of volume-based procurement (VBP) and that a new cycle of profit acceleration will be driven by innovative drugs in 2026. Based on a target P/E ratio of 15 times for next year, the bank raised the target price of CMS from HK$15.6 to HK$16.5, maintaining an "outperform" rating. The bank mentioned that CMS and its subsidiary Dermavon plan to launch several innovative drugs between 2026 and 2028, believing that this can support the company's continued double-digit revenue and profit growth in 2026 and 2027. The bank predicts revenue growth of 18%, 19%, and 20% respectively for 2026 to 2028, with net profit increasing by 29%, 23%, and 22%. Excluding Dermavon from revenue forecasts, growth is expected to be 13%, 14%, and 15% in each year.