After the financial report, can southbound funds support the rebound of 3SBIO's (01530) stock price?

On May 20th last year, 3SBIO (01530) reached a large BD transaction with Pfizer with a total amount exceeding 6 billion U.S. dollars, and set a record for the highest down payment of over 1.4 billion U.S. dollars for domestic innovative drugs going abroad. After the authorization transaction was completed, Pfizer also subscribed to 100 million U.S. dollars of common stock of 3SBIO based on the 30-day volume weighted average price. Recently, the positive impact of this large BD transaction has been reflected in 3SBIO's annual report. 60 billion U.S. dollars BD is key to performance growth It is understood that on March 30th, 3SBIO disclosed its annual performance for 2025. The financial report shows that the company achieved operating income of 17.70 billion RMB for the whole year, a year-on-year increase of 94.3%; the net profit attributable to the parent company reached 8.48 billion RMB, a significant year-on-year increase of 305.8%; the adjusted net profit attributable to the parent company was 8.45 billion RMB, an increase of 264.6% year-on-year. Behind the impressive revenue and profit performance, 3SBIO reported research and development expenses of 1.52 billion RMB during the reporting period, an increase of 14.6% year-on-year; and as of the end of 2025, the company's financial resources had increased to 20.40 billion RMB, with an interest-bearing debt ratio reduced to 9.8%, achieving a positive contribution of 230 million RMB in comprehensive financing costs, and further optimizing the asset-liability structure. In addition, 3SBIO will continue its stable dividend policy, distributing a dividend of 0.25 Hong Kong dollars per share for the year 2025. Splitting 3SBIO's annual income details, it is clear to see the profound impact of the heavyweight BD reached with Pfizer on its financial side: during the reporting period, 3SBIO confirmed authorized income of 9.425 billion RMB, mainly coming from the BD down payment paid by Pfizer. This means that during the reporting period, 3SBIO's revenue excluding authorized income was approximately 8.271 billion RMB, a decrease of around 9.12% from 9.108 billion RMB in the same period last year. In response to this, 3SBIO explicitly mentioned in the financial report that the decline in the revenue of biopharmaceutical products during the reporting period was mainly due to the decline in centralized procurement prices and the impact of medical insurance policies. In a recent research report released by CICC, it was also pointed out that 3SBIO's "endogenous income has declined year-on-year". However, in the report, CICC also indicated that in 2025, the company's Attune adapalene indications and Boehringer Ingelheim's gastric cancer indications were approved, and four products including 613 (IL-1 antibody) and 611 (IL-4R antibody) submitted NDA applications. At the beginning of 2026, positions for Xinbiao (long-acting erythropoietin) and 608 (IL-17 antibody) were approved for marketed, both of which are expected to contribute to the company's income increment in the future. In November 2025, the company announced the plan to spin off Maddie International for listing on the Hong Kong stock market, which the bank believes will help the company continue to focus on its core innovative business. Regarding the BD cooperation with Pfizer, according to the company's financial report and CICC's research report, Pfizer announced 7 clinical projects last year for SSGJ-707, including NSCLC and CRC global multicenter Phase III clinical trials, and plans to initiate over 10 new indications and 10+ innovative combination clinical trials in 2026, with 3 global Phase III registration trials for first-line combination chemotherapy of SQ & NSQ NSCLC and first-line combination chemotherapy of mCRC having already initiated patient enrollment. With more clinical data readouts in the future, it is expected to bring more milestone payments to 3SBIO. It is based on these reasons that, although due to the adjustment of reporting confirmation rhythm factors, CICC significantly lowered its net profit forecast for 3SBIO in 2026 by 47% to 3.024 billion RMB, it remained optimistic about SSGJ-707 becoming a potential cornerstone drug for the next generation of I/O, maintaining a target price of 36.5 Hong Kong dollars, which represents about 60% upside potential from the current price. When will the turning point for the stock price be confirmed? However, despite the impressive annual report performance, the response from the secondary market has been somewhat "interesting". The day after the financial report was released, 3SBIO's stock price plummeted at the opening: within the first 5 minutes of trading, the stock price fell by nearly 8%. Although it rose to near the waterline within half an hour, due to the apparent dominance of the "bearish" forces in the market, the company's stock price ultimately closed down by 6.75%. Although the company's stock price surged by 11.84% on April 1st, the subsequent "four consecutive declines" still reflects the divergence in the opinions of market participants towards the company's performance and the cautious sentiment of external investors. Looking back over time, after reaching a 60 billion U.S. dollars BD agreement with Pfizer, on May 20th last year, 3SBIO's stock price surged by 32.28% in a single day. With the momentum of the Hong Kong stock biopharmaceutical bull market that followed, 3SBIO's stock price rose by an impressive 314.75% in 2025. Based on the annual peak price of 36.8 Hong Kong dollars, the company's stock price experienced a maximum increase of 531.22% during the year. However, after reaching a peak in September last year, 3SBIO's stock price subsequently showed a clear trend of fluctuation and decline. Although there were three rebounds to the upper BOLL line during this period, from September last year to the present, the overall performance of its stock price has mostly been oscillating downwards around the mid-to-lower BOLL line. In terms of monthly stock price performance, 3SBIO's stock price experienced "three consecutive declines" from December last year to February this year, and it only stopped declining and rebounded by 3.19% in March this year. Looking at the trading situation of brokerage firms, in the last 20 days, the top 5 sellers of 3SBIO were HSBC Shanghai, Citibank, Standard Chartered Bank, Bank of China, and BNP Paribas, with net sales of 32.1883 million shares, 26.9353 million shares, 16.0055 million shares, 6.6246 million shares, and 2.6483 million shares, respectively. It can be seen that the trend of foreign withdrawals is more pronounced in the seller positions, with the net selling of the top three institutions accounting for 89%, echoing the trend of foreign divestment in Hong Kong stocks under the recent impact of external factors. However, in the same investment environment, the choice of domestic funds is quite the opposite. The top 5 buyers of 3SBIO include Hong Kong Stock Connect (Shenzhen), Hong Kong Stock Connect (Shanghai), Morgan Stanley, Goldman Sachs, and Industrial and Commercial Bank of China, with net purchases of 50.3725 million shares, 23.7235 million shares, 5.6733 million shares, 3.0575 million shares, and 2.2005 million shares, respectively. The total net purchases through the Hong Kong Stock Connect channel amounted to 74.096 million shares, accounting for 90.30% of the total net purchases by the top 5 institutions. Looking at the changes in the holdings of 3SBIO by the Hong Kong Stock Connect, the trading strategy of the Hong Kong Stock Connect funds on 3SBIO this year has been more inclined towards the right side. After confirming a rebound trend in the company's stock price on March 11th, the proportion of the Hong Kong Stock Connect funds in 3SBIO's holdings has continued to rise despite short-term fluctuations in the company's stock price, increasing from 38.27% on March 11th to 41.37% on April 9th, indicating a strong buying interest from domestic funds. In fact, the differing investment strategies of domestic and foreign funds in the recent trading of 3SBIO's stocks reflect the strong optimism of domestic funds towards the biopharmaceutical sector of the Hong Kong stock market and the entire Chinese biopharmaceutical industry. From a macro perspective, the government work report in 2026 formally identifies biopharmaceuticals as a "national emerging pillar industry", on par with integrated circuits, aerospace, transitioning from a "people's livelihood industry" to a "national strategic techno...