20260824-招银国际-康龙化成-300759.SZ-Guidance_raised_on_robust_CDMO_growth_6页_1mb

Pharmaron Beijing (300759 CH) Summary

Core Content

Pharmaron Beijing (300759 CH) has reported strong financial performance for the first half of 2026, with revenue increasing by 17.9% YoY to RMB7.6 billion and non-IFRS net profit rising by 20.3% YoY to RMB909 million. The company raised its full-year revenue growth guidance to 15-20% from 12-18%, indicating confidence in its growth trajectory.

The CDMO segment was the standout performer, with revenue growing by 32.8% YoY to RMB1.88 billion and a gross profit margin of 25.7% (+2.6ppt YoY). This growth is attributed to increased demand for small-molecule drugs and progress in late-stage projects. The company secured a significant agreement with Eli Lilly for the manufacturing of its oral GLP-1 product and passed its first China innovative drug API PAI Inspection.

The Clinical services segment showed signs of recovery, with revenue growth of 13.8% YoY and a gross profit margin rebounding to 12.1% in 2Q26. New orders increased by over 30% YoY, indicating a positive trend in the China clinical market. Management expects continued margin improvement through 2027.

The Lab services segment saw a 13.7% YoY revenue increase, with bioscience contributing over 60% of segment revenue. Segment bookings rose by over 20% YoY, showing sustained early-stage R&D demand. AI-driven drug discovery (AIDD) now accounts for over 7% of lab services revenue, and its order growth consistently outperforms the overall lab segment.

Main Points

• CDMO Growth:

  • Revenue in 1H26: RMB1.88 billion (+32.8% YoY)
  • Gross profit margin: 25.7% (+2.6ppt YoY)
  • Management raised full-year revenue growth guidance to 15-20% (from 12-18%)

• Clinical Services Recovery:

  • Revenue growth in 1H26: 13.8% YoY
  • Segment GPM rebounded to 12.1% in 2Q26
  • New orders increased by over 30% YoY, indicating demand recovery
  • Expected continued margin improvement through 2027

• Lab Services Demand:

  • Revenue growth in 1H26: 13.7% YoY
  • Segment bookings rose by over 20% YoY
  • AIDD revenue now exceeds 7% of lab segment, with faster order growth

• Earnings Forecast:

  • 2026E: Revenue growth of 18.3% YoY, non-IFRS net profit growth of 22.5% YoY
  • 2027E: Revenue growth of 19.6% YoY, non-IFRS net profit growth of 23.2% YoY
  • 2028E: Revenue growth of 17.0% YoY, non-IFRS net profit growth of 20.0% YoY

• Valuation:

  • Target price raised to RMB56.00 from RMB39.00
  • DCF-based valuation with WACC of 9.32% and terminal growth of 2.0%
  • Equity value: RMB102,887 million
  • Price per share: RMB56.00

Key Information

• Shareholding:

  • HK investors: 22.4%
  • De Facto Controllers: 17.6%

• Stock Performance:

  • 1-month return: 21.9%
  • 3-month return: 79.8%
  • 6-month return: 60.5%

• Financial Highlights:

  • Revenue growth: 18.3% in 2026E, 19.6% in 2027E, 17.0% in 2028E
  • Adjusted net profit growth: 22.5% in 2026E, 23.2% in 2027E, 20.0% in 2028E
  • EPS (Adjusted): RMB1.21 in 2026E, RMB1.49 in 2027E, RMB1.79 in 2028E
  • P/E (Adjusted): 39.6x in 2026E, 32.1x in 2027E, 26.8x in 2028E

• Valuation Metrics:

  • P/B: 4.8x in 2026E, 4.3x in 2027E, 3.8x in 2028E
  • P/CFPS: 27.9x in 2026E, 24.6x in 2027E, 20.7x in 2028E
  • Dividend yield: 0.5% in 2026E, 0.6% in 2027E, 0.8% in 2028E

• Risk Factors:

  • Lower-than-expected success in late- and commercial-stage CDMO projects
  • Uncertainty in demand recovery for early-stage R&D
  • Slower-than-expected margin improvement in clinical services
  • Geopolitical uncertainties

CMBIGM Ratings

• BUY: Potential return of over 15% over the next 12 months
• HOLD: Potential return of +15% to -10% over the next 12 months
• SELL: Potential loss of over 10% over the next 12 months
• OUTPERFORM: Industry expected to outperform the relevant broad market benchmark
• MARKET-PERFORM: Industry expected to perform in-line with the relevant broad market benchmark
• UNDERPERFORM: Industry expected to underperform the relevant broad market benchmark

Conclusion

Pharmaron Beijing is experiencing strong growth in its CDMO segment, which is expected to drive overall profitability and margin expansion. The company has raised its revenue growth guidance for the full year, and its financial outlook is positive. However, there are risks that need to be monitored, including the success of late-stage projects and geopolitical factors. The stock is currently rated as a BUY, with a target price of RMB56.00.