24 Aug 2026 CMB International Global Markets | Equity Research | Company Update

Pharmaron Beijing (300759 CH)

Guidance raised on robust CDMO growth

Pharmaron delivered robust 1H26 results, with revenue rising 17.9% YoY to RMB7.6bn and non-IFRS net profit up 20.3% YoY to RMB909mn. Earnings growth in 2Q26 clearly accelerated over 1Q26. 1H26 revenue accounted for 46.2% of our full-year forecast, higher than the historical range of 43-45%, while non-IFRS net profit in 1H26 represented 42.1% of our full-year forecast, in-line with the historical range of 40-45%. New bookings increased by more than 30% YoY, led by the >50% YoY growth of CDMO business. Reflecting strong order growth and improving execution, mgmt. raised full-year revenue growth guidance to 15-20% (from 12-18%), coupled with faster growth of non-IFRS net profit.

 Commercial breakthroughs and margin expansion of CDMO segment. CDMO segment was the standout performer, generating 1H26 revenue of RMB1.88bn (+32.8% YoY) and a gross profit margin (GPM) of 25.7% (+2.6ppt YoY). Growth was fueled by robust small-molecule demand and the progression of late-stage projects. The company secured a landmark commercial drug-product manufacturing agreement for Eli Lilly’s oral GLP-1 product (Orforglipron), while its Ningbo facility passed its first China innovative drug API PAI Inspection. Its CDMO services encompass a broad range of modalities and high-potential targets, with several products already in mid-to-late-stage clinical or commercialization stage, poised for near-term volume ramp-up. The company is also stepping up capacity expansion, advancing small-molecule CDMO facilities in Shaoxing and Hangzhou, as well as facilities for peptide and conjugation. Driven by robust demand coupled with rising utilization, we expect CDMO segment to serve as the main contributor to the Company’s overall GPM expansion going forward.

 Clinical services close to bottoming-out. Clinical services revenue grew 13.8% YoY in 1H26, higher than the single-digit growth seen in 2024/25. 2Q26 segment GPM rebounded sharply by ~5.0ppts QoQ to 12.1%, as pricing pressure eased with signals of price hikes. New orders climbed >30% YoY, creating more evidence of demand recovery in China clinical market. Mgmt. expected continued margin improvement through 2H26 and into 2027.

 Resilient early-stage demand with AI momentum building. Lab services revenue increased 13.7% YoY in 1H26, with bioscience contributing over 60% of segment revenue. Segment bookings rose 20%+ YoY, underscoring sustained early-stage R&D demand from both MNCs and biotech clients. Specifically, new modalities revenue within bioscience grew over 40% YoY, aligning with the trend seen in past few years. Note that AI-driven drug discovery (AIDD) revenue now exceeds 7% of the lab segment, with AIDD order growth consistently outpacing the overall lab average.

 Maintain BUY. To factor in the solid demand growth and expected margin expansion, we raise our forecast on Pharmaron’s earnings, expecting revenue to grow by 18.3%/ 19.6%/ 17.0% YoY and non-IFRS net profit to increase by 22.5%/ 23.2%/ 20.0% YoY in 2026E/ 27E/ 28E, respectively. Hence, we raise our DCF-based TP from RMB39.00 to RMB56.00 (WACC of 9.32%; terminal growth of 2.0%; both unchanged).

Earnings Summary

(YE 31 Dec) FY24A FY25A FY26E FY27E FY28E Revenue (RMB mn) 12,276 14,095 16,680 19,941 23,321

YoY growth (%) 6.4 14.8 18.3 19.6 17.0 Adjusted net profit (RMB mn) 1,607 1,816 2,225 2,742 3,290

YoY growth (%) (15.6) 13.0 22.5 23.2 20.0 EPS (Adjusted) (RMB) 0.91 1.03 1.21 1.49 1.79 Consensus EPS (RMB) na na 1.11 1.40 1.77 P/E (Adjusted) (x) 52.8 46.5 39.6 32.1 26.8 Source: Company data, Bloomberg, CMBIGM estimates

Pharmaron Beijing (300759 CH)

• Guidance raised on robust CDMO growth

Target Price RMB56.00

(Previous TP RMB39.00)

Up/Downside 16.7% Current Price RMB47.98

China Healthcare Benchen HUANG, CFA huangbenchen@cmbi.com.hk Jill WU, CFA

(852) 3900 0842 jillwu@cmbi.com.hk

Stock Data

Mkt Cap (RMB mn) 88,152.9 Avg 3 mths t/o (RMB mn) 2,476.3 52w High/Low (RMB) 51.15/21.72 Total Issued Shares (mn) 1837.3

Source: FactSet

Shareholding Structure

HK investors 22.4% De Facto Controllers 17.6%

Source: HKEX

Share Performance

Absolute Relative 1-mth 21.9% 17.8% 3-mth 79.8% 75.5% 6-mth 60.5% 63.0%

Source: FactSet

12-mth Price Performance

Source: FactSet

PLEASE READ THE ANALYST CERTIFICATION AND IMPORTANT DISCLOSURES ON LAST PAGE MORE REPORTS FROM BLOOMBERG: RESP CMBR OR http://www.cmbi.com.hk

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Figure 1: Earnings revision

Source: Company data, CMBIGM estimates

Figure 2: CMBIGM estimates vs consensus

Source: Bloomberg, CMBIGM estimates

Figure 3: Risk-adjusted DCF valuation DCF Valuation (in Rmb mn) 2026E 2027E 2028E 2029E 2030E 2031E 2032E 2033E 2034E 2035E

EBIT 2,789 3,487 4,117 5,226 6,556 8,126 9,950 12,035 14,376 16,956 Tax rate 21.26% 20.00% 20.00% 20.00% 20.00% 20.00% 20.00% 20.00% 20.00% 20.00% EBIT*(1-tax rate) 2,196 2,790 3,293 4,181 5,245 6,501 7,960 9,628 11,501 13,565 + D&A 1,325 1,562 1,752 2,102 2,490 2,912 3,361 3,830 4,307 4,779

• - Change in working capital -250 -593 -615 -738 -874 -1,022 -1,180 -1,345 -1,512 -1,677
• - Capex -3,500 -3,500 -3,000 -3,000 -3,000 -3,000 -3,000 -3,000 -3,000 -3,000

FCFF -228 259 1,430 2,545 3,860 5,390 7,142 9,114 11,296 13,666 Terminal value 190,564

Terminal growth rate 2.00% WACC 9.32% Cost of Equity 12.50% Cost of Debt 4.00% Equity Beta 1.05 Risk Free Rate 2.00% Market Risk Premium 10.00% Target Debt to Asset ratio 35.00% Effective Corporate Tax Rate 15.00%

PV of terminal value (RMB mn) 78,207 Total PV (RMB mn) 105,698 Net debt (RMB mn) 2,244 Minority interest (RMBmn) 567 Equity value (RMB mn) 102,887 # of shares (mn) 1,837 Price per share (RMB per share) 56.00 Source: CMBIGM estimates

Figure 4: Sensitivity analysis of DCF model (RMB)

Source: CMBIGM estimates

Risks:

1) Lower-than-expected probabilities of success in winning late- and commercial-stage CDMO projects in the global market; 2) uncertainties in the demand recovery sustainability in early-stage R&D; 3) slower-than-expected margin improvement of clinical services; 4) geopolitical uncertainties.

Financial Summary

INCOME STATEMENT 2023A 2024A 2025A 2026E 2027E 2028E

YE 31 Dec (RMB mn) Revenue 11,538 12,276 14,095 16,680 19,941 23,321 Cost of goods sold (7,414) (8,073) (9,185) (10,898) (12,775) (14,676) Gross profit 4,124 4,203 4,910 5,782 7,166 8,645 Operating expenses (2,390) (2,422) (2,765) (3,220) (3,979) (4,828) Selling expense (253) (258) (306) (372) (485) (614) Admin expense (1,607) (1,585) (1,736) (2,061) (2,524) (3,021) R&D expense (448) (469) (576) (650) (797) (978) Others (83) (110) (146) (137) (174) (215) Operating profit 1,734 1,781 2,145 2,562 3,187 3,817 Gain/loss on financial assets at FVTPL 19 2 66 107 100 100 Investment gain/loss 45 542 (102) 57 100 100 Net Interest income/(expense) (5) (143) (156) (278) (100) (90) Other income/expense 45 (90) (40) 63 100 100 Pre-tax profit 1,838 2,091 1,913 2,511 3,388 4,027 Income tax (256) (377) (358) (534) (678) (805) After tax profit 1,582 1,714 1,555 1,977 2,710 3,221 Minority interest 19 79 109 107 147 174 Net profit 1,601 1,793 1,664 2,084 2,857 3,395 Adjusted net profit 1,903 1,607 1,816 2,225 2,742 3,290 Gross dividends 357 354 366 417 571 679

BALANCE SHEET 2023A 2024A 2025A 2026E 2027E 2028E

YE 31 Dec (RMB mn) Current assets 10,874 7,608 7,778 8,814 9,580 11,443 Cash & equivalents 5,919 1,690 1,017 1,673 1,580 2,560 Account receivables 2,242 2,414 2,722 3,039 3,633 4,249 Inventories 1,013 1,117 1,472 1,536 1,800 2,068 Financial assets at FVTPL 622 1,120 714 714 714 714 Other current assets 684 810 1,387 1,387 1,387 1,387 Contract assets 394 458 466 466 466 466 Non-current assets 15,602 16,319 19,316 21,657 23,795 25,242 PP&E 6,497 7,809 8,933 11,420 13,666 15,222 Right-of-use assets 776 560 499 342 186 29 Deferred income tax 153 193 263 263 263 263 Intangibles 789 791 1,197 1,134 1,072 1,009 Goodwill 2,781 2,761 3,586 3,586 3,586 3,586 Long-term investments 723 649 640 640 640 640 Other non-current assets 3,884 3,557 4,199 4,271 4,383 4,494 Total assets 26,477 23,927 27,094 30,471 33,375 36,686

Current liabilities 3,654 4,224 8,364 8,995 9,760 10,529 Short-term borrowings 577 765 1,265 1,765 2,265 2,765 Account payables 412 477 607 737 1,003 1,271 Tax payable 238 219 207 207 207 207 Other current liabilities 1,686 1,928 5,324 5,324 5,324 5,324 Contract liabilities 741 835 961 961 961 961 Non-current liabilities 9,584 5,481 2,991 2,991 2,991 2,991 Long-term borrowings 4,308 4,377 1,772 1,772 1,772 1,772 Bond payables 3,892 0 0 0 0 0 Obligations under finance leases 585 401 379 379 379 379 Other non-current liabilities 799 702 840 840 840 840 Total liabilities 13,239 9,705 11,355 11,986 12,751 13,520

Share capital 1,787 1,778 1,779 2,965 2,965 2,965 Capital surplus 5,222 5,008 4,950 4,950 4,950 4,950 Retained earnings 5,205 6,443 7,679 9,346 11,631 14,348 Other reserves 343 390 656 656 656 656 Total shareholders equity 12,557 13,619 15,064 17,917 20,203 22,919 Minority interest 681 604 674 567 421 247 Total equity and liabilities 26,477 23,927 27,094 30,471 33,375 36,686

CASH FLOW 2023A 2024A 2025A 2026E 2027E 2028E

YE 31 Dec (RMB mn) Operating Profit before taxation 1,838 2,091 1,913 2,511 3,388 4,027 Depreciation & amortization 1,009 1,145 1,270 1,325 1,562 1,752 Tax paid (256) (377) (358) (534) (678) (805) Change in working capital 64 (117) (10) (250) (593) (615) Others 100 (166) 406 111 (100) (110) Net cash from operations 2,754 2,577 3,221 3,164 3,579 4,248

Investing Capital expenditure (2,865) (2,041) (2,669) (3,500) (3,500) (3,000) Acquisition of subsidiaries/ investments (2,113) (3,197) (5,120) (4,000) (3,000) (3,000) Net proceeds from disposal of short-term investments

2,720 3,227 3,409 4,000 3,000 3,000 Others 7 (13) 6 0 0 0 Net cash from investing (2,251) (2,024) (4,374) (3,500) (3,500) (3,000) Financing Dividend paid (458) (548) (531) (695) (671) (769) Net borrowings 3,612 (3,771) 1,096 500 500 500 Proceeds from share issues 971 11 17 1,186 0 0 Others (209) (488) (204) 0 0 0 Net cash from financing 3,915 (4,797) 377 991 (171) (269) Net change in cash Cash at the beginning of the year 1,360 5,789 1,623 1,017 1,673 1,580 Exchange difference 11 78 (4) 0 0 0 Cash at the end of the year 5,789 1,623 843 1,673 1,580 2,560

GROWTH 2023A 2024A 2025A 2026E 2027E 2028E

YE 31 Dec

Revenue 12.4% 6.4% 14.8% 18.3% 19.6% 17.0% Gross profit 9.4% 1.9% 16.8% 17.8% 23.9% 20.6% Operating profit 2.5% 2.7% 20.4% 19.4% 24.4% 19.7% Net profit 16.5% 12.0% (7.2%) 25.3% 37.1% 18.9% Adj. net profit 3.8% (15.6%) 13.0% 22.5% 23.2% 20.0%

PROFITABILITY 2023A 2024A 2025A 2026E 2027E 2028E

YE 31 Dec

Gross profit margin 35.7% 34.2% 34.8% 34.7% 35.9% 37.1% Operating margin 15.0% 14.5% 15.2% 15.4% 16.0% 16.4% Adj. net profit margin 16.5% 13.1% 12.9% 13.3% 13.8% 14.1% Return on equity (ROE) 13.9% 13.7% 11.6% 12.6% 15.0% 15.7%

GEARING/LIQUIDITY/ACTIVITIES 2023A 2024A 2025A 2026E 2027E 2028E

YE 31 Dec

Net debt to equity (x) 0.2 0.3 0.1 0.1 0.1 0.1 Current ratio (x) 3.0 1.8 0.9 1.0 1.0 1.1 Receivable turnover days 65.2 69.2 66.5 66.5 66.5 66.5 Inventory turnover days 50.6 48.1 51.4 51.4 51.4 51.4 Payable turnover days 58.0 50.4 51.6 51.6 51.6 51.6

VALUATION 2023A 2024A 2025A 2026E 2027E 2028E

YE 31 Dec

P/E (adjusted) 44.7 52.8 46.5 39.6 32.1 26.8 P/B 6.4 6.0 5.4 4.8 4.3 3.8 P/CFPS 30.9 33.0 26.2 27.9 24.6 20.7 Div yield (%) 0.4 0.4 0.4 0.5 0.6 0.8

Source: Company data, CMBIGM estimates. Note: The calculation of net cash includes financial assets.

Disclosures & Disclaimers

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CMBIGM Ratings

BUY : Stock with potential return of over 15% over next 12 months HOLD : Stock with potential return of +15% to -10% over next 12 months SELL : Stock with potential loss of over 10% over next 12 months NOT RATED : Stock is not rated by CMBIGM

OUTPERFORM : Industry expected to outperform the relevant broad market benchmark over next 12 months MARKET-PERFORM : Industry expected to perform in-line with the relevant broad market benchmark over next 12 months UNDERPERFORM : Industry expected to underperform the relevant broad market benchmark over next 12 months

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