28 Oct 2026 CMB International Global Markets | Equity Research | Company Update

Pharmaron Beijing (300759 CH)

Resilient demand driving accelerated growth in 3Q26

Pharmaron’s earnings growth accelerated in 3Q26, with revenue rising 20.9% YoY and non-IFRS adj. net profit attributable to shareholders increasing 24.7% YoY, outpacing the growth of 17.9% and 20.3% YoY, respectively, in 1H26. Note that the growth of adj. net profit consistently exceeded that of revenue through 2026, indicating strengthening operating momentum. New bookings of 9M26 increased by more than 30% YoY, led again by the >40% YoY growth of CDMO business. Mgmt. maintained its 2026E full-year revenue growth guidance of 15– 20% and expressed confidence in margin improvement in the near future.

 Resilient demand and business momentum across all segments. 1) Laboratory services revenue grew 17.5% YoY in 3Q26 (vs 13.7% YoY in 1H26), while 9M26 bookings increased over 25% YoY, accelerating from 20%+ YoY in 1H26. Such growth was supported by complex small molecules and new modalities, including PROTACs, molecular glues, RIPTACs, conjugates, cyclic peptides and oligonucleotides, alongside deeper penetration among MNC and AI-enabled drug discovery customers. 2) 3Q26 CDMO revenue rose 30.1% YoY (vs 32.8% YoY in 1H26), with 9M26 bookings up over 40%, maintaining the strong momentum of 1H26. Latestage and commercial demand remained robust, with sizable deliveries for certain European pharma clients driving the acceleration of Top-20 customer revenue in the quarter. Mgmt. expects more high-potential programs to enter late and commercial stages with production of certain key projects already well scheduled, marking its CRDMO business model to enter a harvest phase. To accommodate the rising demand, mgmt. targeted capex to reach more than RMB3.0bn in 2026E and to remain elevated in 2027E. 3) Clinical development services revenue increased 18.0% YoY in 3Q26 (vs 14.2% YoY in 1H26), with 9M26 bookings up over 25%. Mgmt. saw an inflection in China’s clinical CRO market following intense competition since 2022.

 Margin well positioned to expand down the road. We expect margins to trend upward for Pharmaron. Per mgmt., FX reduced 9M26 gross profit margin (GPM) by c.2ppts. Laboratory services’ 3Q26 GPM declined 3.4ppts YoY, primarily reflecting RMB appreciation against the US dollar. Under constant FX, the segment GPM would be stable to slightly higher, according to mgmt. CDMO GPM expanded 1.6ppts YoY and 4.5ppts QoQ in 3Q26, demonstrating benefits from a richer mix of late-stage and large-scale projects, higher utilization and more flexible production scheduling. Smallmolecule CDMO GPM exceeded 35% in 9M26, and mgmt. targets 35–40% over time, assuming successful large-project deliveries. Clinical GPM improved 2.3ppts YoY and 1.0ppt QoQ in 3Q26. China’s CRO market inflection should support further margin recovery. Collectively, these trends underpin mgmt’s goal for adj. net profit to outgrow revenue in the near future.

 Maintain BUY. We expect Pharmaron’s revenue to grow by 18.3%/ 19.5%/ 17.8% YoY and non-IFRS net profit to increase by 22.8%/ 23.8%/ 19.8% YoY in 2026E/ 27E/ 28E, respectively. Our DCF-based TP remains unchanged at 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 19,936 23,491

YoY growth (%) 6.4 14.8 18.3 19.5 17.8 Adjusted net profit (RMB m 1,607 1,816 2,231 2,762 3,307

YoY growth (%) (15.6) 13.0 22.8 23.8 19.8 EPS (Adjusted) (RMB) 0.91 1.03 1.21 1.50 1.80 Consensus EPS (RMB) na na 1.10 1.42 1.82 P/E (Adjusted) (x) 43.6 38.4 32.6 26.3 22.0 Source: Company data, Bloomberg, CMBIGM estimates

Pharmaron Beijing (300759 CH)

• Resilient demand driving accelerated growth in 3Q26

Target Price RMB56.00

(Previous TP RMB56.00)

Up/Downside 41.4% Current Price RMB39.60

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) 72,756.4 Avg 3 mths t/o (RMB mn) 2,450.5 52w High/Low (RMB) 51.15/21.72 Total Issued Shares (mn) 1837.3

Source: FactSet

Shareholding Structure

HK investors 22.7% De Facto Controllers 16.5%

Source: HKEX

Share Performance

Absolute Relative 1-mth -8.2% -2.0% 3-mth 5.0% 15.1% 6-mth 28.1% 42.4%

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

1

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 2,773 3,539 4,157 5,279 6,625 8,215 10,063 12,176 14,551 17,170 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) 2,184 2,832 3,325 4,223 5,300 6,572 8,051 9,741 11,641 13,736 + D&A 1,314 1,539 1,732 2,069 2,442 2,845 3,272 3,713 4,159 4,595

• - Change in working capital -249 -592 -647 -773 -912 -1,063 -1,222 -1,387 -1,554 -1,717
• - Capex -3,250 -3,500 -3,000 -3,000 -3,000 -3,000 -3,000 -3,000 -3,000 -3,000

FCFF -2 279 1,410 2,519 3,830 5,354 7,100 9,067 11,246 13,615 Terminal value 189,843

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) 77,910 Total PV (RMB mn) 105,462 Net debt (RMB mn) 2,002 Minority interest (RMBmn) 567 Equity value (RMB mn) 102,893 # 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 recovery 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 19,936 23,491 Cost of goods sold (7,414) (8,073) (9,185) (10,967) (12,808) (14,817) Gross profit 4,124 4,203 4,910 5,714 7,129 8,674 Operating expenses (2,390) (2,422) (2,765) (3,167) (3,889) (4,817) Selling expense (253) (258) (306) (368) (459) (588) Admin expense (1,607) (1,585) (1,736) (2,015) (2,469) (3,026) R&D expense (448) (469) (576) (650) (796) (985) Others (83) (110) (146) (135) (165) (218) Operating profit 1,734 1,781 2,145 2,546 3,239 3,857 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) (256) (133) (119) Other income/expense 45 (90) (40) 63 100 100 Pre-tax profit 1,838 2,091 1,913 2,518 3,406 4,037 Income tax (256) (377) (358) (535) (681) (807) After tax profit 1,582 1,714 1,555 1,982 2,725 3,230 Minority interest 19 79 109 107 147 175 Net profit 1,601 1,793 1,664 2,090 2,873 3,405 Adjusted net profit 1,903 1,607 1,816 2,231 2,762 3,307 Gross dividends 357 354 366 418 575 681

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

YE 31 Dec (RMB mn) Current assets 10,874 7,608 7,778 12,066 13,316 15,681 Cash & equivalents 5,919 1,690 1,017 4,915 5,313 6,747 Account receivables 2,242 2,414 2,722 3,039 3,632 4,280 Inventories 1,013 1,117 1,472 1,545 1,805 2,088 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 21,419 23,579 25,048 PP&E 6,497 7,809 8,933 11,182 13,451 15,027 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 33,485 36,895 40,728

Current liabilities 3,654 4,224 8,364 12,004 13,265 14,549 Short-term borrowings 577 765 1,265 4,765 5,765 6,765 Account payables 412 477 607 747 1,007 1,291 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 14,996 16,256 17,540

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 9,350 11,648 14,372 Other reserves 343 390 656 656 656 656 Total shareholders equity 12,557 13,619 15,064 17,922 20,220 22,943 Minority interest 681 604 674 567 420 245 Total equity and liabilities 26,477 23,927 27,094 33,485 36,895 40,728

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

YE 31 Dec (RMB mn) Operating Profit before taxation 1,838 2,091 1,913 2,518 3,406 4,037 Depreciation & amortization 1,009 1,145 1,270 1,314 1,539 1,732 Tax paid (256) (377) (358) (535) (681) (807) Change in working capital 64 (117) (10) (249) (592) (647) Others 100 (166) 406 89 (67) (81) Net cash from operations 2,754 2,577 3,221 3,135 3,605 4,234

Investing Capital expenditure (2,865) (2,041) (2,669) (3,250) (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) (3,250) (3,500) (3,000) Financing Dividend paid (458) (548) (531) (674) (708) (800) Net borrowings 3,612 (3,771) 1,096 3,500 1,000 1,000 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 4,012 292 200 Net change in cash Cash at the beginning of the year 1,360 5,789 1,623 1,017 4,915 5,313 Exchange difference 11 78 (4) 0 0 0 Cash at the end of the year 5,789 1,623 843 4,915 5,313 6,747

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

YE 31 Dec

Revenue 12.4% 6.4% 14.8% 18.3% 19.5% 17.8% Gross profit 9.4% 1.9% 16.8% 16.4% 24.8% 21.7% Operating profit 2.5% 2.7% 20.4% 18.7% 27.2% 19.0% Net profit 16.5% 12.0% (7.2%) 25.6% 37.5% 18.5% Adj. net profit 3.8% (15.6%) 13.0% 22.8% 23.8% 19.8%

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

YE 31 Dec

Gross profit margin 35.7% 34.2% 34.8% 34.3% 35.8% 36.9% Operating margin 15.0% 14.5% 15.2% 15.3% 16.2% 16.4% Adj. net profit margin 16.5% 13.1% 12.9% 13.4% 13.9% 14.1% Return on equity (ROE) 13.9% 13.7% 11.6% 12.7% 15.1% 15.8%

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) 36.9 43.6 38.4 32.6 26.3 22.0 P/B 5.3 4.9 4.4 3.9 3.5 3.1 P/CFPS 25.5 27.2 21.7 23.2 20.2 17.2 Div yield (%) 0.5 0.5 0.5 0.6 0.8 0.9

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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