Global customer demand continued to expand. Driven by the penetration of strategic clients within the lab services and deliveries of CDMO projects, revenue from global Top20 pharma clients surged by 29.4% YoY, far exceeding the Company's overall growth. Similarly, revenue from European clients grew by 27.4% YoY, also well above the Company's average, primarily driven by effective go-to-market strategies and steady advancement of CDMO pipeline. Newly signed orders increased by over 14% YoY, extending the robust growth trend following a >20% YoY increase in 2024. As the core business, lab services saw its new bookings grow by ~12% YoY in 2025. Meanwhile, small molecule CDMO also showed encouraging momentum, delivering ~13% YoY growth in new orders. During the year, the segment added 24 PhIII and 15 PPQ & commercialization projects, continuously elevating its commercial manufacturing potential going forward. Furthermore, the growth of new orders in clinical development segment outpaced the Company's average, indicating a stabilization and early recovery in clinical demand from domestic clients and the Company's expanding market share.

Pharmaron Beijing (300759 CH)

Pharmaron reported 2025 financial results, with revenue growing by 14.8% YoY to RMB14.10bn, and non-IFRS adj. net profit increasing by 13.0% YoY to RMB1.82bn. Both revenue and profit growth meaningfully accelerated compared to 2024. The Company's 2025 revenue and adj. net profit came in 0.5% and 0.7% higher than our estimates, respectively, aligning with our expectations. Looking ahead, mgmt. expects revenue to grow by 12-18% YoY in 2026. It is worth noting that this guidance incorporates a negative impact of 3ppts from FX.

(YE 31 Dec)

FY24A

FY25A

FY26E

FY27E

FY28E

Revenue (RMB mn)

12,276

14,095

16,410

19,019

21,855

YoY growth(%)

6.4

14.8

16.4

15.9

14.9

Adjusted net profit (RMB m)

1,607

1,816

2,156

2,537

2,955

YoY growth(%)

(15.6)

13.0

18.7

17.7

16.5

EPS(Adjusted)(RMB)

0.91

1.03

1.17

1.38

1.61

Consensus EPS(RMB)

na

na

1.19

1.45

1.78

P/E(Adjusted)(x)

30.8

27.1

23.8

20.3

17.4

Landmark CDMO deal to fuel future growth

Pivotal breakthroughs in small molecule CDMO commercial services. In Mar 2026, Pharmaron announced a commercial DP agreement with Eli Lilly for the oral GLP-1 drug, Orforglipron, a potential blockbuster. Under this agreement, Eli Lilly will invest US$200mn in Pharmaron to support the buildout of technical capabilities, with the potential to further expand collaboration scope. The milestone partnership will not only generate significant incremental revenue in the future (despite limited contribution for 2026), but also signifies that Pharmaron's CDMO platform fully complies with the stringent quality systems of top-tier pharma companies. Consequently, this will serve as a powerful endorsement for Pharmaron to continuously expand in global market. Beyond the breakthrough in DP services, Pharmaron's CDMO business has also established its commercial API capabilities. Its API facilities in Shaoxing and Ningbo have both passed the FDA inspections, while its first innovative API project in the US was approved in 4Q25. Given the DP partnership with Eli Lilly and other pipeline advancements, we expect the small molecule CDMO business to grow at a faster pace than the Company's other business lines over the next three years.

Maintain BUY. We raise our DCF-based TP from RMB38.08 to RMB39.00 (WACC of 9.32%; terminal growth of 2.0%), to reflect a more positive trend of global demand on R&D and manufacturing outsourcing. We forecast Pharmaron's revenue to grow by 16.4%/ 15.9%/ 14.9% YoY and adj. net profit to increase by 18.7%/ 17.7%/ 16.5% YoY in 2026E/ 27E/ 28E, respectively.

Earnings Summary

Source: Company data, Bloomberg, CMBIGM estimates

BUY (Maintain)

Target Price RMB39.00

(Previous TP RMB38.08)

Up/Downside 39.4%

Current Price RMB27.98

China Healthcare

Benchen HUANG, CFA

huangbenchen@cmbi.com.hk

Jill WU, CFA

(852) 39000842

jillwu@cmbi.com.hk

Stock Data

Mkt Cap (RMB mn)

51,407.2

Avg 3 mths t/o (RMB mn)

678.9

52w High/Low (RMB)

35.90/22.06

Total Issued Shares (mn)

1837.3

Source: FactSet

Shareholding Structure

HK investors

20.0%

De Facto Controllers

18.2%

Source:HKEX

Share Performance

Absolute

Relative

1-mth

-5.5%

1.6%

3-mth

-1.6%

1.8%

6-mth

-21.7%

-15.2%

Source: FactSet

12-mth Price Performance


Source: FactSet


Figure 1: Earnings revision

New

Old

Diff(%)

RMB mn

FY26E

FY27E

FY28E

FY26E

FY27E

FY28E

FY26E

FY27E

FY28E

Revenue

16,410

19,019

21,855

16,092

18,710

na

1.98%

1.65%

na

Gross profit

5,871

6,964

8,199

5,550

6,590

na

5.78%

5.67%

na

Operating profit

2,439

2,853

3,311

2,424

2,843

na

0.65%

0.36%

na

Non-IFRS net profit

2,156

2,537

2,955

2,126

2,523

na

1.38%

0.53%

na

Non-IFRS EPS (RMB)

1.17

1.38

1.61

1.16

1.37

na

1.34%

0.49%

na

Gross margin

35.78%

36.62%

37.52%

34.49%

35.22%

na

+1.29ppt

+1.39ppt

na

Operating margin

14.86%

15.00%

15.15%

15.06%

15.19%

na

-0.20ppt

-0.19ppt

na

Net margin

13.14%

13.34%

13.52%

13.21%

13.49%

na

-0.08ppt

-0.15ppt

na

Source: Company data, CMBIGM estimates

Figure 2: CMBIGM estimates vs consensus

CMBIGM

Consensus

Diff(%)

RMB mn

FY26E

FY27E

FY28E

FY26E

FY27E

FY28E

FY26E

FY27E

FY28E

Revenue

16,410

19,019

21,855

16,152

18,605

22,019

1.60%

2.23%

-0.75%

Gross profit

5,871

6,964

8,199

5,746

6,774

8,135

2.18%

2.81%

0.79%

Operating profit

2,439

2,853

3,311

2,553

3,103

4,034

-4.46%

-8.06%

-17.91%

Non-IFRS net profit

2,156

2,537

2,955

2,107

2,567

3,181

2.30%

-1.19%

-7.09%

Non-IFRS EPS (RMB)

1.17

1.38

1.61

1.19

1.45

1.78

-1.41%

-5.05%

-9.48%

Gross margin

35.78%

36.62%

37.52%

35.58%

36.41%

36.95%

+0.20ppt

+0.21ppt

+0.57ppt

Operating margin

14.86%

15.00%

15.15%

15.81%

16.68%

18.32%

-0.94ppt

-1.68ppt

-3.17ppt

Net margin

13.14%

13.34%

13.52%

13.04%

13.80%

14.45%

+0.09ppt

-0.46ppt

-0.92ppt

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

2,739

3,153

3,611

4,352

5,179

6,085

7,058

8,082

9,132

10,183

Tax rate

18.00%

Source: CMBIGM estimates

Figure 4: Sensitivity analysis of DCF model

WACC

8.32%

8.82%

9.32%

9.82%

10.32%

Terminal growth rate

4.00%

64.26

56.38

50.01

44.77

40.38

3.50%

58.66

52.02

46.55

41.97

38.09

2.00%

47.18

42.78

39.00

35.73

32.87

2.50%

50.35

45.37

41.15

37.52

34.39

2.00%

47.18

42.78

39.00

35.73

32.87

Source: CMBIGM estimates


Financial Summary

INCOME STATEMENT

2023A

2024A

2025A

2026E

2027E

2028E

YE 31 Dec (RMB mn)

Revenue

11,538

12,276

14,095

16,410

19,019

21,855

Cost of goods sold

(7,414)

(8,073)

(9,185)

(10,539)

(12,055)

(13,656)

Gross profit

4,124

4,203

4,910

5,871

6,964

8,199

Operating expenses

(2,390)

(2,422)

(2,765)

(3,432)

(4,111)

(4,888)

Selling expense

(253)

(258)

(306)

(406)

(509)

(628)

Admin expense

(1,607)

(1,585)

(1,736)

(2,104)

(2,495)

(2,922)

R&D expense

(448)

(469)

(576)

(720)

(853)

(1,024)

Others

(83)

(110)

(146)

(203)

(254)

(314)

Operating profit

1,734

1,781

2,145

2,439

2,853

3,311

Gain/loss on financial assets at FVTPL

19

2

66

100

100

100

Investment gain/loss

45

542

(102)

100

100

100

Net Interest income/(expense)

(5)

(143)

(156)

(94)

(74)

(56)

Other income/expense

45

(90)

(40)

100

100

100

Pre-tax profit

1,838

2,091

1,913

2,646

3,079

3,556

Income tax

(256)

(377)

(358)

(476)

(554)

(640)

After tax profit

1,582

1,714

1,555

2,169

2,525

2,916

Minority interest

19

79

109

108

126

146

Net profit

1,601

1,793

1,664

2,278

2,651

3,061

Adjusted net profit

1,903

1,607

1,816

2,156

2,537

2,955

Gross dividends

357

354

366

456

530

612

BALANCE SHEET

2023A

2024A

2025A

2026E

2027E

2028E

YE 31 Dec (RMB mn)

Current assets

10,874

7,608

7,778

9,336

10,745

12,560

Cash & equivalents

5,919

1,690

1,017

2,295

3,015

4,088

Account receivables

2,242

2,414

2,722

2,990

3,465

3,981

Inventories

1,013

1,117

1,472

1,485

1,699

1,924

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

21,238

22,538

23,752

PP&E

6,497

7,809

8,933

10,463

11,371

12,193

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

4,810

5,421

6,033

Total assets

26,477

23,927

27,094

30,574

33,283

36,313

Current liabilities

3,654

4,224

8,364

8,944

9,658

10,384

Short-term borrowings

577

765

1,265

1,765

2,265

2,765

Account payables

412

477

607

687

901

1,127

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

11,935

12,650

13,376

Share capital

1,787

1,778

1,779

2,966

2,966

2,966

Capital surplus

5,222

5,008

4,950

4,950

4,950

4,950

Retained earnings

5,205

6,443

7,679

9,501

11,622

14,071

Other reserves

343

390

656

656

656

656

Total shareholders equity

12,557

13,619

15,064

18,073

20,194

22,643

Minority interest

681

604

674

566

440

294

Total equity and liabilities

26,477

23,927

27,094

30,574

33,283

36,313


CASH FLOW

2023A

2024A

2025A

2026E

2027E

2028E

YE 31 Dec (RMB mn)

Operating

Profit before taxation

1,838

2,091

1,913

2,646

3,079

3,556

Depreciation & amortization

1,009

1,145

1,270

1,278

1,400

1,486

Tax paid

(256)

(377)

(358)

(476)

(554)

(640)

Change in working capital

64

(117)

(10)

(200)

(475)

(516)

Others

100

(166)

406

(106)

(126)

(144)

Net cash from operations

2,754

2,577

3,221

3,140

3,324

3,741

Investing

Capital expenditure

(2,865)

(2,041)

(2,669)

(2,500)

(2,000)

(2,000)

Acquisition of subsidiaries/ investments

(2,113)

(3,197)

(5,120)

(3,000)

(3,000)

(3,000)

Net proceeds from disposal of short-term investments

2,720

3,227

3,409

2,500

2,500

2,500

Others

7

(13)

6

0

0

0

Net cash from investing

(2,251)

(2,024)

(4,374)

(3,000)

(2,500)

(2,500)

Financing

Dividend paid

(458)

(548)

(531)

(549)

(604)

(668)

Net borrowings

3,612

(3,771)

1,096

500

500

500

Proceeds from share issues

971

11

17

1,187

0

0

Others

(209)

(488)

(204)

0

0

0

Net cash from financing

3,915

(4,797)

377

1,138

(104)

(168)

Net change in cash

Cash at the beginning of the year

1,360

5,789

1,623

1,017

2,295

3,015

Exchange difference

11

78

(4)

0

0

0

Cash at the end of the year

5,789

1,623

843

2,295

3,015

4,088

GROWTH

2023A

2024A

2025A

2026E

2027E

2028E

YE 31 Dec

Revenue

12.4%

6.4%

14.8%

16.4%

15.9%

14.9%

Gross profit

9.4%

1.9%

16.8%

19.6%

18.6%

17.7%

Operating profit

2.5%

2.7%

20.4%

13.7%

17.0%

16.1%

Net profit

16.5%

12.0%

(7.2%)

36.9%

16.4%

15.5%

Adj. net profit

3.8%

(15.6%)

13.0%

18.7%

17.7%

16.5%

PROFITABILITY

2023A

2024A

2025A

2026E

2027E

2028E

YE 31 Dec

Gross profit margin

35.7%

34.2%

34.8%

35.8%

36.6%

37.5%

Operating margin

15.0%

14.5%

15.2%

14.9%

15.0%

15.2%

Adj. net profit margin

16.5%

13.1%

12.9%

13.1%

13.3%

13.5%

Return on equity (ROE)

13.9%

13.7%

11.6%

13.7%

13.9%

14.3%

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

0.0

Current ratio (x)

3.0

1.8

0.9

1.0

1.1

1.2

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 (ajusted)

26.1

30.8

27.1

23.8

20.3

17.4

P/B

3.7

3.5

3.1

2.8

2.5

2.2

P/CFPS

18.0

19.2

15.3

16.4

15.5

13.7

Div yield (%)

0.7

0.7

0.7

0.9

1.0

1.2

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



Disclosures & Disclaimers

Analyst Certification

The research analyst who is primary responsible for the content of this research report, in whole or in part, certifies that with respect to the securities or issuer that the analyst covered in this report: (1) all of the views expressed accurately reflect his or her personal views about the subject securities or issuer; and (2) no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific views expressed by that analyst in this report. Besides, the analyst confirms that neither the analyst nor his/her associates (as defined in the code of conduct issued by The Hong Kong Securities and Futures Commission) (1) have dealt in or traded in the stock(s) covered in this research report within 30 calendar days prior to the date of issue of this report; (2) will deal in or trade in the stock(s) covered in this research report 3 business days after the date of issue of this report; (3) serve as an officer of any of the Hong Kong listed companies covered in this report; and (4) have any financial interests in the Hong Kong listed companies covered in this report.

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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