CICC has released a research report maintaining its earnings forecasts for CMS (00867) for 2025 and 2026. The current stock price corresponds to 17.3x/15.6x price-to-earnings ratios for 2025/2026 respectively. The firm maintains its outperform rating and, considering the upward movement in sector valuation center and strong progress in Dermomax business, has raised the target price by 40% to HK$15.40, corresponding to 19.8x 2025 P/E and 18.0x 2026 P/E, representing 14.9% upside potential from the current stock price.
CICC's main viewpoints are as follows:
**1H25 Results Slightly Exceed Market Expectations** The company announced 1H25 results: revenue of RMB4.002 billion, up 10.8% year-on-year; total pharmaceutical sales revenue of RMB4.670 billion, up 8.9% year-on-year; net profit attributable to shareholders of RMB941 million, up 3.4% year-on-year, slightly exceeding market expectations, primarily due to strong sales volume of major exclusive/branded innovative products.
**Centralized Procurement Impact Gradually Clearing, 1H25 Results Return to Growth Track** According to the announcement, based on total pharmaceutical sales revenue calculation, 1H25 segment breakdown shows: cardiovascular and related diseases segment revenue of RMB2.216 billion (YoY +0.6%), digestive/autoimmune related diseases segment revenue of RMB1.411 billion (YoY +4.9%), dermatology segment (Dermomax Pharma) revenue of RMB498 million (YoY +104.3%), ophthalmology segment revenue of RMB358 million (YoY +17.7%), and other products RMB187 million (YoY -2.3%). Meanwhile, the company's major exclusive/branded and innovative products revenue reached RMB2.90 billion (YoY +20.6%), with revenue proportion increasing by 6.0 percentage points year-on-year to 62.1%, driving overall company revenue growth.
**Deep Innovation Pipeline Layout Drives Long-term Sustainable Growth** The company drives product innovation through diversified approaches including overseas licensing + domestic cooperation + independent R&D. Rejuran has been approved in July 2025, and the company expects blockbuster product ruxolitinib cream (vitiligo) to be approved for launch in 2H25, with desidustat tablets (renal anemia) expected to be approved by year-end, potentially contributing revenue flexibility next year. Additionally, ZUNVEYL (AD) has submitted marketing application, Y-3 (stroke) Phase III clinical trial has been completed, and ABP-671 (gout) and IL-4Rα monoclonal antibody (asthma) are in Phase IIb/III and Phase III trials respectively. The company consistently engages in R&D project initiation from commercialization and frontline perspectives, which the firm believes will continue to drive long-term company growth.
**International Expansion + Commercial Innovation, New CMS Releases New Value** In April 2025, the company announced plans to spin off Dermomax Pharma through introduction listing via distribution in specie. Dermomax Pharma has established a comprehensive, differentiated dermatology product portfolio, and the firm believes independent listing could unlock the independent value of the high-growth dermatology business. Meanwhile, in July 2025, the company achieved secondary listing on the main board of Singapore Exchange, which the firm believes could further capture incremental dividends from emerging markets and create a new multi-regional growth landscape.