CICC has released a research report stating that, considering the contribution from new product sales, it has raised its adjusted net profit forecast for CMS (00867) for 2026/2027 by 6%/9% to RMB 2.112 billion / RMB 2.635 billion, respectively. The current share price implies a price-to-earnings ratio of 13.3x for 2026 and 10.5x for 2027. The brokerage maintained its Outperform rating and simultaneously increased the target price by 6% to HK$17.50. This new target corresponds to a P/E of 18.0x for 2026 and 14.2x for 2027, implying a potential upside of 35%. Key points from CICC's report are as follows.

The company's 2025 results were in line with market expectations. CMS reported revenue of RMB 8.212 billion, a year-on-year increase of 9.9%, and an adjusted net profit of RMB 1.776 billion, up 3.6% year-on-year.

The effectiveness of the strategic transformation is evident, with growth drivers being comprehensively renewed. In 2025, innovative drugs and exclusive products became the core growth engine, the impact of national centralized drug procurement has largely been absorbed, and the product structure continues to optimize. Revenue from major exclusive/branded drugs and innovative drugs reached RMB 5.613 billion, a year-on-year increase of 23.3%, accounting for 59.8% of total drug sales revenue, up 7.0 percentage points year-on-year. Notably, sales of innovative and exclusive drugs grew by 44.1% year-on-year, driving the company's overall revenue growth.

The strategy of focusing on specialized therapeutic areas is advancing, with the skin health business experiencing rapid growth. By product line, the company's cardiovascular line generated RMB 4.181 billion in 2025, up 2.3% year-on-year; the gastroenterology/autoimmune line reached RMB 2.969 billion, up 3.3% year-on-year; the ophthalmology line was RMB 708 million, up 12.9% year-on-year; and the skin health business surged to RMB 1.070 billion, a significant increase of 73.2% year-on-year. The company plans to spin off its skin health subsidiary, Demai Pharmaceutical, for a separate listing in Hong Kong in 2025. In January 2026, a core product for vitiligo was approved for market launch. The brokerage expects that Ruxolitinib could achieve sales of at least RMB 500 million in 2026.

The product pipeline possesses differentiated innovation potential, and the self-developed pipeline is promising. The company is advancing a dual-drive innovation strategy combining internal R&D and collaborative development, while using investment returns to fund research. Full-year 2025 R&D expenditure reached RMB 1.058 billion, an increase of 40.5% year-on-year, with an R&D expense ratio of 11.3%. Throughout the year, the company achieved 2 approvals, 6 New Drug Applications, and 6 Investigational New Drug applications, indicating an expansion and enhancement of its innovation portfolio. Products such as Y-3 Injection, a long-acting anti-IL-4Rα monoclonal antibody, Weikangduta, and Sileweimi have entered the NDA stage. The self-developed product CMS-D008, a siRNA drug targeting INHBE, received IND approval in March 2026.

Risk warnings include potential R&D failures, new product launches falling short of expectations, and slower-than-expected international expansion.