On April 21, CONSUN PHARMA (01681) held a celebration event for its inclusion in the Hong Kong Stock Connect and an investor exchange meeting in Shenzhen. During the event, Chairman and President An Meng, along with several core executives, shared the company's business performance and strategic plans, engaging in in-depth discussions with investors regarding its future growth potential.

As a potentially undervalued leader in nephrology, its Stock Connect inclusion is expected to bring incremental capital. As CONSUN PHARMA enters its thirteenth year since listing, the market is focusing on the renewed vitality of this established pharmaceutical company. On March 9, following an announcement regarding adjustments to the Hong Kong Stock Connect list, 42 companies were newly added, including CONSUN PHARMA. Since its inclusion, as of April 29, southbound capital holdings in the company have exceeded 22 million shares. However, the company's trailing twelve-month (TTM) P/E ratio stands at only 11.21 times, significantly lower than the industry average P/E of 19.29 times. This indicates a substantial perception gap and valuation disconnect in the capital market's current pricing of CONSUN PHARMA.

From a fundamental perspective, driven by its core product, Niaoduqing Granules, and sustained efforts across multiple specialties, the company achieved revenue of RMB 3.42 billion in 2025, a year-on-year increase of 15.2%. Net profit grew 18.4% year-on-year to RMB 1.08 billion. This impressive performance is a key reason for attracting Hong Kong Stock Connect capital. In terms of profitability, the company achieved a gross profit margin of approximately 78.0% and a net profit margin of 31.5% in 2025, with a remarkably high Return on Equity (ROE) of 25.0%. Compared to peers, whether among A-share or Hong Kong-listed traditional Chinese medicine (TCM) sector constituents, CONSUN PHARMA's core metrics are significantly superior to the industry median levels, and its ROE far exceeds the industry median.

Financial reports show that in 2025, the company generated operating cash flow of RMB 1.21 billion, an increase of 11.5% year-on-year. Cash and cash equivalents at the period-end were approximately RMB 4.38 billion, accounting for over 90% of net assets. This ample cash flow has laid a solid foundation for long-term value development. Notably, the company has maintained a generous dividend policy since listing, with cumulative dividends exceeding HKD 3.3 billion. The annual dividend payout ratio has been increasing from 30% and exceeded 50% in 2025. Furthermore, management indicated that the substantial cash reserves will support potential investments, mergers and acquisitions, or business development (BD) activities, with continued increases in R&D and innovation investment planned for the future.

As of the market close on April 29, CONSUN PHARMA's total market capitalization was approximately HKD 13.456 billion (about RMB 11.783 billion). After deducting cash, this market value level essentially only reflects the cash flow value of its flagship product, while the subsequent potential of its product portfolio and pipeline appears to be assigned "zero value," suggesting significant room for share price appreciation.

As a leading enterprise in China's nephrology field, CONSUN PHARMA comprehensively presented its development blueprint to "build a nephrology flagship and become a first-class pharmaceutical enterprise leading in multiple specialties" during the event. It outlined a clear path for high-quality development through impressive financial data, a clear product layout, forward-looking R&D innovation, and steady internationalization steps.

Nephrology, the core business of CONSUN PHARMA, achieved sales revenue of RMB 2.40 billion in 2025, a year-on-year increase of 20.3%, solidifying its position as a leader in the Chinese nephrology market. Its future development has become a major topic of interest. During the event, the company projected that its core nephrology drugs, Niaoduqing Granules and Yishen Huashi Granules, are expected to reach sales of RMB 3.5 billion in the future, with a long-term potential to challenge RMB 5 billion. Concurrently, products like Roxadustat Capsules and Empagliflozin Tablets have been successively approved for market launch, constructing a comprehensive nephrology product matrix that synergizes TCM and chemical drugs. Additionally, in terms of introducing hospital preparations, the company successfully introduced "Qijian Granules" from China-Japan Friendship Hospital for treating diabetic nephropathy, and "Baihua Zilian Granules" from The First Affiliated Hospital of Sun Yat-sen University for treating lupus nephritis, enriching its nephrology product pipeline.

Regarding innovative chemical drugs, CONSUN PHARMA is developing a high-end innovative drug pipeline aligned with its nephrology strategy. Clinical studies for SK-08 and SK-09 are currently progressing in an orderly manner. It is anticipated that the company's investments in the transformation of TCM hospital preparations and innovative nephrology chemical drugs are likely to cultivate new blockbuster products.

On the business development front, the company revealed that it has established a professional BD center staffed by team members with backgrounds in multinational pharmaceutical companies and top consulting firms. The company has already utilized AI to establish a BD database and is actively communicating with global pharmaceutical companies, with several high-quality projects under negotiation. In the future, the company aims to rapidly enrich its pipeline through a "self-research + introduction" strategy, creating integrated TCM and Western medicine treatment solutions for kidney disease.

From a risk-reward perspective, CONSUN PHARMA possesses a strong downside safety net and high upside potential. In the short term, the robust cash flow from stable sales and subsequent volume growth of its core products has established a solid valuation floor. However, the current valuation is severely mismatched with its leading position and growth potential. In the long run, the company is poised to continue leading the nephrology sector and is currently at a critical juncture for valuation reshaping as it transitions from a domestic leader to a global nephrology pharmaceutical enterprise. With the continuous implementation of its strategy, global capital may undergo a systematic re-rating of its value, potentially leading to a Davis Double Play of both earnings growth and multiple expansion in the future.