China Merchants Securities International issued a research report maintaining an Overweight rating for CHINARES PHARMA (3320), anticipating valuation re-rating opportunities in fiscal year 2026 and beyond. The firm introduced forecasts for fiscal years 2026-2027 and extended its valuation base to the end of 2026, lowering the target price from HK$8.1 to HK$5.9, corresponding to 9x and 8x price-to-earnings ratios for 2026 and 2027 respectively, while maintaining the "Overweight" rating.

CHINARES PHARMA's performance met expectations with stable overall results. In the first half of the year, the company achieved operating revenue of RMB 131.867 billion, up 2.5% year-on-year, while net profit reached RMB 2.077 billion, down 20.3% year-on-year. The overall gross margin remained stable at 16.3%. Sales expense ratio was 7.6%, administrative expense ratio was 2.4%, and R&D investment reached RMB 1.25 billion.

The decline in net profit was mainly affected by one-time factors such as impairment of associate companies. Excluding these impacts, adjusted net profit declined 4.7% year-on-year, reflecting that the main business operations remained relatively stable overall. The company declared an interim dividend of RMB 0.072 per share.