Goldman Sachs issued a research report slightly lowering its net profit forecasts for PHARMARON (03759) by 0.1%, 0.1%, and 0.5% for 2025, 2026, and 2027, respectively. The firm maintains a "Buy" rating on PHARMARON's H-shares and a "Neutral" rating on its A-shares (300759.SZ).

Based on a rolled-forward valuation benchmark, Goldman Sachs applied a three-year forward P/E ratio of 22x (previously 21x) and a discount rate of 10.5%, assuming a three-year earnings CAGR of 15% (previously 14%). Consequently, the H-share target price was raised from HK$26.6 to HK$30, while the A-share target price increased from RMB 36.6 to RMB 38.5. The H-share target price reflects a 50% A-H premium.

Goldman Sachs noted that PHARMARON's Q3 revenue reached RMB 3.65 billion, up 13.4% year-on-year and 9.1% quarter-on-quarter, slightly surpassing the firm's previous estimate of RMB 3.48 billion. Revenue growth was primarily driven by sustained momentum in the CMC and bioscience segments, with increased contributions from the top 20 pharmaceutical clients. The non-IFRS adjusted net profit margin improved to 12.9%, compared to 11.3% in Q1 and 12.2% in Q2, benefiting from higher utilization rates and operating leverage.

Management raised its full-year revenue growth guidance from 10%-15% to 12%-16%, implying Q4 year-on-year growth of 6%-20%. They also expect further margin improvement in Q4 compared to the first three quarters. However, due to margin dilution from new capacity additions in Q1, the full-year non-IFRS margin may slightly underperform 2024 levels.

Management expressed confidence in achieving the revised guidance, citing strong CMC order growth, continued capacity expansion, and improved core business margins. Ongoing investments in biologics and strategic acquisitions are expected to solidify PHARMARON's sustained growth and leadership in the CDMO sector.