Guoyuan International released a research report highlighting that CMS (00867) has established a global pipeline of 40 innovative drugs, primarily featuring First-in-Class (FIC) and Best-in-Class (BIC) candidates. Among these, five approved drugs are accelerating commercial value realization, seven New Drug Applications (NDAs) are under review, and over 10 clinical trials are progressing. The oral JAK1 inhibitor Povorcitinib has received Breakthrough Therapy designation. The firm issued a "Buy" rating with a target price of HK$17.68 per share. Key insights include:

**Robust Innovative Pipeline**: CMS has globally deployed 40 FIC/BIC-focused candidates. Five approved drugs are driving commercialization, while seven NDAs are under evaluation, alongside over 10 registration-stage clinical trials. On December 11, 2025, the NMPA accepted the NDA for the Class 1 innovative drug Y-3 injection—the world’s first brain cell protector targeting PSD95-nNOS and MPO with multi-target synergistic mechanisms. It aims to simultaneously address stroke treatment and post-stroke depression/anxiety, having met Phase III primary endpoints, with a projected market potential of RMB3 billion.

**Povorcitinib’s Breakthrough Status**: The oral JAK1 inhibitor secured NMPA Breakthrough Therapy designation for non-segmental vitiligo in adults. Globally, Phase III trials for vitiligo, hidradenitis suppurativa, and prurigo nodosa are underway, alongside Phase II asthma studies. China’s unmet need is significant, with ~10.3 million vitiligo patients (8.2 million non-segmental cases). Ruxolitinib cream’s NDA has been submitted.

**Strong Financial Performance**: H1 2025 revenue (all drug sales) rose 8.9% YoY to RMB4.67 billion, with net profit up 3.1% to RMB930 million. The dermatology segment surged 104.3% to RMB498 million, contributing 10.7% of drug sales. Demai Pharmaceuticals plans a spin-off listing on HKEX to fuel growth. Branded and innovative products collectively grew 20.6% to RMB2.9 billion (62.1% of revenue). Impact from volume-based procurement products (e.g., Plendil, Deanxit, Ursofalk) has been absorbed.

**Investment Thesis**: With a recovering performance and optimized product mix leaning toward innovation, CMS is projected to generate 2025–27 revenues of RMB7.86 billion, RMB8.95 billion, and RMB10.02 billion, and net profits of RMB1.667 billion, RMB1.941 billion, and RMB2.308 billion, respectively. The HK$17.68 target implies 16.9x 2027 P/E, offering 32% upside. Risks include R&D delays, commercialization hurdles, and geopolitical complexities affecting global expansion.