CICC released a research report stating that considering INNOVENT BIO's (01801) better-than-expected operational profitability in the first half of the year, the firm raised its 2025 net profit forecast by 84.3% to RMB 871 million, while basically maintaining its 2026 attributable net profit forecast unchanged at RMB 1.30 billion. The firm maintains its outperform rating and, considering operational efficiency improvements and innovative pipeline progress, raised the target price by 24.1% to HK$118.3 based on DCF model, representing 30.0% upside potential from the current stock price.

CICC's main viewpoints are as follows:

1H25 Net Profit Significantly Exceeded Expectations The company announced 1H25 results: revenue of RMB 5.95 billion, up 50.65% year-over-year, in line with expectations; attributable net profit of RMB 834 million, non-IFRS net profit of RMB 1.21 billion, with profitability significantly exceeding expectations, mainly due to the company's revenue demonstrating economies of scale and continuous improvement in operational efficiency.

Innovative Product Revenue Continues to Increase, Multiple Blockbuster Products in CVM Pipeline Expected to Scale Up in Second Half 1H25 product sales revenue reached RMB 5.23 billion, up 37.3% year-over-year. The company's oncology product portfolio performed strongly in 1H25. According to partner Eli Lilly's financial report, sintilimab generated revenue of $275 million in 1H25, up 16% year-over-year. According to company announcements, as of the interim report date in 2025, the company has successfully commercialized 5 new drugs, expanding its product portfolio to 16 products. Benefiting from continuous volume growth of innovative products, the company's gross margin reached 86.0% in 1H25, up 3.1 percentage points year-over-year. The firm expects new products represented by mazdutide and potentially approved pucotenlimab to further contribute growth momentum in the second half.

Next-Generation Pipeline Continues to Achieve Proof of Concept (PoC), IBI363 Progress Notable In 1H25, the company presented excellent PoC data for IBI363 (PD-1/IL-2α-bias) in colorectal cancer, non-small cell lung cancer, and melanoma at the 2025 ASCO meeting, and advanced registration clinical development. The pivotal clinical trial for IO-naïve melanoma was initiated in China in early 2025. The global multi-center Phase III registration clinical trial for IO-treated squamous non-small cell lung cancer received approval from the US FDA and China's NMPA in August. Additionally, the company announced that Phase III clinical research for 3L colorectal cancer is in preparation, while simultaneously advancing PoC trials for front-line and other indications. Furthermore, the company's IBI343 (CLDN18.2 ADC) initiated Phase III clinical research in China for 3L pancreatic ductal adenocarcinoma, with Phase III clinical research for 3L gastric cancer progressing simultaneously in China and Japan.

Continuous Exploration of Multi-Dimensional Innovative Product Portfolio Expected to Bring More New Growth Points According to company announcements, the company's next-generation ADCs include EGFR/B7H3 ADC, dual-payload ADC, oral GLP-1, TSLP/IL-4α, and GPRC5D/BCMA/CD3, which have entered Phase I clinical research stage, with the company planning to continuously read out data. The firm believes the company has made multi-dimensional deployments in oncology and comprehensive product areas, and is expected to incubate more innovative growth points in the future.

Risk Warning: R&D failures, expenses exceeding expectations, volume-based procurement price reductions, deteriorating competitive landscape, external collaboration progress falling short of expectations.