CICC issued a research report stating that due to the time required for delivery and revenue recognition of certain projects at MORIMATSU INTL (02155), the firm has lowered its 2025 net profit forecast by 27.7% to 740 million yuan and introduced a 2026 net profit forecast of 937 million yuan for the first time. Considering the time needed for projects to contribute revenue and profits, the firm has switched its valuation basis to 2026. The current stock price corresponds to 11.8x 2026 P/E ratio. CICC maintains its outperform rating, but due to the upward shift in industry valuation center and the company's benefit from global manufacturing transfer and long-term growth opportunities in AI and other high-tech industries, the firm has raised its target price by 50% to HK$12.00, corresponding to 14.4x 2026 P/E ratio, representing 22.0% upside potential from the current stock price.

CICC's main viewpoints are as follows:

**H1 2025 Performance Met Market Expectations** H1 2025 revenue was 2.687 billion yuan, down 22.7% year-over-year; net profit attributable to shareholders was 340 million yuan, down 10.1% year-over-year. The first-half performance met market expectations. The firm believes this was mainly due to the 9-14 month order recognition cycle, while new orders signed last year declined 23% and orders on hand fell 10%, with domestic project suspensions also affecting revenue recognition.

**Net Profit Margin Continued to Improve, Demonstrating Robust Profitability** First-half gross margin was 29.4%, down 0.2 percentage points year-over-year, maintaining robust profitability despite significant revenue decline; net profit margin was 12.6%, up 1.8 percentage points year-over-year, with profitability continuing to improve. Sales/administrative/R&D/financial expense ratios were 3.2%/11.1%/4.2%/0.2% respectively, changing by +0.9pct/+3.5pct/-2.1pct/flat year-over-year.

**Pharmaceuticals Drive Better-than-Expected New Orders, Orders on Hand Reach Historic High** New orders signed in the first half totaled 5.996 billion yuan, up 89.5% year-over-year. Among these: pharmaceutical new orders reached 4.372 billion yuan, up 642% year-over-year; other segments such as electronic chemicals, daily chemicals, and oil & gas refining also showed growth in new orders. As of H1 2025, orders on hand totaled 10.566 billion yuan, up 20.4% year-over-year, reaching a historic high. Among new orders signed in the first half, overseas orders accounted for 92.8%, and modular integrated solution orders accounted for 88.4%, both showing significant year-over-year increases.

**Platform-based Multinational Layout Shows Results, High-tech Industry Positioning Continues to Improve** The firm believes the company is making progress across AI, semiconductors, pharmaceuticals, and other high-tech industries. In pharmaceuticals, global capacity demand from MNCs and CXOs is rapidly expanding; in AI, modular data centers are expected to welcome a new growth cycle; in wet electronic chemicals, advanced process evolution and new energy demand growth are driving high-end product localization.

**Risk Factors:** Downstream industry cyclical fluctuation risks, liquidity risks, and foreign exchange rate fluctuation risks.