Jefferies Financial Group has issued a research report initiating coverage on ADICON HOLDINGS (09860) with a "Buy" rating and a target price of HK$12.60. The firm stated that ADICON's strategic positioning in AI-driven medical testing and its planned major acquisition of Crown Bioscience are set to significantly bolster the company's comprehensive capabilities across the drug development and diagnostic value chain. The report highlights that ADICON's AI strategy revolves around three core pillars: first, its AI-assisted pathology reading system can boost slide reading efficiency to 6-7 times that of manual work, while also featuring quality control functions that automatically identify and correct transcription errors, anatomical site mistakes, and diagnostic omissions in reports. Second, the company has launched a generative AI laboratory assistant for clinicians named "Ai Xiao Yi" and a clinical large language model, "Wen Yi," developed jointly with Huawei, which have already been integrated into diagnostic workflows to serve report quality control, flow cytometry analysis, and intelligent patient diagnosis portals. Third, ADICON has completed the phased consolidation, governance, and cleansing of its 20-year repository of precision medicine testing data and is actively exploring its commercial potential in areas such as commercial insurance. The company currently completes approximately 10 million AI-assisted image interpretations annually. Notably, ADICON announced in November 2025 its agreement to acquire Crown Bioscience for a maximum consideration of $204 million. The transaction includes an upfront payment of $120 million and deferred payments contingent on the achievement of performance milestones. It is understood that Crown Bioscience specializes in translational and immuno-oncology, possessing the world's largest commercial PDX model library, with deep expertise in CDX models and biomarker solutions, serving over 1,100 clients globally, including the top 20 pharmaceutical companies. Furthermore, Crown is a leader in the AI space, owning the industry's first preclinical data platform and advanced predictive tools for anti-cancer drug synergy. Jefferies believes this acquisition will substantially enhance ADICON's capabilities in preclinical and translational research, further solidifying its industry standing through Crown's rich data assets and bioinformatics expertise. Post-transaction, approximately 23% of ADICON's revenue is projected to be derived from overseas markets.