UOB Kay Hian Private Limited
Date of Report: Tuesday, 19 August 2025
Sino Biopharmaceutical Delivers Strong 1H25 Results, Out-Licensing Set to Drive Future Growth
Company Overview: Sino Biopharmaceutical (1177 HK)
Sino Biopharmaceutical stands as a leading pharmaceutical provider in China, offering a comprehensive product portfolio across cardio cerebral vascular diseases, hepatitis, oncology, analgesic, respiratory, and diabetic therapeutic areas. The company, listed on the Hong Kong Stock Exchange, boasts a substantial market capitalization of HK$148.4 billion (US$19.0 billion) and is 40.4% owned by the Tse Family. The stock has demonstrated remarkable price performance, surging 147.2% year-to-date and reaching a 52-week high of HK$8.05.
1H25 Earnings Beat: Robust Growth Across Key Metrics
Sino Biopharm delivered outstanding interim 2025 results:
Revenue climbed 10.7% year-on-year (YoY).
Adjusted net profit to shareholders surged 101.1% YoY.
The company reaffirmed its double-digit growth guidance for 2025, with plans to launch more than 10 new products between 2025-2027.
| Metric |
1H24 |
1H25 |
YoY% |
| Revenue (Rmbm) |
15,874 |
17,575 |
10.7% |
| Surgery/Analgesia Drugs |
2,583 |
3,105 |
20.2% |
| Oncology Drugs |
5,360 |
6,694 |
24.9% |
| Other Drugs |
7,707 |
7,592 |
-1.5% |
| Gross Profit |
13,030 |
14,494 |
11.2% |
| Adj. Net Profit to Shareholders |
1,535 |
3,088 |
101.1% |
| Adjusted EPS (Rmb) |
0.08 |
0.17 |
105.6% |
Key margin highlights:
Gross profit margin improved to 82.5%.
Adjusted net profit margin soared to 17.6%, up 7.9 percentage points.
R&D expense increased to 18.1% of revenue, reflecting strong innovation commitment.
Innovative Drugs Take Center Stage
Innovative drugs revenue reached Rmb7.8 billion, rising 27.2% YoY and now contributing 44.4% of total revenue.
Oncology drug sales jumped 38.1% YoY to Rmb6.7 billion.
Surgery and analgesia medicines posted an impressive 17.7% YoY growth.
Revenue from other medicines expanded 43.2% YoY to Rmb7.6 billion.
| Segment |
Revenue (Rmbm) |
YoY % |
Contribution to Total Revenue |
| Innovative Drugs |
7,800 |
27.2% |
44.4% |
| Oncology Drugs |
6,700 |
38.1% |
38.1% |
| Surgery/Analgesia Medicines |
3,100 |
17.7% |
17.7% |
| Other Medicines |
7,600 |
43.2% |
43.2% |
Operational Efficiencies and Margin Expansion
Gross margin from continued operations improved to 82.5%, driven by manufacturing optimization and expanded production facilities.
SG&A as a percentage of revenue decreased, reflecting enhanced cost efficiency.
R&D expense surged 23.6% YoY to Rmb3.2 billion, underlining the company’s focus on innovation.
Significant increase in dividend income (Rmb1.35 billion) from SINOVAC Life Sciences and fair value gain on investments (Rmb541.5 million) contributed to robust earnings.
Product Pipeline and Market Expansion
Sino Biopharm received approval for two innovative products in 1H25: Putanning (Meloxicam Injection (II)) and Anqixin (Recombinant Human Coagulation Factor VIIa N01 for Injection).
Anlotinib secured its ninth indication approval in China for first-line treatment of locally advanced or metastatic soft-tissue sarcoma.
Management targets double-digit revenue growth in 2025, with innovative products expected to contribute around 50% of total revenue in 2025 and 60% by 2027.
Plans to launch over 10 innovative products in 2025-27, including TQB3616 (CDK2/4/6 inhibitor for breast cancer) and Zongertinib (HER2 inhibitor for NSCLC).
Out-Licensing: A New Earnings Growth Engine
Cash position at end-Jun 2025: Rmb30.5 billion.
Completed full acquisition of LaNova Medicines for US$500 million, strengthening antibody discovery and ADC technology capabilities.
LaNova’s out-licensing project with Merck & Co. for LM-299/MK-2010 (PD-1/VEGF bispecific antibody) proceeding well; US$300 million milestone payment expected in 2H25.
Out-licensing projected to become a recurring revenue stream, supporting sustained earnings growth.
Financial Overview and Forecast
| Year |
Net Turnover (Rmbm) |
EBITDA (Rmbm) |
Net Profit (Adj.) (Rmbm) |
EPS (Fen) |
PE (x) |
Dividend Yield (%) |
ROE (%) |
| 2023 |
26,199 |
6,486 |
2,589 |
14.0 |
52.0 |
0.6 |
7.7 |
| 2024 |
28,866 |
6,490 |
3,457 |
18.9 |
38.4 |
0.9 |
11.2 |
| 2025F |
32,336 |
7,719 |
5,727 |
31.8 |
22.8 |
1.3 |
14.9 |
| 2026F |
36,013 |
9,285 |
5,738 |
31.9 |
22.8 |
1.3 |
13.4 |
| 2027F |
40,032 |
10,279 |
6,399 |
35.5 |
20.4 |
1.4 |
13.7 |
Additional Financial Metrics:
Net margin projected at 15.5% in 2025F, 13.7% in 2026F, and 13.8% in 2027F.
Net debt to equity expected to fall to 1.4% by 2027F.
Dividend payout ratio for interim 2025 is 26.8%.
Cash Flow and Balance Sheet Highlights
| Year |
Operating Cash Flow (Rmbm) |
Investing Cash Flow (Rmbm) |
Financing Cash Flow (Rmbm) |
Ending Cash (Rmbm) |
| 2024 |
5,630 |
-1,380 |
-7,590 |
3,336 |
| 2025F |
9,413 |
-4,120 |
-2,829 |
5,799 |
| 2026F |
7,826 |
-547 |
-5,430 |
7,649 |
| 2027F |
9,540 |
-714 |
-6,016 |
10,458 |
Strategic Outlook: Upgraded Target Price and Valuation
Target price raised to HK$10.50, based on a sum-of-the-parts (SOTP) approach:
HK$4.07/share at 11x 2025F PE for existing drugs
HK$6.43/share based on NAV-derived pipeline value (9.8% WACC, 4.5% perpetual growth rate)
The company is forecast to deliver strong earnings, with 2025 net profit (adj.) expected to grow 65.7% YoY, revised up from 6.8%.
Out-licensing, innovative launches, and dividend income underpin the bullish outlook.
Risks and Considerations
Key risks include policy changes (anti-corruption, DRG/DIP programs, volume-based procurement), delays or failures in R&D or product launches, and intensifying market competition.
Conclusion: Sino Biopharmaceutical Poised for Sustained Growth
Sino Biopharmaceutical’s stellar 1H25 performance and strategic moves in innovation and out-licensing set the stage for continued growth and margin expansion. The company’s robust financials, aggressive product pipeline, and strengthened cash position support a bullish outlook. With a raised target price and strong earnings trajectory, Sino Biopharm remains a compelling investment opportunity in China’s healthcare sector, while investors should remain mindful of policy and competitive risks.
