20260430-招银国际-康龙化成-300759.SZ-1Q26_results_a_strong_start_driven_by_CDMO_services_6页_1mb

Pharmaron Beijing (300759 CH) 1Q26 Summary

Core Content

Pharmaron Beijing (300759 CH) reported strong 1Q26 results, with revenue increasing by 15.5% YoY to RMB3.58bn and adjusted non-IFRS attributable net profit rising by 16.2% YoY to RMB406mn. The results reflect a robust start to the year, with new orders surging over 30% YoY, outperforming the 14% YoY growth in 2025. Management maintained its full-year revenue growth guidance of 12%–18%.

Key Financial Highlights

Main Drivers of Performance

1. CDMO Services Growth

   • Revenue from small molecule CDMO surged by 25.0% YoY to RMB866mn, significantly outperforming other segments.
   • The segment's strong performance is attributed to a major DP contract with Eli Lilly for its GLP-1 drug Orforglipron.
   • Management expects the small molecule CDMO segment to continue outpacing overall growth due to strong demand and capacity expansion plans.
   • Capital expenditure for 2026 is expected to be around RMB3.0bn, with a strategic focus on late-stage projects and new modalities.

2. Clinical Services

   • Revenue from clinical services increased by 11.8% YoY, accelerating from 7.1% in 2025.
   • Segment GPM dropped to 7.1% in 1Q26, down 4.7ppts YoY, mainly due to revenue mix changes and pricing competition in the Chinese market.
   • Despite improved SMO pricing and reduced CRO price pressure, the segment is still executing low-priced orders from the previous year.
   • Management expects the segment to remain in a loss-reduction phase in 2026, with performance likely to improve in 2027 as higher-priced orders convert into revenue.

Investment Outlook

• Target Price: Maintained at RMB39.00.
• Valuation: Based on a DCF model with a WACC of 9.32% and terminal growth of 2.0%, the target price remains unchanged.
• Outlook: The company is rated as BUY, indicating potential return of over 15% over the next 12 months.
• Market Position: The company is well-positioned to capture major manufacturing orders due to its broad coverage of promising targets and molecules, and its strong relationships with MNC clients.

Financial Structure and Performance

• Capital Expenditure: Expected to be RMB3.0bn in 2026, up 12.4% YoY.
• Net Debt to Equity: At 0.0x in 2026E, indicating a strong balance sheet.
• Current Ratio: Increased to 1.1x in 2026E, reflecting improved liquidity.
• Gross Margin: Improved to 35.53% in 1Q26, with a trend of growth over the forecast period.
• Operating Margin: Expected to remain stable at around 15.0% in 2026E.
• Net Margin: Projected to rise slightly to 13.45% in 2026E.
• ROE: Expected to increase to 13.8% in 2026E, showing improved profitability.

Shareholding and Stock Performance

• Market Cap: RMB54,659.2mn.
• Shareholding Structure:
  • HK investors: 21.8%
  • De Facto Controllers: 17.6%
• Share Performance:
  • 12-mth price performance: Absolute 12.6%, Relative 7.6%.
  • 3-mth: Absolute -1.6%, Relative 5.4%.
  • 6-mth: Absolute -12.6%, Relative -11.8%.

Valuation and Sensitivity Analysis

• DCF Valuation: Equity value is projected to be RMB71,650mn, with a target price of RMB39.00.
• Sensitivity Analysis:
  • Terminal growth rate: RMB39.00 at 2.00%.
  • WACC: RMB39.00 at 9.32%.
  • The valuation is sensitive to changes in terminal growth rate and WACC, with lower growth rates and higher WACC reducing the value.

Analyst Certification and Disclaimer

• The analyst certifies that the views expressed accurately reflect their personal views.
• No part of their compensation is related to the specific views expressed.
• There are risks involved in transacting in any securities, and the information may not be suitable for all investors.
• The report is for informational purposes only and should not be construed as an offer or solicitation to buy or sell any security.
• CMBIGM is not liable for any loss or damage incurred from relying on the information.
• The report is based on publicly available and reliable information, and the analyses are subject to change without notice.

CMBIGM Ratings

• BUY: Potential return of over 15% over the next 12 months.
• HOLD: Potential return of +15% to -10%.
• SELL: Potential loss of over 10%.
• NOT RATED: Not rated by CMBIGM.
• OUTPERFORM: Industry expected to outperform the relevant broad market benchmark.
• MARKET-PERFORM: Industry expected to perform in-line with the relevant broad market benchmark.
• UNDERPERFORM: Industry expected to underperform the relevant broad market benchmark.

Conclusion

Pharmaron Beijing is showing strong performance in the first quarter of 2026, driven by robust demand in CDMO services, particularly in small molecule CDMO. The company is well-positioned for future growth with ongoing capacity expansions and strategic client relationships. While the clinical services segment is still in a loss-reduction phase, the overall financial health and growth trajectory of the company support a BUY rating. Investors are advised to consult with a professional financial advisor for personalized investment decisions.