Yao Ming Biotech (02269) Interim Report: Exceeding expectations, breaking through the target price of major banks, and the accelerated growth on the M-side once again verifies the long-term investment logic

Against the backdrop of recent marginal pressure on US dollar credit and increased momentum in the allocation of Hong Kong stocks, Hong Kong Stock Pharmaceuticals has shown a clear new and efficient response from the sector.

The Zhitong Finance App observed that after falling 6.66% in June this year, the Hang Seng Healthcare Index continued to rise in July and August, with a cumulative increase of about 24.80% within 2 months. However, the underlying logic of this market round is mainly a two-way resonance between domestic and international demand for innovative drug research and development and CXO recovery.

As the leader in the CXO sector of Hong Kong stocks, the stock price of Yao Ming Biotech (02269) rebounded ahead of the index in this market, breaking out of the “three consecutive months”. The cumulative increase in the June-August stock price was about 45%, and the increase during the year was over 60%, clearly outperforming the Hang Seng Index market and the pharmaceutical sector during the same period.

It is worth mentioning that well-known investment banks, including UBS, Lyon, Goldman Sachs, Nomura, and Yamato, released research reports on Pharmaceutical Biotech at the beginning of this year and gave target prices in the HK$40 range. Meanwhile, Yao Ming Biotech's stock price broke through the HK$50 mark in late August, surpassing the target price expectations of major banks mentioned above.

Figure 1: Recent stock price trends of Yao Ming Biotech

As Yao Ming Biotech's stock price soared, international investment banks recently raised their valuation anchors for Yao Ming Biotech, and the target price gradually moved up to around HK$50. For example, UBS raised the target price of Yao Ming Biotech to HK$51.1 on July 2, giving it a “buy” rating; Nomura raised the target price of Medicinal Biotech to HK$51.38 in late July to give it a “buy” rating; and as early as February of this year, Morgan Stanley raised the target price of Medicinal Biotech to HK$50, giving it an “increase in weight” rating.

In the leading market in this round, Yao Ming Biotech continues to fluctuate and has a clear upward trend, and is still breaking through the latest target price of major banks. It reflects the market's reassessment of the company's fundamentals and long-term growth expectations.

According to the Zhitong Finance App, the reason why the current market capital was able to “outperform” the institutional weather vane is that when the research direction outside the field was still limited to historical fluctuations, stage pressure, and market disputes, the repricing of the global innovative drug industry chain and upstream delivery, as well as the scarcity of the value of the Pharmaceutical Biotech platform, was first reflected in the secondary market.

Yao Ming Biotech's 2026 mid-term results send a strong signal: the transformation of the project pipeline to the late stage and commercialization stage is accelerating, and the complex molecule business is further improving the quality of growth. The company is moving from expanding the number of projects to centralized implementation of high-value projects, and its long-term valuation logic is also gradually shifting from R&D reserves to a visible increase in commercial revenue.

The M-side's accelerated growth once again verifies the long-term investment logic

Many major international companies are highly consistent in their view of Yao Ming Biotech's logic, as mentioned by Goldman Sachs in its research report on the three core logics of Pharmaceutical Biotech: hard core verification on the performance side, technical barriers to complex molecules, and the immediate need for global CXO outsourcing.

However, the current 2026 interim results have once again verified the long-term investment logic of Yao Ming Biotech with high-quality data: the accelerated transformation from R&D (R) to development (D) to production (M) is becoming a key driving force for the continued rapid growth of Yao Ming Biotech, and the company's “golden funnel” is entering a period of full realization.

According to financial reports, the company's total revenue for the period was 11.8 billion yuan, up about 18.4% year on year (up 23.4% year on year in US dollars); adjusted gross profit increased 25.6% year on year to RMB 5.7 billion, and adjusted gross margin increased 2.8 percentage points year on year to 48.4% year on year; adjusted net profit and adjusted net profit to mother reached 3.9 billion yuan and 3.3 billion yuan respectively, corresponding to year-on-year increases of 38.6% and 38.4%%. Under the premise of achieving strong revenue growth, the profit growth rate is still significantly faster than the revenue growth rate, indicating that its operating efficiency, capacity utilization rate, and business structure have upgraded and improved, further verifying that the company's core business has entered a higher quality growth stage.

Yao Ming Biotech has also raised its annual performance guidelines. It is estimated that in 2026, the revenue growth rate will increase to 20-23% compared to the same period with a fixed exchange rate (previously estimated 16-20%); the reporting revenue growth rate will increase to 15-18% compared to the same period (previously estimated 13-17%).

However, the core highlight of this financial report is not the remarkable profit elasticity shown by Yao Ming Biotech, but rather an early reflection of the accelerated growth trajectory of the hardcore business side, bringing clear investment certainty to the market.

On the business side, Yao Ming Biotech added 169 new comprehensive projects in the first half of 2026. Among them, 123 endogenous comprehensive projects were added, reaching a new high, with a year-on-year increase of 43%, and the subsidiary Pharmaceutical Federation (02268) obtained 46 comprehensive projects after merger and acquisition of Dongyao Pharmaceutical. The company's total number of comprehensive projects has further reached 1,064, of which more than 70% of the new projects and more than 50% of the total projects are complex molecular projects such as dual/multiple antibodies and ADC. This shows that while expanding the capacity of the Pharmaceutical Biotech project pipeline, it is being upgraded to higher technical barriers and higher value density at an accelerated pace.

However, for investors, it is necessary not only to see the company's “Thousand Molecules Reached” achievements, but also to clearly see the structural outbreak ushered in by Yao Ming Biotech's CRDMO “Golden Funnel” through financial reports.

Specifically, there were 525 pre-clinical projects within the Pharmaceutical Biotech CRDMO integrated platform, an increase of 22.4% over the previous year. As can be seen, the R-side business is expanding at an accelerated pace as a “golden funnel” traffic entry. While screening and delivering high-quality projects for the company's late-stage business, it has also further enhanced the company's medium- to long-term growth visibility of high profit margins.

While the R side accelerated its expansion, the company's D-side early (phase I and phase II) clinical projects reached 433 (303 phase I projects and 130 phase II projects), an increase of 25.9%; the M-side late-stage (phase III) clinical and commercial production projects increased to 106 (78 phase III projects and 28 commercial production projects), an increase of 16.5% over the previous year.

Figure 2: Number of Pharmaceutical Biotech CRDMO platform projects (as of June 30, 2026)

The above D-side and M-side data clearly show flow migration and structural optimization within the “golden funnel” of Pharmacovigenics: a large number of “follower molecule” projects continue to flow to post-clinical, process verification, and commercialization processes along the “R-D-M” link. In addition, in the first half of the year, Yao Ming Biotech was transferred from outside to 16 “winning molecules” projects, including 5 late-stage and commercialization projects, 2 of which were biosimilar projects. WuxiATM TrueSite, a next-generation integrated cell line platform, organically combines development efficiency with production efficiency advantages, which can significantly shorten the project cycle and reduce production costs, so it is particularly suited to the needs of the biosimilar market.

Because of this, the future growth prospects of Yao Ming Biotech's M-side production business are becoming more and more clear. First, the “Follow Molecule” project continues to advance to the commercialization stage; second, “winning molecules” continues to supplement late-stage and commercial production projects; third, major global biopharmaceuticals are intensively entering the patent expiration window to accelerate the release of demand for biosimilar drugs; and fourth, biologics integration capabilities further enhance project value. Multiple drivers are superimposed to support the continuous growth of the production business.

PPQ (Process Performance Verification) is a key verification step before commercial production of biopharmaceuticals, and it is also a core leading indicator for observing M-side business. On the basis of completing 28 PPQs in 2025, Yao Ming Biotech has scheduled 34 and 30 PPQs in 2026 and 2027, respectively. The continuous increase in PPQ schedules indicates that more projects are progressing to the commercialization stage, locking in commercial revenue for the company for the next 1-3 years ahead of schedule, making it the leading indicator with the strongest performance certainty.

In 2026, Yao Ming Biotech's top three production projects are each expected to contribute more than 100 million US dollars in revenue. The M-side's compound growth rate is expected to reach 30% in the next three years. The strong performance of the M-side has also been cross-verified with the company's active expansion of production capacity. The Zhitong Finance App learned that since this year, on the one hand, Yao Ming Biotech has been speeding up the construction of bases in the US and Singapore, and on the other hand, it has rapidly expanded production capacity by controlling shareholder Yao Pharmaceutical and acquiring CDMO assets under Chuangsheng Group.

Up to now this year, Yao Ming Biotech's Irish base has signed 3 new large-scale commercial production projects and initiated technology transfer. The MFG8 stock solution production plant at Yao Ming Biotech's Hebei base passed the US FDA pre-approval inspection, further strengthening the delivery base for related commercialization projects.

Empowered by a reliable quality system and anticipated further expansion of production, the company has already locked in the future M-side value release.

With the opening of a global commercial production capacity base, the weight of Yao Ming Biotech's M-side business is rapidly rising, which is ultimately reflected in the subsequent performance of Yao Ming Biotech, further verifying the company's long-term investment logic.

The complex molecule project has become a “value amplifier”

In recent years, Yao Ming Biotech has achieved accurate identification in high-potential complex molecular fields such as dual/multiple antibodies and ADC. In the first half of the year, 71% of Yao Ming Biotech's new projects were dual/multiple antibodies and ADCs. This has not only become the company's current “fastest growing and most profitable” engine, but also a key amplifier for its value growth.

At the market level, dual/multiple antibodies and ADCs are experiencing explosive growth.

According to Pharmaceutical Rubik's Cube data, the cumulative sales volume of global dual-antibody products in 2025 was about 16 billion US dollars, an increase of about 27% over the previous year. Currently, there are still about 1,800 dual-antibody treatments under development worldwide. In the same period, IQVIA data showed that global ADC product sales reached 18.8 billion US dollars and are expected to reach 36 billion US dollars by 2030.

Leading products continue to be released. This not only indicates that next-generation biopharmaceuticals represented by dual/multiple antibodies and ADCs are becoming the most active innovation racetrack in the world, but also indicates that the global double/multiple antibody outsourcing penetration rate will increase rapidly as the industry needs.

Although complex molecular process barriers are high and process transfer and PPQ verification are difficult, with PharmacomingBio's many years of experience in complex molecular projects, a quality system tested by global drug control, and advanced process platforms, its platform technical capabilities in the field of double/multiple antibodies and ADC have continued to be verified by customers.

Taking double/polyantibody as an example, the semi-annual report shows that the number of double/polyantibody projects within the Pharmaco-Ming Biointegration Platform reached 221, 74 projects entered clinical phase I/II, 10 projects entered clinical phase III, and 3 commercialization projects, all of which are high-potential assets. It is also one of the largest and most technologically advanced dual/multiple antibody development pipelines in the industry.

The Zhitong Finance App learned that Yao Ming Biotech has built a “highway” for complex molecular projects from laboratory to commercialization. The double polyantibody project can be efficiently completed within 6 months from DNA to IND submission. It only takes 3.5 months to complete from technology to PPQ, which is more than 50% faster than the average cycle of the industry. The company continues to enable global customers to launch double/multiple antibody pipelines, and as a result, it has become the preferred partner for global innovative pharmaceutical companies to launch pipelines in the middle and late stages.

The performance in the ADC field was also impressive. Pharmaceutical Federation performed well in the 2026 interim results. The comprehensive revenue reached 3.71 billion yuan, a year-on-year increase of 37.0% based on the actual exchange rate (AER), and a year-on-year increase of 41.5% in the fixed exchange rate (CER) calculation, further demonstrating the dominance of Pharmaceutical Ming Biotech on the complex molecular circuit.

And this is an industry spillover effect brought about by strong technical barriers. Such high-end increases will also bring Yao Ming Biotech the industry advantages of high customer stickiness, high gross profit, and high sustainability.

CICC's latest research report affirms the strength of the Yao Ming Biotech Innovation Technology Platform and the barriers on the complex molecular circuit, pointing out that the company's platform capabilities are gradually being upgraded from R&D efficiency tools to a core competitive advantage, and it is expected that it will continue to improve its global competitiveness in complex molecular fields such as dual antibodies, multiple antibodies, and biosimilar drugs. At the same time, the research report mentioned that Shuangduoantang is difficult to develop and produce, customer switching costs are high, and the project profit margin and retention rate are better, which will further increase the revenue stickiness and commercialization flexibility of Pharmacomimetics.

Market perception reshaping and long-term value revaluation

Yao Ming Biotech's stock price rose strongly, outperforming the Hang Seng Index and the pharmaceutical sector. In addition, leading companies on the CXO circuit have received more attention, and the market has begun to further actively revalue the commercialization of medicinal biotechnology and the increase in the share of complex molecules.

On August 13 this year, Bank of America Securities released a research report, raising the terminal growth rate assumption for China's CRO/CDMO industry from 1% to 3%, and raising the target prices of many CXO companies.

Judging from the content of the research report, Bank of America uses China's innovative drug “financing+going overseas” dual data as an anchor, saying “China's medical research and development activities will be further accelerated, and Chinese CRO/CDMO companies are expected to benefit”. This judgment is consistent with the optimistic tone of “China's innovative drugs going overseas+supply chain return”, showing a continuing signal of major international banks repricing China's CXO industry.

Among them, the Bank of America raised the target price of Hong Kong shares from HK$204.3 to HK$242, an increase of 18.4%, maintaining the “buy” rating. The reason why Yao Ming Kangde took the lead in receiving revaluation pricing is that it has already demonstrated a complete small-molecule CRDMO growth path: massive project reserves continue to flow to the back-end, and the share of late-stage and commercial production businesses has increased, driving an improvement in revenue scale and profit quality, thereby driving up the valuation center.

As a macromolecular CRDMO platform, Yao Ming Biotech is replicating the above growth logic. The “golden funnel” of a thousand molecules not only provides a continuous source of projects, but also forms a clearer path of value realization through stage transitions, providing a solid fundamental basis for valuation reshaping.

In a research report in June of this year, Cathay Pacific Haitong proposed to be optimistic about the long-term growth potential of Yao Ming Biotech, and emphasized the scarcity of the CRDMO model, giving the company an “increase in weight” rating, with a target price of HK$54.49.

In this interim report, Yao Ming Biotech once again verified the endogenous growth potential of its CRDMO platform. More and more projects are progressing backwards along the R-D-M path and gradually entering PPQ and commercial production. The company's total outstanding orders increased to US$25.1 billion, and the total number of uncompleted orders increased to US$5.5 billion within three years, an increase of about 30% over the previous year.

It is easy to see that Yao Ming Biotech's growth logic is undergoing structural upgrades: early projects continue to expand, mid- and late-stage projects accelerate, PPQ and commercial production provide higher revenue visibility, and complex molecules further enhance project value and profit flexibility.

In the future, as the integrated CRDMO platform of Yao Ming Biotech further enters the centralized implementation cycle, the results of commercialization transformation of more and more molecules will become the core basis for supporting the company's long-term value increase.