Guoyuan International: Giving Kangzhe Pharmaceutical (00867) a “buy” rating with a target price of HK$17.68

The Zhitong Finance App learned that Guoyuan International released a research report saying that Kangzhe Pharmaceutical (00867) has deployed 40 innovative pipelines based on FIC and BIC around the world, 5 innovative drugs have been approved to accelerate the release of commercial value, and in 7 NDA reviews, more than 10 clinical trials are underway. Povorcitinib, an oral JAK1 inhibitor, was recognized as a breakthrough treatment. A “buy” rating is given, and the target price is HK$17.68 per share.

Guoyuan International's main views are as follows:

Innovative drug pipelines are abundant, and the marketing license application for Class 1 new drug Y-3 for injectable use has been accepted

The company has deployed 40 innovative pipelines around the world, mainly FIC and BIC, and 5 innovative drugs have been approved to accelerate the release of commercial value; 7 NDAs are under review, and more than 10 registered clinical trials are being carried out in an orderly manner. The company's application for a new drug marketing license for Class 1 injectable Y-3 was accepted by the NMPA on December 11, '25. This drug is the world's first brain cell protector developed based on PSD95-nNOS and MPO targets. It has a multi-target highly selective coordination mechanism, and is expected to achieve simultaneous intervention in stroke treatment with post-stroke depression and anxiety. The phase III clinical trial reached the end of the main efficacy. The market space for injectable Y-3 is at the level of 3 billion yuan. Povorcitinib, an innovative oral JAK1 inhibitor, was recognized as a breakthrough treatment by the NMPA in China, and the proposed indication is non-segmental vitiligo in adults. Povorcitinib has conducted many clinical trials overseas: the drug is undergoing phase 3 clinical trials in many countries to treat non-segmental vitiligo, moderate to severe suppurative hidradenitis, and pruritus nodular, and phase 2 asthma trials are also ongoing. China has a large base of vitiligo patients and unmet treatment needs: there are about 10.3 million vitiligo patients in China, of which 8.2 million are non-segmental patients. Lucotinib cream has been submitted for an NDA.

Performance increased year-on-year, and innovative drugs began to be released

In the first half of 2025, the company achieved revenue of 4.67 billion yuan (all calculated from drug sales revenue), up 8.9% year on year; realized net profit of 930 million yuan, up 3.1% year on year. The Skin Health Line achieved revenue of 498.0 million yuan, an increase of 104.3% over the previous year, accounting for 10.7% of the Group's drug sales revenue. Demei Pharmaceuticals plans to independently list on the main board of the Stock Exchange by introducing listing and physical distribution, further unleash its high growth potential and rely on the Group's strong commercialization capabilities to drive sales growth. The company's branded products and innovative products all totaled RMB 2.9 billion in pharmaceutical sales, an increase of 20.6% over the previous year, accounting for 62.1% of the turnover. The impact of procured products such as Boeidine, Delicin, and Yousif on performance has been digested.

Investment advice

The company's performance bottomed out and rebounded. As innovative drugs continued to be launched, the company's product structure was greatly optimized, focusing on innovative drugs. The estimated revenue for 2025-27 is RMB7.86 billion, RMB8.95 billion and RMB10.02 billion, with net profit of RMB1,667 billion, 1,941 billion and 2,308 billion respectively, with a target price of HK$1,768, corresponding 16.9 times PE in 2027. It gave a buy rating, a 32% increase from the current price.

Risk Alerts

1) New product development progress may fall short of expectations; 2) Product commercialization progress falls short of expectations; 3) The complexity of the international situation exceeds expectations, and the progress of internationalization of innovative drugs is lower than expected.