Goldman Sachs: Maintaining Kangde (02359) “Buy” Rating Target Price of HK$251

The Zhitong Finance App learned that Goldman Sachs released a research report saying that Yao Ming Kangde (02359) held an annual investor day on November 6. The overall content of the event was in line with the expectations. The company further demonstrated progress in technical capabilities, R&D pipelines and operational efficiency, and did not update financial forecasts; the bank gave Pharmaceutical Kangde a “buy” rating, with a target price of HK$251.

The report mentioned that the company's management provided details, confirming the view that AIDD (AI-enabled scientific research) does not replace traditional R&D services, but rather expands the scope of drug discovery and lowers the threshold of innovation by generating more biological hypotheses and exploring new targets and molecular forms. At the same time, faster design and analysis cycles will increase the demand for physical “manufacturing and testing” steps. Pharmacovigant's ability to integrate chemistry, biology, and drug metabolism (DMPK) is used as a wet laboratory component in this model to transform computer simulation hypotheses into actual compounds and experimental data on a large scale.

As an example, management pointed out that some AIDD customers required about 10 times the analytical throughput of traditional small molecule projects, while another global AI company required 5,000 culture plates, which is equivalent to about 500 times the throughput of traditional projects.

Yao Ming Kangde also demonstrated its automated and all-weather bioanalysis, high-throughput ADME (pharmacokinetics) capabilities, the company manages a system of more than 1 million compounds, and a virtual compound library with a scale of 46 billion. Goldman Sachs specifically mentioned a serial startup team from California. The team did not have its own laboratory. Through cooperation with Pharmaceutical Kant's multiple early platforms, the project expanded from 4 to more than 40, confirming how the company can deepen customer relationships and expand market share through early stage participation.

In terms of operational efficiency, management said that the new workshop only takes about two months from start-up to full production, which is significantly shorter than in the past; the construction time of the workshop has also been shortened from the past 2 to 3 years to about 14 months. Currently, around 20 workshops are in the delivery, construction or planning phase. The company adopted a “synchronized construction, delivery and use” strategy to make capacity expansion more in line with the progress of the project. The new Changzhou base plans to invest 10 billion yuan to build 800 tons of API production capacity within three years. The first workshop is expected to be put into operation in mid-2028. A total of about 15 workshops are planned.