CICC International: Lowers target price for Pharmaron to HK$80, maintains overweight recommendation on CXO sector.

Industrial International released a report stating that the management of Pharmaron was optimistic about the performance of new dollar-denominated orders in the first half of this year, mainly benefiting from the strong downstream research and development demand and investment enthusiasm in the XDC field, especially from overseas customers. With the Singapore plant about to receive GMP clearance and the first CMO project expected to generate revenue from 2027, combined with the capacity brought by the acquisition of Dongyao in the form of raw materials and formulations, the bank believes that the company's performance is likely to meet the management's guidance with high certainty. However, considering that short-term performance may be affected by one-off factors, the bank has lowered Pharmaron's revenue forecast for 2026 to 2028 by 4% and lowered the projected net profit by 15% to 23% to reflect the short-term impact of exchange rate fluctuations, increased one-time financial expenses brought by the acquisition and consolidation of Dongyao Pharmaceutical, and rising SG&A expenses. Adjusted net profit forecast also decreased by 4% to 14%. The bank has adjusted the target price of Pharmaron to HK $80, maintained a "buy" rating, and continued to recommend the CXO sector as a focus.