The Zhitong Finance App learned that Everbright Securities released a research report saying that Kangchen Pharmaceutical (01681) is a leader in nephrology, with steady growth, diversified and undervalued attributes. The bank maintained the company's 26-28 net profit forecast of 12.5/14.1/1.61 billion yuan, an increase of 15.5%/13.4%/13.8% year-on-year. The PE corresponding to the current stock price is 8.3/7.3/6.5 times. Maintain a “buy” rating.
The main views of Everbright Securities are as follows:
Event: Company releases 2026 interim report
26H1 achieved operating income and net profit to mother of 1,785/595 million yuan, respectively, or +13.8%/+19.5% year-on-year. Net operating cash flow of 781 million yuan, +58.6% YoY; EPS (basic) 0.71 yuan. The results are in line with market expectations. The company plans to declare an interim dividend of HK$0.38 per share, with a dividend payout ratio of 46.2%.
26H1 revenue grew steadily and profitability increased
26H1's profit side growth rate is higher than the revenue side, mainly due to improved management efficiency and effective control of total operating costs. 26H1's gross margin was +4.31pp to 81.36% year on year, mainly due to the company improving the supplier management system, improving production and operation efficiency and declining core raw material costs; net profit margin was +1.59pp to 33.36% year on year, further increasing profitability. 26h1's sales expense ratio was -1.73pp to 31.14% year on year, with significant cost reduction and efficiency results; the management cost ratio was +2.18pp to 13.50% year over year, mainly due to the optimization of the organizational structure, introduction of talents, and increased investment in R&D. Furthermore, the 26H1 corporate income tax rate was +8.30pp to 14.35% year-on-year, mainly due to the combined effects of the Khorgos factory's preferential income tax exemption policy expiring at the end of 2025 and the increase in withholding tax.
Inventory and receivables turnover is stable, and payable turnover is lengthening
26H1's inventory turnover days were 136.9 days, which was basically the same as 136.5 days in '25; 26H1 accounts receivable turnover days was 30.2 days, which was basically the same as 32.3 days in '25; 26H1 trade payables and notes payable turnover days were 70.6 days, an increase of 20.5 days over 50.1 days in '25, mainly due to the company's optimization of supplier settlement models and strengthening working capital management. 26H1's net cash flow from operating activities was 781 million yuan, +58.6% year-on-year, related to increased profit levels, increased customer payout ratios, and extended supplier credit periods. The company's operating quality has been consolidated, and supply chain management capabilities have been improved.
The nephrology business is growing strongly, and ongoing research projects are progressing in an orderly manner
By product, 26H1 nephrology drug revenue was +18.1% year-on-year, continuing to maintain its leading position in the market. Revenue growth was related to channel expansion and increased market penetration; revenue for women/hepatobiliary drugs was +9.1%/233.7% compared to the same period, with excellent performance. The company continues to promote research and development. Among them, the new traditional Chinese medicine class 1.1 “Astragalus” has been approved for IND; in terms of MRI contrast agents, the gadolite glucamine injection was approved for marketing in August '26, and the disodium gadocerate injection has been submitted for CDE review; SK-08 has completed phase I clinical trials in China, and SK-09 is undergoing phase I clinical trials in Australia.
Risk Alerts
Pharmaceutical industry policy risks; OTC channel expansion falls short of expectations; peer competition increases risk; risk of failure in innovative drug development.