创新驱动：核心盈利增强与全球业务拓展，重申买入评级

and global BD; reiterate BuyReiterateRating:BUYIPO:7.10HKD/Price:4.79HKD Innovativedrugsandout-licensingunderpinsolid1H26 growth and out-licensing.Combined revenue from innovative drugs and licensing rose44.3% to RMB8.79bn (45.2% of revenue in 1H26 vs.34.7% in 1H25). Gross profit grew 11.4% to RMB16.15bn, while gross margin expanded 0.6ppt to 83.0%. S&D expensesdeclined 18.4% to RMB5.26bn, admin expenses fell 11.3% to RMB969mn, and R&Dcosts decreased 3.4% to RMB3.08bn, improving operating leverage.Attributableprofitrose 1.4% to RMB3.43bn, while underlying profit grew 8.1% to RMB3.34bn. ExcludingSinovac Life Sciences dividend income, underlying profit surged 92.3% to RMB3.34bn,highlighting stronger core earnings despite lower dividend income and fair-value gains.NewapprovalsandBDsreinforceinnovation-ledgrowth KeyChanges In 1H26, NMPA approved four Class 1 or Class 2 innovative drugs from SBP, includingrovadicitinib, peceleganan, naldemedine, and flurbiprofen patch, alongside four new indications for culmerciclib,zongertinib, and anlotinib plus benmelstobart across multipletumors. SBP accelerated pipeline monetisation by licensing worldwide rights torovadicitinib to Sanofi for US$135mn upfront and upto USs1.53bn in total paymentsplus royalties. After the period, the TQC3721 agreement with AstraZeneca includedUS$20Omn upfront, up to USs1.9bn in total payments and double-digit royalties. SBPalso secured mainland China commercial rights to GSK's bepirovirsen, Trelegy Ellipta,and Anoro Ellipta, while expanding its technology platforms through Hygieia's liver-targeted siRNA capabilities and LaNova's antibody-discovery and ADC platforms.Lift PO to HKD7.1; reiterate Buy Merrill Lynch (Hong Kong)+852 3508 4531Sandra Sun >>Research Analyst MerilI Lynch (Hong Kong)sandra.sun@bofa.comEthan Cui>>Research Analyst Merill Lynch (Hong Kong)ethan.cui@bofa.com Given the impact of anti-corruption measures, particularly on the generic business, we expense estimates to reflect the improved ratios seen in 1H26. We also include potentialnew BD upfront payments in our DCF model. Thus, we now expect attributable profit ofRMB5.1b in 2026 (was RMB4.0bn) and therefore arrive at a new PO of HKD7.1 (was HKD6.2).Given the rapid growth rate in drug sales and the strong pipeline, we reiterate Buy.Estimates (Dec) (CNY)2024A2025A2026E2027E2028E Price >> Employed by a non-US affiliate of BofAS and is not registered/qualified as a research analystunder the FINRA rules.Refer to Other Important Disclosures'for information on certain BofA Securities entities that take Acronyms SBP: Sino BiopharmS&D: Selling and distributionNMPA:National Medical ProductsAdministrationBD: Business developmentADC: Antibody-drug conjugate responsibility for the information herein in particular jurisdictions. BofA Securities does and seeks to do business with issuers covered in its researchreports. As a result, investors should be aware that the firm may have a conflict ofinterest that could affect the objectivityof this report.Investors should considerthisreport as only a single factor in making their investment decision.Refer to important disclosures on page 8 to10.Analyst Certification on page 4.PriceObjective Basis/Risk on page 4.13010305 2s Sino BiopharmiQprofileKey Income Statement Data (Dec)2024A Pharmaceuticals Sino Biopharm is China's leading pharmaceutical manufacturer with leading positions in both hepatitis andcardiovascular markets. Its competitive edge includes abroad product portfolio spanning multiple therapeuticareas, a sophisticated in-house sales team, and a deep drugpipeline. The company primarily operates through fourmain subsidiaries: Beijing Tide Pharma Jjiangsu Chia TaiTianqing Pharma, Nanjing Chia Tai Tianqing Pharma, andBejing ChiaTai Green Continent Pharma. Sino Biopharm is China's leading pharmaceutical manufacturer, with leading position in multiple diseasemarkets. Its competitive edge includes a broad productportfolio spanning multiple therapeutic areas, asophisticated in-house sales team, and a deep drugpipeline. Our DCF indicates the stock still has upside relativeto current market valuation. Stock Data Price to Book Value2.3x Key Metrics Estimate changesExhibit 1: Estimate changes We lift adjusted net profit estimates from 2026 onward Sino Biopharm (SBMFF) Our PO of HKs7.1 is based on a DCF model. Our assumption of the DCF model includes a 18% debt-to-asset ratio, a 4.0% risk free rate, 7.0% market premium, and 5.4% cost ofdebt. We apply beta of 0.9 (in line with Bloomberg 6-month beta) and arrive at 10.3% pressure, (2) heightened competition resulting in loss of market share, (3) setbacks indrug development, (4) healthcare policy risk, 5) VBP on biosimilars with significant pricecut progress on pipeline. AnalystCertification reflect my personal views about the subject securities and issuers. I also certify that nopart of my compensation was, is, or will be, directly or indirectly, related to the specif