Key takeaway

The company achieved revenue of 851 million yuan in 2025, a year-on-year increase of 14.38%. After excluding the impact of share-based payments, net profit attributable to the parent after deducting non-recurring gains and losses increased by 6.21% year-on-year. The company maintained steady growth on the revenue side in 2025, while the profit side was under pressure due to previously lowered contract prices resulting from industry competition. Benefiting from the company's leading full-chain clinical trial service capabilities, businesses such as large-scale clinical trials, SMO, and data statistics maintained a healthy development momentum. Simultaneously, the company actively deployed AI technology, utilizing AI to assist in the development of clinical trial-related processes and to reduce internal costs and improve efficiency. Currently, the company has ample cash on hand. Orders in 2025 showed a year-on-year recovery. As industry sentiment gradually improves, the company is wellpositioned for long-term development by leveraging AI for cost reduction and efficiency improvement, along with its global presence.

Event

The company released its 2025 annual report In 2025, the company achieved operating revenue of 851 million yuan, a year-on-year increase of 14.38%; net profit attributable to the parent company was 137 million yuan, a year-on-year decrease of 2.37%; net profit attributable to the parent after deducting non-recurring gains and losses was 113 million yuan, a year-on-year decrease of 1.47%. After excluding the impact of share-based payments, the net profit attributable to the parent company after deducting non-recurring gains and losses was 136 million yuan, a year-on-year increase of 6.21%.

Brief analysis

Steady revenue growth, performance in line with expectations In 2025, the company achieved operating revenue of 851 million yuan, a year-on-year increase of 14.38%, and net profit attributable to the parent company of 137 million yuan, a year-on-year decrease of 2.37%. Both revenue and profit performance were in line with expectations.Against the backdrop of the clinical CRO industry being impacted by the macro investment and financing environment and sustained pressure on contract prices, the company maintained stable operations and achieved good growth on the revenue side. On a quarterly basis, in Q4 2025, the company achieved revenue of 244 million yuan, a year-on-year increase of 34%, and net profit attributable to the parent company of 41 million yuan, a year-on-year decrease of 25.9%. The relatively fast growth on the revenue side was mainly related to the recognition of revenue from some orders in the fourth quarter. New orders signed for the full year 2025 increased compared to 2024. Despite lower average order prices, the growth in the number of orders contributed significantly.

Core businesses maintain double-digit growth, order prices stabilize at the bottom

By segment, in 2025, the company's Clinical Trial Technical Services (including clinical trial operations, clinical pharmacology, and clinical trial consulting) generated revenue of 413 million yuan, a year-on-year increase of 10.04%, accounting for 48.5% of main business revenue; Clinical Trial Related and Laboratory Services (including clinical trial site management, data management and statistical analysis, and biological sample testing) generated revenue of 438 million yuan, a year-on-year increase of 18.8%, accounting for 51.5%. In terms of gross margin, the clinical trial technical services segment saw a significant decline due to price adjustments and passthrough fee structures, while the SMO segment's gross margin increased, and the data statistics and programming business maintained a stable gross margin. Regarding orders, new orders signed in 2025 increased slightly compared to 2024. Order prices in 2025 remained under pressure; however, the companybelieves project prices have largely bottomed out and expects an improvement in the first half of 2026. Simultaneously, benefiting from robust R&D investment in domestic innovative drugs, the proportion of nononcology projects within the project structure continues to rise. The company expects the average completion cycle for its backlog to shorten from 3 years to 2 years, with asset turnover and order confirmation pace expected to further accelerate.

2026 Outlook: Leveraging AI for continuous cost reduction and efficiency gains, external M&A expected to open new growth space

The company has already deeply integrated AI into areas such as clinical protocol writing, pharmacovigilance (PV), and data management (DM). For instance, by leveraging over a decade of accumulated data from thousands of projects, AI has significantly reduced clinical protocol writing time to just a few days and lowered per-project costs. It is expected to gradually impact more manual processes in the future, driving continuous cost reduction and efficiency improvements. The company is not only focusing on its traditional integrated information technology teams but is also actively collaborating with top-tier AI companies and academic institutions. As AI models are fully implemented across clinical operations, data management, pharmacovigilance, and other areas, the company's personnel efficiency ratio and profit margin are expected to recover. Furthermore, with nearly 1.8 billion RMB in cash on hand, the company is actively seeking potential M&A targets that can create synergies with its existing business. Adhering to the principle of "complementary strengths and value creation," external mergers and acquisitions are expected to become a new growth driver for the company.

Financial Analysis: Period Expense Ratio Decreased, Clinical Business Gross Margin Remains Under Pressure

In 2025, the company's selling expense ratio, administrative expense ratio, and R&D expense ratio were 1.63%, 10.36%, and 7.28%, respectively, representing year-on-year changes of -0.23pp, -0.05pp, and -0.36pp. Benefiting from continuous cost reduction, efficiency improvements, and enhanced operational efficiency, the period expense ratio continued to decline. Meanwhile, the company increased its R&D investment, leading to a rise in R&D expenses. Affected by intensified industry competition, the company's gross margin decreased from 37.1% in 2024 to 34.7%, a year-on-year decline of 2.4 percentage points. Specifically, the gross margin for clinical trial technical services was 29.28%, down 5.67 percentage points year-on-year, indicating significant pressure. An improvement is expected as industry demand recovers.

Earnings Forecast and Investment Recommendation

As a leading domestic clinical CRO company, it has demonstrated exceptional operational resilience and risk resistance during a phase of intense industry price competition and accelerated market consolidation. In the short term, with order prices bottoming out and quarterly industry sentiment recovering, the company's core business is expected to maintain steady growth. In the medium to long term, the company is deeply aligned with the wave of innovative drug globalization, with strong demand for overseas consulting and large -scale clinical services. Furthermore, the comprehensive empowerment by AI technology will open new pathways for cost reduction and efficiency enhancement. We forecast the company's operating revenue for 2026-2028 to be 898 million yuan, 967 million yuan, and 1.041 billion yuan, representing year-on-year growth of 5.6%, 7.6%, and 7.7%, respectively. Net profit attributable to the parent company is projected to be 138 million yuan, 158 yuan, and 179 million yuan, with year-on-year growth of 1.1%, 13.9%, and 13.6%, respectively. The corresponding P/E ratios are 48x, 42x, and 37x. We maintain a "Buy" rating.

Risks:

Risks of intensifying market competition and slower-than-expected recovery in order prices: If intense internal competition persists and peers continue irrational low-price bidding, the company may face difficulties in securing orders or further compression of profit margins. Risks of slower-than-expected recovery in innovative drug R&D investment and financing: The CRO industry heavily relies on R&D spending from downstream pharmaceutical companies; a slow improvement in the macro financing environment would affect order demand across the industry. Risks of slower-than-expected AI technology R&D and commercialization: The application of AI models in the clinical field requires significant capital and time investment; if technological progress or customer acceptance lags expectations, i t may impact the company's strategic goal of cost reduction and efficiency enhancement. Risks associated with overseas business expansion and geopolitics: The company is actively expanding into overseas markets such as the US and Australia; changes in local regulations or international trade frictions could adversely affect its globalization efforts. Risks of slower-than-expected progress in M&A and post-merger integration: The company is currently negotiating multiple acquisition targets; if price disagreements lead to failed transactions, or if expected "one-plus-one-greater-than-two" synergies are not realized post-merger, it could drag down the company's overall performance.