Removing the heavy asset label, why is Yao Ming Kangde (02359)'s profit running faster and faster?

In the current macro-context of profound changes in the global biomedical investment and financing cycle and R&D requirements, the CXO circuit has long been stereotyped and labeled as an asset-heavy, manpower-intensive traditional industry, and the market's focus is also often on a single scale figure on the front page of earnings reports.

However, when we analyze in depth the multiple financial reports handed over by Yao Ming Kangde (02359) from 2025 to the first half of 2026, we can clearly find a unique phenomenon that is extremely important as an industry trend vane — the company's profit growth rate continued and significantly higher than the revenue growth rate during the same period, forming a widening “scissor gap”.

Judging from recent financial disclosures and performance data, starting from the first quarter of 2025, this “adjusted profit growth rate and revenue growth rate” showed a high operating trend of 19.02%, 27.54%, 26.96%, and 27.16% in sequence, and further expanded to 44.3% in the first half of 2026.

In other words, the efficiency of generating profits continues to improve with each additional unit of revenue, which means that the enterprise growth logic is steadily moving from simple scale expansion to value creation driven by high-value-added businesses.

From “quantitative change” to “qualitative change”, high-value-added business opens the ceiling for profit growth

This leapfrog growth does not depend on incidental non-recurring profits and losses, but is rooted in the dividends of Pharmaceutical Kangde's unique CRDMO integrated business model, deep optimization of the main revenue structure, and systematic improvement in lean operating efficiency.

According to the Zhitong Finance App, the root cause of Yao Ming Kangde's high profit margin is deeply rooted in profound changes in its revenue structure, which is mainly reflected in the three dimensions going hand in hand:

First, the company's unique “follower” strategy has officially entered the harvest period after a long period of intensive cultivation, and the share of high-value projects in the overall business has steadily increased. By the end of June 2026, the total number of the company's small-molecule D&M pipelines had reached 3,731, of which the number of commercial projects had increased to 95. These projects at the back end of the value chain often had higher profit contribution rates, which led to a structural increase in overall profit margins.

Second, the TIDES business ushered in explosive growth. In the first half of 2026, the TIDES business achieved revenue of 7.26 billion yuan, an increase of 44.3% over the previous year. The company has raised the annual revenue guide for this business to a rapid growth rate of about 45%. It currently maintains a leading position in the industry on cutting-edge circuits such as nucleic acids, conjugates, polyspecific antibodies and peptides, and has undoubtedly become the “second growth curve” for the company's profit;

Finally, the “Biology+Test” integrated service platform showed a strong collaborative drainage effect. The first half of 2026 brought more than 20% new customers to the company and continued to deliver massive high-value projects to the entire group.

Profit monetization capacity continues to soar, creating a “cash cow” level HALO asset

Yao Ming Kangde's overall gross profit margin (56.56%) and adjusted profit margin (42.36%) for the second quarter both broke through the historical ceiling. What kind of concept is this? Using its 38.36% net profit margin as a yardstick, there are almost only financial and high-end liquor giants that can maintain profits at this extreme level in the A-share camp with revenue exceeding 10 billion dollars in a single quarter.

Not only is it “able to make money,” but it is also “able to collect money,” Yao Ming Kant's ability to turn profits into free cash flow is evolving at an accelerated pace. In the first half of this year, the company's adjusted non-IFRS profit was 11.57 billion yuan, while the adjusted operating cash flow reached 9.98 billion yuan. This means that its operating cash flow accounts for an impressive 86.25% of profits.

What makes the market even more excited is that by the end of the second quarter, the company had more than 10 billion dollars of accounts receivable lying on its books. According to its extremely short repayment cycle of about 55 days, the vast majority of this huge amount of money will be directly converted into net cash flow of real money in the third quarter.

As profits and cash flow conversion capabilities continue to soar, Pharma Ming Kangde's will and execution to give back to shareholders is also increasing. Following the release of strong mid-term earnings reports, the company announced that it will implement an interim dividend for the second year in a row and further expand the dividend scale to 1.5 billion yuan. This initiative to share high-quality development results with shareholders with real money continues to consolidate its scarce value as the core “HALO asset” of A-shares.

As can be clearly seen from the continuous expansion of “scissor gap” in performance, Yao Ming Kangde has successfully achieved a transition from “scale growth” to “value creation”. Thanks to the success of multiple customer products and excellent management execution, the company has comprehensively raised its 2026 full-year guidance: the overall revenue is expected to reach 585-60.5 billion yuan, and the revenue from continuing operations will increase 35-39% year-on-year.

Looking forward to the future, this high-quality development paradigm with quality as the core and technology as the wing will continue to push Yao Ming Kangde through the cycle to bring sustainable high-quality returns to shareholders and gain a higher level of global competitive advantage.