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XTALPI(2228)
Analysis¡G
XtalPi Holdings¡¦ drug discovery solutions business achieved strong growth, primarily benefiting from the Group¡¦s major collaboration with DoveTree, a company founded by therenowned leader in biopharmaceuticals Professor Gregory Verdine. The agreement includes a first-stage upfront payment of US$51 million, with the right to receive an additional potential payment of US$49 million, and eligibility for variable payments up to US$5.89 billion based on potential regulatory and commercial milestones, as well as potential single-digit percentage royalties based on the product¡¦s annual net sales. This collaboration will leverage the Group¡¦s independently developed AI+robotics drug discovery platform to assist in discovering and developing small molecule and antibody candidate drugs targeting oncology, immunology and inflammation diseases, neurological disorders, and metabolic disorders. DoveTree will obtain exclusive global development and commercialization rights for the above products. For the six months ended June 30, 2025, the Group achieved the first-stage milestone and recognized US$51 million in revenue.
In addition, three projects in collaboration with a leading biopharmaceutical company have all reached important milestones. Among them, a collaboration project initiated in 2024 targeting the chronic disease field reached the PCC milestone one quarter ahead of schedule, fully validating the capability of XtalPi¡¦s AI-computation-experiment deeply integrated one-stop technology platform in accelerating drug discovery; the partner has initiated a new round of collaboration with the Group on more new targets and indications. Recently, the Group¡¦s wholly-owned subsidiary Shanghai Ailux Biotechnologies (Ailux Shanghai) reached a platform-based strategic collaboration with Eli Lilly to accelerate the discovery and development of bispecific antibodies for treating multiple diseases. Through the collaboration, Lilly will have access to Ailux¡¦s AI-driven bispecific antibody engineering platform, which integrates advanced structural modeling, generative design, and developability analysis to design antibody molecules that combine innovative functions, superior efficacy, and ideal drug-like properties. Under the terms of the collaboration, Lilly can nominate target pairs for bispecific antibody design and also obtain a license to use Ailux¡¦s proprietary platform for internal use. The collaboration includes upfront and near-term milestone payments totaling tens of millions of US dollars. According to the collaboration terms, the potential total value of the collaboration (including development, regulatory, and commercial milestone payments) is up to US$345 million.
The Group¡¦s AI molecular discovery platform has recently successfully developed and validated two innovative topical functional ingredients for hair loss prevention and hair growth¡Xsmall molecule Remeanagen (XTP-118) and peptide AquaKine (XTP-016). The combination formula of these ¡§twin star¡¨ molecules has been proven through rigorous human trials to significantly outperform existing similar products in terms of hair growth and anti-hair loss effects, safety, and onset speed. Both molecules have successfully passed the US Cosmetics New Ingredient INCI registration, and their combination product Groland has also obtained US Food and Drug Administration (FDA) cosmetics filing, marking the official entry of XtalPi¡¦s AI platform into the high-potential consumer health field. In the future, XtalPi will not only tackle drug development for major diseases but also create consumer-grade molecular products that improve the quality of daily life for the general public. (I do not hold the above stock).
Strategy¡G
Buy-in Price: $11.80, Target Price: $13.40, Cut Loss Price: $11.00
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SINOPEC CORP(386)
Analysis¡G
On the news front, approved by the State Council, China Petrochemical Corporation (Sinopec Group) and China Aviation Oil Group Corporation have implemented a restructuring plan. Sinopec and China Aviation Oil exhibit significant complementarity in their business structures. Sinopec focuses on refined oil sales and refinery production, covering the entire industry chain from oil and gas extraction to chemical production. China Aviation Oil specializes in aviation fuel sales and overseas operations, providing fuel supply guarantees for 258 domestic transport airports and 454 general aviation airports, as well as serving 585 global airline customers. Following the restructuring, Sinopec can directly integrate its upstream refining capacity with China Aviation Oil's terminal refueling network. This will reduce intermediate circulation links, forming an integrated "refining-storage-transportation-refueling" supply chain and effectively lowering aviation fuel procurement and operational costs. The combination of Sinopec's large-scale refining capabilities and China Aviation Oil's specialized aviation service network is expected to enhance overall asset utilization efficiency. Post-restructuring, with support from Sinopec's capital, technology, and refining capacity, China Aviation Oil can strengthen its bargaining power in aviation fuel procurement, pricing, and services, gaining greater leverage with suppliers and further consolidating its market position. Sinopec, in turn, can leverage China Aviation Oil's overseas business to expand into the international aviation fuel market, achieving a more globalized layout.
Strategy¡G
Buy-in Price: $4.69, Target Price: $5.20, Cut Loss Price: $4.40
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Desay SV (002920 CH) - Continuous Updates of Intelligent Products
Investment SummaryCompany profile
Desay SV, established in 1986, is a leading company in the automotive electronics field, with its main products including intelligent cockpits, intelligent driving, and connected services. As the cornerstone of the company's revenue, the intelligent cockpit generated a revenue of RMB18.23 billion in 2024, (RMB, the same below), accounting for 66.01% of total revenue. The intelligent driving business also saw growth, with 2024 revenue reaching RMB7.314 billion, a yoy increase of 63.06%, accounting for 26.5%. The company's total revenue in 2024 amounted to 27.618 billion yuan, up 26.06% yoy, with a net profit of 2.005 billion, up 29.62% yoy.
Strong Performance in the First Three Quarters
In the first three quarters of 2025, the Company achieved revenues/net profits/net profits excluding non-recurring items of RMB22.337 billion/RMB1.788 billion/RMB1.724 billion, marking yoy increases of 17.72%/27.08%/19.02%, respectively. The gross margin was 19.70%, down 0.5 percentage points yoy. In the third quarter of 2025 alone, the company achieved revenues/net profits/net profits excluding non-recurring items of RMB7.692 billion/RMB0.565 billion/RMB0.571 billion, marking yoy increases of 5.63%, but a decline of 0.57% and 13.25%, respectively. Compared to the previous quarter, revenues/net profits/net profits excluding non-recurring items decreased by 2.04%, 11.74%, and 12.86%, respectively. The third-quarter performance declined quarter-on-quarter, mainly due to the decrease in sales from the core customer Li Auto and industry-wide price reduction pressures. However, with the upcoming launch and delivery of new models such as the Li Auto i6 and Xpeng X9 in the fourth quarter, it is expected that the increase in sales driven by the launch of multiple new models will improve performance in the fourth quarter.The quarter-on-quarter decline in performance was mainly influenced by lower sales of core customer Li Auto's vehicles and price reduction pressures in the industry. However, with the upcoming launch and delivery of new models such as the Li Auto i6 and XPeng X9 in the fourth quarter, it is expected that the increase in sales from these new models will improve fourth-quarter performance.
Ongoing Investment in R&D, Continuous Updates of Intelligent Products, Leading the Industry
In 2024, the company's R&D expenses were RMB2.256 billion, accounting for 8.17% of revenue. In the first three quarters of 2025, R&D expenses amounted to RMB2.003 billion, accounting for 8.97% of revenue. The continued increase in R&D investment has provided strong support for new technologies and products. 1) Intelligent Cockpit: The company's fourth-generation intelligent cockpit has been scaled up for mass production in collaboration with Li Auto, Xiaomi Auto, and Geely Auto, and has continued to receive new project orders from GAC Passenger Cars, Geely Auto, and GAC Aion. The fourth-generation flagship intelligent cockpit domain controller is now in mass production for Chery Auto. The fifth-generation intelligent cockpit platform has secured new project orders from Li Auto and attracted attention from several top global OEMs. The company's HUD (Head-Up Display) first mass production project has been launched, marking a significant breakthrough in the intelligent driving visual field. New project orders have been received from Shanghai GM, GAC Passenger Cars, and Dongfeng Nissan. 2) Intelligent Driving: In the field of advanced driver-assistance systems (ADAS), the company continues to maintain the highest market share in China and continuously optimizes and upgrades its products to meet the needs of different vehicle levels. Several flagship ADAS domain controllers have been mass-produced and successfully delivered to prominent clients such as Xiaomi Auto, Li Auto, Great Wall Motors, XPeng Motors, GAC Toyota, Geely Auto, and GAC Aion. New project orders have been received from Great Wall Motors, Geely Auto, Chery Auto, GAC Aion, and Dongfeng Passenger Vehicles. The company also offers several lightweight ADAS solutions for mid- to low-priced vehicles, the largest segment of the market, and has secured new project points from major clients such as GAC Toyota, Chery Auto, and Toyota. These solutions will be promoted to more customers. 3) Connected Services: The company has successfully achieved mass production of UWB (Ultra-Wideband) and BLE (Bluetooth Low Energy) solutions, becoming the first supplier in China to implement UWB solutions. This first-mover advantage has helped the company win key client collaborations with Li Auto and Chery Auto. Successful Fundraising, Capacity ExpansionIn October, the company completed a private placement of A-shares, raising a net amount of RMB4.393 billion. The funds are intended for investment in projects such as the Desay SV automotive electronics base in Central and Western China (Phase I) (RMB1.699 billion), intelligent automotive electronic system-level component production (RMB1.974 billion), and the intelligent computing centre and cockpit integration platform R&D (RMB0.72 billion). The company expects the first two projects, once completed, will add annual revenues of RMB8.276 billion and RMB14.773 billion, respectively, and net profits of RMB0.59 billion and RMB1.187 billion, significantly boosting the company's long-term growth potential and reinforcing its leadership position in the automotive electronics sector. Deepening International Strategy, Building Ecosystem CollaborationThe company has strengthened its strategic partnerships with global core chip manufacturers and OEMs, successfully securing new project orders from clients such as VW and Toyota, and making breakthroughs with white-spot clients such as Renault and Honda. The company has also established overseas branches in major countries and regions such as Germany, France, Spain, Japan, and Singapore. Regarding overseas production capacity, in May 2025, the company began contributing production capacity in Indonesia, strengthening the supply chain resilience and delivery capabilities in Southeast Asia. In June 2025, the Monterrey plant in Mexico launched its first mass production project, offering more efficient localized service guarantees for the Americas market. The smart factory in Spain is expected to begin mass production in 2026, providing cutting-edge intelligent products for the intelligent cockpit and ADAS fields in Europe. In the first half of 2025, the gross margin of overseas operations reached 28.93%, up 8.22 percentage points yoy, exceeding the domestic gross margin by 9.26 percentage points. The expansion of overseas production capacity will provide strong support for profit growth. Unmanned Vehicle Launch, Expanding into New BusinessesOn September 2, the company launched the "Chuanxing Zhiyuan" vehicle-grade unmanned vehicle brand in Shanghai. Entering the unmanned vehicle field is an extension of the company's core capabilities. The first product, the S6, features a vehicle-grade fully-controlled chassis and modular upper structure. Based on the S6 platform, the vehicle is capable of serving various scenarios such as industrial parks, logistics parks, agricultural trade distribution, express delivery, supermarket distribution, store restocking, fresh food distribution, and pharmaceutical delivery. The S6 series of low-speed unmanned vehicle products has already received multiple customer orders. Investment ThesisThe Company is a leader in automotive electronics, benefiting from continuous investment in R&D to maintain its technological leadership, while also actively exploring new businesses. We remain highly optimistic about the company's growth prospects.
As for valuation, we expected diluted EPS of the Company to RMB 4.12/5.23/6.63 of 2025/2026/2027. And we accordingly gave the target price to RMB147, respectively 35.7/28.1/22.2x P/E for 2025/2026/2027. "Buy" rating. (Closing price as at 31 December 2025) Peer Comparison
Source: Wind, Phillip Securities Hong Kong Research PE BAND
Source: Wind, Phillip Securities Hong Kong Research RiskProgress of new production line is below expectations
Electric vehicle sales fall short of expectations
Macroeconomic downturn affects product demand
Sharply rising raw material prices or sharply falling product prices Financials
(Closing price as at 31 December 2025)
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| Recommendation on 12-1-2026 | | Recommendation | Buy (Initiation) | | Price on Recommendation Date | $ 120.300 | | Suggested purchase price | N/A | | Target Price | $ 147.000 |
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