Tigermed (03347): Goldman Sachs sees robust orders and recovering pricing strengthening Tigermed's growth visibility, with fuller earnings benefits expected from 2027.

Overview

This conference-takeaways report argues that Tigermed's order momentum, improving pricing and a broader customer mix increase revenue visibility. Goldman Sachs expects pricing and backlog conversion to make a more meaningful contribution to growth and margins from 2027, while retaining a Buy rating on both share classes.

Core views

Goldman Sachs highlights sustained order momentum as the central support for Tigermed's outlook. New orders increased about 30% year-on-year in 1H26, principally through volume expansion, on top of a 5-6% blended price increase. Management said momentum remained healthy in 3Q despite a harder comparison base. New-contract pricing has improved further, with average increases of about 10% in recent months. The report expects this better pricing environment to feed gradually into revenue growth and margin recovery as the backlog converts, with the full benefit more likely to emerge progressively from 2027. Early-stage biotech customers remain the principal source of order growth, although they remain cautious about Phase III spending. Goldman Sachs notes that domestic pharmaceutical companies and multinational pharmaceutical companies are growing faster from a smaller base, particularly in early-stage clinical development, making the customer mix broader. Management reported limited observable effects from geopolitical developments on China clinical trials, business-development activity or licensing trends, citing continued strong order intake. The report views AI primarily as an operating-efficiency lever rather than a near-term source of clinical-trial revenue. AI agents are being used to support clinical research associates in data verification and trial execution. While AI-enabled drug-discovery pipelines are expanding, management expects time will be needed before those programs reach clinical-stage development and generate meaningful demand for clinical trials. Overseas operations are showing encouraging recovery signs. Frontage is benefiting from improving early-stage demand and recovering global biotech funding conditions, while the overseas clinical business has found better-than-expected opportunities in Australia and New Zealand. Chinese biotech companies are also increasingly incorporating overseas trials into development plans, supporting incremental demand for cross-border clinical services. Goldman Sachs values the A-share at a 12-month target price of Rmb65.90 through a sum-of-the-parts approach: Rmb49.3 for core operations using a 10-year DCF and Rmb16.6 for investment assets at book value. The H-share target price is HK$52.10, based on a 38% discount to the A-share target. The institution is Buy-rated on both share classes.

Analysis framework

Goldman Sachs combines management commentary from Asia Healthcare CDMO Day with order, pricing, customer-demand and overseas-market observations to assess revenue visibility and the timing of margin recovery. It then values the A-share using a sum-of-the-parts framework, separating discounted cash flow value for core operations from book value for investment assets, and derives the H-share target using a discount to the A-share.

Methodology notes

• Valuation methodsSOTP (Sum-of-the-Parts) Valuation

  Sum-of-the-parts valuation

  The report separates Tigermed's A-share value into core operations and investment assets, assigning Rmb49.3 to operations and Rmb16.6 to investment assets.

• Valuation methodsDCF (Discounted Cash Flow)

  10-year discounted cash flow valuation

  Goldman Sachs derives the Rmb49.3 value for core operations from a 10-year DCF, which estimates present value from projected future cash flows.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Tigermed H-share (3347.HK)

  Primary covered security; Goldman Sachs applies a 38% discount to the A-share target to derive its H-share target.

  Strengths

  Robust order intake, pricing recovery, growing pharmaceutical demand and overseas opportunities.

  Weaknesses

  Biotech customers remain cautious on Phase III spending.

  Comparison

  Its HK$52.10 target is based on a 38% discount to the A-share target.

  Risks

  Geopolitical pressure, order impairment, weak front-end demand or investment, slower global expansion and lagging market consolidation.

• Tigermed A-share (300347.SZ)

  Covered security; its target is valued directly through a sum-of-the-parts framework.

  Strengths

  Core operations are valued through a 10-year DCF, alongside investment assets valued at book value.

  Weaknesses

  Biotech customers remain cautious on Phase III spending.

  Comparison

  The H-share target is derived at a 38% discount to the A-share target.

  Risks

  Geopolitical pressure, order impairment, weak front-end demand or investment, slower global expansion and lagging market consolidation.

Key data

• 1H26 new-order growthc.30% YoYDriven primarily by volume expansion and supplemented by a 5-6% blended price increase.
• Recent new-contract price increasec.10%Management indicated average pricing increases reached this level in recent months.
• H-share 12-month target priceHK$52.10Based on a 38% discount to the A-share target; versus HK$45.10 current price and 15.5% upside.
• A-share 12-month target priceRmb65.90SOTP valuation comprising Rmb49.3 for core operations and Rmb16.6 for investment assets; versus Rmb56.81 current price and 16.0% upside.
• Revenue forecastRmb7,966.9mn / Rmb9,243.1mn / Rmb10,582.4mnGoldman Sachs forecasts for 2026E / 2027E / 2028E.
• EBITDA forecastRmb1,020.1mn / Rmb1,334.1mn / Rmb1,700.5mnGoldman Sachs forecasts for 2026E / 2027E / 2028E.

Impact & implications

The report sees stronger orders and pricing as improving revenue visibility, with backlog conversion expected to lift growth and margins more materially from 2027. A broader pharmaceutical customer base, recovering overseas activity and AI-enabled operating efficiency are identified as additional medium-term growth levers.

Risks

• Geopolitical risk, including stricter US regulatory reviews or higher fees for clinical trials.
• Continued order impairment.
• Continued weakness in front-end demand and investment.
• Slower-than-expected global expansion.
• Lagging market consolidation.