康龙化成（300759）：Resilient demand driving accelerated growth in 3Q26

康龙化成(300759) 　　Pharmaron’s earnings growth accelerated in3Q26,with revenue rising20.9%YoY and non-IFRS adj.net profit attributable to shareholders increasing24.7%YoY,outpacing the growth of17.9%and20.3%YoY,respectively,in1H26.Notethat the growth of adj.net profit consistently exceeded that of revenue through2026,indicating strengthening operating momentum.New bookings of9M26increased by more than30%YoY,led again by the>40%YoY growth of CDMObusiness.Mgmt.maintained its2026E full-year revenue growth guidance of15–20%and expressed confidence in margin improvement in the near future. 　　Resilient demand and business momentum across all segments.1)Laboratory services revenue grew17.5%YoY in3Q26(vs13.7%YoY in1H26),while9M26bookings increased over25%YoY,accelerating from20%+YoY in1H26.Such growth was supported by complex small moleculesand new modalities,including PROTACs,molecular glues,RIPTACs,conjugates,cyclic peptides and oligonucleotides,alongside deeperpenetration among MNC and AI-enabled drug discovery customers.2)3Q26CDMO revenue rose30.1%YoY(vs32.8%YoY in1H26),with9M26bookings up over40%,maintaining the strong momentum of1H26.Late-stage and commercial demand remained robust,with sizable deliveries forcertain European pharma clients driving the acceleration of Top-20customerrevenue in the quarter.Mgmt.expects more high-potential programs to enterlate and commercial stages with production of certain key projects alreadywell scheduled,marking its CRDMO business model to enter a harvestphase.To accommodate the rising demand,mgmt.targeted capex to reachmore than RMB3.0bn in2026E and to remain elevated in2027E.3)Clinicaldevelopment services revenue increased18.0%YoY in3Q26(vs14.2%YoYin1H26),with9M26bookings up over25%.Mgmt.saw an inflection inChina’s clinical CRO market following intense competition since2022. 　　Margin well positioned to expand down the road.We expect margins totrend upward for Pharmaron.Per mgmt.,FX reduced9M26gross profitmargin(GPM)by c.2ppts.Laboratory services’3Q26GPM declined3.4pptsYoY,primarily reflecting RMB appreciation against the US dollar.Underconstant FX,the segment GPM would be stable to slightly higher,accordingto mgmt.CDMO GPM expanded1.6ppts YoY and4.5ppts QoQ in3Q26,demonstrating benefits from a richer mix of late-stage and large-scaleprojects,higher utilization and more flexible production scheduling.Small-molecule CDMO GPM exceeded35%in9M26,and mgmt.targets35–40%over time,assuming successful large-project deliveries.Clinical GPMimproved2.3ppts YoY and1.0ppt QoQ in3Q26.China’s CRO marketinflection should support further margin recovery.Collectively,these trendsunderpin mgmt’s goal for adj.net profit to outgrow revenue in the near future. 　　Maintain BUY.We expect Pharmaron’s revenue to grow by18.3%/19.5%/17.8%YoY and non-IFRS net profit to increase by22.8%/23.8%/19.8%YoYin2026E/27E/28E,respectively.Our DCF-based TP remains unchanged atRMB56.00(WACC of9.32%;terminal growth of2.0%;both unchanged).