Given that the company's Q4 2025 revenue met expectations, operating profit slightly exceeded forecasts, while net profit fell short of expectations due to the drag from non‑operating items, we believe the market appears to have overreacted to higher-than-expected R&D expenses in the fourth quarter and to the relatively conservative 2026 revenue guidance. We reiterate our "Buy" rating on the company and its target price.
In 4Q25, revenue was broadly in line with expectations, operating profit slightly exceeded expectations, while net profit fell short of forecasts.
In 4Q25, total revenue came in at US$1.498 billion (+32.8% YoY, +6.1% QoQ), including product revenue of US$1.476 billion (+32.1% YoY, +5.8% QoQ), broadly in line with our expectations and the consensus forecast from VA (Visible Alpha). In terms of operating profit (OP), GAAP‑adjusted OP stood at US$0.185 billion (+333% YoY, +13.4% QoQ), while adjusted OP reached US$0.344 billion (+338.2% YoY, +1.0% QoQ), slightly better than both our prior expectations and the VA consensus forecast—mainly due to stronger-than-expected product gross margins, partially offset by R&D expenses that were notably higher than anticipated. Net profit, on a GAAP basis, was US$66.5 million (+143.8% YoY, -46.7% QoQ), while adjusted net profit came in at US$0.225 billion (+1297% YoY, -25.9% QoQ), slightly below our prior expectations and the VA consensus forecast—largely because non‑operating items (lower-than‑expected interest income, higher-than‑expected impairment losses on investments, and higher-than‑expected taxes) weighed on results. On the profitability front, product gross margin hit a new quarterly high of 90.4% (+4.7 percentage points YoY, +4.4 percentage points QoQ), while overall operating margin further climbed to 12.4% (+0.8 percentage point QoQ).
Zebutinib's quarterly sales continued to climb at a solid growth rate, reaching 1.15 billion USD. Following Zebutinib's sales exceeding the 1 billion USD mark in 3Q25, its sales further surged to 1.15 billion USD in 4Q25 (+38.4% YoY, +10.1% QoQ), consistently demonstrating strong growth. By region, Zebutinib sales in the U.S. remained robust in the fourth quarter, reaching 0.845 billion USD (+37.1% YoY, +14.3% QoQ), driven primarily by increased sales across multiple indications, coupled with moderate gains from higher pricing; Zebutinib achieved 0.167 billion USD in sales in Europe (+47.2% YoY, +2.2% QoQ), largely benefiting from expanded market share in key countries including Germany; meanwhile, Zebutinib sales in China edged down slightly to 87 million USD (+26.0% YoY, -5.5% QoQ—our estimate suggests this was mainly due to the impact of reimbursement channel compensation for医保 prices).
In 2026, the company expects total revenue to reach 6.2–6.4 billion USD, GAAP operating profit to reach 0.7–0.8 billion USD, and adjusted Non-GAAP operating profit to reach 1.4–1.5 billion USD: The company's guidance projects total revenue of 6.2–6.4 billion USD in 2026, corresponding to a YoY growth rate of 16%–20%; GAAP gross margin is expected to remain at a high level above 80%; GAAP operating expenses are projected to grow moderately to 4.7–4.9 billion USD (YoY growth of 11.2%–15.9%), with GAAP operating profit expected to reach 0.7–0.8 billion USD (YoY growth of 56.6%–79.0%), and adjusted Non-GAAP operating profit reaching 1.4–1.5 billion USD (YoY growth of 27.3%–36.4%). Overall, we believe this guidance is relatively conservative and easy to achieve.
For the first time, the company is highlighting inflammatory and autoimmune diseases as its third key R&D focus, following hematologic malignancies and solid tumors. The company's pipeline for 2026 is rich with promising catalysts, including: (1) Sonrotoclax (a BCL2 inhibitor): Approved in the U.S. for relapsed/refractory MCL (expected in H1 2026); (2) BGB-16673 (a BTK CDAC): Phase 2 trial in relapsed/refractory CLL (CaDanCe-101 study) is poised to submit a global accelerated review application (expected in H2 2026), with interim data from the Phase 1b study on moderate-to-severe chronic spontaneous urticaria expected in H1 2026; (3) Zanubrutinib: Interim analysis of the Phase 3 MANGROVE trial (first‑line MCL) is anticipated in H1 2026; (4) Tiragolumab: NDA submissions in the U.S. and China for first‑line HER2‑positive gastric cancer (in combination with Zanidatamab) are expected in H1 2026; (5) Early-stage assets:
CDK4 inhibitors are poised to initiate a global Phase III clinical trial for 1L HR+/HER2‑negative breast cancer (expected in H1 2026); Phase I data for 1L HR+ breast cancer are expected to be released in H1 2026; Phase I data for the GPC3 x 4-1BB bispecific antibody are expected to be released in H1 2026, with potential to launch a registration‑enabling Phase II clinical trial (expected in H2 2026); Phase I data for the B7-H4 ADC are expected to be released in H1 2026; Phase I/II RA data for the IRAK4 CDAC are expected to be released in H2 2026; PRMT5i data are expected to be released in H2 2026; and CEA ADC data are expected to be released in H2 2026.
We maintain a "Buy" rating and target price. Based on the company's updated financial statements and guidance, we slightly adjust the 2026E adjusted Non-GAAP net profit to USD 1.21 billion (primarily due to higher R&D and sales expenses, partially offset by a slight increase in gross margin), while keeping the 2027E adjusted Non-GAAP net profit largely unchanged at USD 1.56 billion. We also introduce financial forecasts for 2028E. Using the DCF valuation method (WACC: 7.6%, perpetual growth rate: 3%), we maintain a "Buy" rating and target prices for U.S. stocks, Hong Kong stocks, and A-shares (USD 390, HKD 236, and RMB 326, respectively).
Investment Risks: Zebutinib's overseas sales fall short of expectations; delays in clinical trials or regulatory approvals for core R&D pipelines, or data that fail to meet expectations; escalating geopolitical tensions between China and the United States.
