Asymchem: Third-quarter deliveries weigh on revenue; fourth-quarter execution and peptide ramp-up are key
Third-quarter revenue fell short of Goldman Sachs’ expectations, while cost controls supported profit. Full-year growth guidance remains unchanged, but delivery pressure has shifted to the fourth quarter. Goldman Sachs remains optimistic that the peptide business will accelerate growth in 2027, while cutting its earnings forecasts and target prices.
Original source：Goldman SachsFirst published on Unhidea：Original source date：
Key takeaway
Goldman Sachs maintains its view that Asymchem’s growth will accelerate in 2027, but near-term confidence depends on fourth-quarter deliveries. Capacity expansion brings opportunities for peptide growth alongside margin volatility and cash consumption.
Why did profit remain resilient despite revenue missing expectations?
Asymchem’s revenue in the third quarter of 2026 was 1.788 billion yuan, up 24% year on year and below Goldman Sachs’ expectations, mainly because of shipment timing. Adjusted net profit was 320 million yuan, up 50% year on year, broadly in line with Goldman Sachs’ expectations and 11% above the Visible Alpha consensus.
Profit resilience came mainly from cost controls: the adjusted net margin was 18%, above Goldman Sachs’ forecast of 16% and up 3.06 percentage points year on year. However, emerging businesses were still ramping up capacity, and their gross margin fell from 33% in the first half to 28% in the third quarter. Emerging business revenue grew 18% over the same period, below the 28% growth of the small-molecule business.
With full-year guidance unchanged, what must the fourth quarter deliver?
Management maintained its guidance for 19%–22% year-on-year revenue growth in 2026. Greater pressure from renminbi appreciation in the third quarter means stronger underlying operating growth is needed to achieve the same renminbi revenue growth rate.
Management attributed the revenue shortfall mainly to delivery timing, rather than technical or capacity-ramp issues: a natural disaster in Dunhua, Jilin, delayed some small-molecule deliveries until the fourth quarter, and some large-molecule projects were also scheduled for delivery in the fourth quarter.
Late-stage clinical and commercial projects involve larger supply volumes and longer execution cycles, with deliveries concentrated in the second half. Revenue has been affected by shipment timing for two consecutive quarters, so Goldman Sachs sees fourth-quarter execution as key to restoring near-term earnings visibility.
Which projects will deliver faster growth in 2027?
Management expects revenue to grow faster in 2027 than in 2026; Goldman Sachs’ corresponding forecasts are approximately 25% and 19%. Orders continue to provide support, but third-quarter order growth was approximately 30%, slowing from the 55% disclosed on 26 August.
The peptide growth pathway involves additional capacity, projects entering process performance qualification (PPQ), and higher utilization. The company expects to reach 69 thousand liters of peptide capacity by year-end and a higher utilization level in 2027. Several projects are expected to enter PPQ next year; some could contribute more revenue than traditional commercial small-molecule projects because of higher supply volumes and prices.
The ramp-up has a clear timetable: new peptide production lines are expected to come online gradually from mid-2027. For small molecules, 13 projects were originally scheduled to enter PPQ in the second half of 2026, with revenue timing dependent on regulatory approvals and customer arrangements. The new Taixing site remains under construction and must complete customer audits and project onboarding before contributing revenue.
How much cash will faster capacity expansion require?
The company reiterated capital expenditure of 2.6 billion–2.8 billion yuan for 2026, above the 2.1 billion yuan indicated at its second-quarter results, and expects spending to accelerate further next year, focused on peptides and ADCs. New growth drivers require upfront investment, with revenue and profit to follow.
Goldman Sachs’ model forecasts capital expenditure of 2.7 billion and 3 billion yuan in 2026 and 2027, respectively, above operating cash flow of 1.586 billion and 2.111 billion yuan in the corresponding periods. This implies negative free cash flow of 1.114 billion and 889 million yuan, respectively; cash and equivalents fall from 6.321 billion yuan at the end of 2025 to 3.234 billion yuan at the end of 2027.
Why cut target prices while remaining optimistic about growth?
With gross margin improving more slowly than expected, Goldman Sachs lowered its adjusted net profit forecasts for 2026–2028 by 1.5%, 4.4% and 3.9%, respectively. It retains its view that growth will accelerate, but has lowered its expectations for the pace of earnings realization.
Goldman Sachs maintained its buy rating on the H-shares and neutral rating on the A-shares, cutting their respective 12-month target prices from HK$187.50 and 206.40 yuan to HK$180.20 and 198.40 yuan. The valuation still uses a price-to-earnings multiple of 27 times forward 12-month earnings, with the A-share valuation derived using an A/H premium of 20%. The target price cuts reflect the earnings forecast revisions.
