China CXOs The dust settled; eyes on 2026 growth

Research evidence excerpt

23 December 2025

Equity Research Report

China CXOs

Equities

Health Care Providers &

Srvcs

The dust settled; eyes on 2026 growth

China

◆ No surprises on the 2026 NDAA signing, including the

watered-down Biosecure provision

◆ Key commercial order deliveries, a revived funding cycle and

easing domestic competition could be major catalysts in 2026

◆ We remain positive on China CXO names; maintain Buy ratings

and keep TPs unchanged, except for Wuxi XDC (raise TP)

Linda Shu*, PhD (Reg. No. S1700522120001)

Head of China Healthcare Research

HSBC Qianhai Securities Limited

Andre Sun* (Reg. No. S1700124030009)

Associate

Shenzhen

* Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is

not registered/ qualified pursuant to FINRA regulations

The other shoe dropped. On 18 December, the US President signed the 2026 National

Defense Authorization Act (NDAA), following the passage in the upper chamber with

broad bipartisan support in a vote of 77 to 20. As we previously discussed, S.Amdt.3841

(revised Biosecure provision) will be officially bound under legislation from 2026. The

revised framework – adopting a "non-named list + one-year buffer" – has de-escalated

geopolitical risks, ensuring continuity of US orders for Chinese leaders while reducing

new business headwinds. Concurrently, the Federal Reserve’s rate cut cycle has

revived biotech financing, driving expanded pharma R&D pipelines and cascading

demand for CXO services. FedWatch (Exhibit 3) indicates two to three 25bp rate cuts

in 2026. Domestically, China’s CXO competitive moat is deepening via economies of

scale, AI-driven efficiency gains and niche technology upgrades, including antibody

drug conjugates (ADCs) and peptides.

Visibility is still clear. We expect low-teen order growth in the industry to support

11-39% net profit growth for major players in 2026. With the global capacity footprint

set to be expanded for major players over 2026-28, we believe geopolitical risks are

largely removed. We believe the current valuation, at a 30x 2026e PE or 1.1x 2026e

PEG on average, is attractive. Key risks warrant monitoring: Potential expansion of

…