AI-powered innovative R&D platform backed by stable revenue growth. XtalPi leverages its AI-driven innovative R&D platform to deliver stable revenue growth across its two core businesses: (i) drug discovery solutions, providing end-to-end modular solutions for the drug development process, and (ii) intelligent automation solutions, encompassing solid-state R&D services and automated chemical synthesis services. In the drug discovery segment, the company has established strategic collaborations with leading pharmaceutical firms, including Eli Lilly, Johnson & Johnson, CTTP, Zhuhai United Lab, Meta Biopharma, and Signet Therapeutics. Meanwhile, its intelligent automation solutions enhance R&D efficiency by integrating automated synthesis and data analysis, with applications spanning new materials and energy fields. XtalPi’s revenue is on a robust growth trajectory, projected to grow from RMB174mn in FY23 to RMB251mn (+44% YoY) in FY24E, and further to RMB434mn (+73% YoY) in FY25E, per our estimates.
Diversified partnerships to unlock cross-industry potential. XtalPi’s extensive network of partnerships underscores its broad application potential and commercial prospects across AI and robotics-enabled industries. Beyond drug discovery, the company collaborates with GCL Group to advance new energy materials, supporting the green transition in the energy sector. It also partners with Guangzhou University of Chinese Medicine to develop intelligent and automated platforms for TCM drug R&D, driving high-quality growth in the TCM industry. Collaborations with Microsoft China focus on innovation in biomedicine and new materials, while a partnership with JW Pharmaceutical leverages AI-enabled robotic labs to enhance R&D efficiency. Additionally, through its joint venture with Indonesia's Sinar Mas Group, XtalPi promotes AI applications across diverse industrial fields. The company has also extended its reach into agriculture, AI infrastructure, and other sectors through collaborations with enterprises and research institutions. These partnerships highlight XtalPi’s strong cross-industry capabilities and its potential to create value in emerging markets.
Maintain BUY. XtalPi’s dual revenue streams from drug discovery and intelligent automation are on a stable growth trajectory. The company further strengthened its financial position by completing two fundraising placement in 2025, raising HK$3.2bn to enhance its cash reserves and fund future growth initiatives. With broad collaborations and cross-industry applications, XtalPi is well-positioned for future commercial success. We derive our target price of HK$7.57 based on a DCF model (WACC: 9.64%, terminal growth rate: 3.0%).
Risks: Risks relating to 1) R&D progress of drug candidates in partnerships, 2) sustainability of commercialization, and 3) shareholder sell-off following lock-up expiration.