3 Asian Biotech and Industrial Stocks Trading at Significant Discounts to Fair Value in Q3 2025

In Q3 2025, Asia’s high-growth sectors—biotechnology and industrial manufacturing—present compelling value opportunities. Three stocks stand out for their significant discounts to fair value, driven by strong cash flow dynamics, strategic innovation, and long-term re-rating potential: Innovent Biologics, Sichuan Kelun-Biotech, and Nippon Steel.

Innovent Biologics: A Biotech Powerhouse with Dual-Engine Growth

Innovent Biologics (HK:1801) has demonstrated exceptional financial resilience and innovation in Q3 2025. Total revenue surged 50.6% year-on-year to RMB 5.95 billion, with product revenue growing 37.3% to RMB 5.23 billion [2]. Net profit reached RMB 1.21 billion, and EBITDA hit RMB 1.41 billion, reflecting improved gross margins (86.8%) and disciplined cost management [2].

Cash flow analysis reveals a mixed picture: operating cash flow for the year ending December 2024 was RMB 1.29 billion, but investing cash flow was negative RMB 1.17 billion, reflecting heavy R&D and capital expenditures [5]. Financing activities also saw outflows of RMB 606.63 million, underscoring the company’s aggressive reinvestment in growth [5]. Despite these outflows, Innovent’s cash reserves remain robust at USD 2 billion [1], providing a buffer for its ambitious pipeline.

Strategically, Innovent has expanded its portfolio to 16 drugs, including oncology leaders like Dovbleron® and Jaypirca® [2]. Its dual-engine model—combining commercial product sales with innovation—positions it to achieve RMB 20 billion in product revenue by 2027 and advance five pipeline programs into global Phase 3 trials by 2030 [2]. With a P/E ratio significantly below its biotech peers and a strong balance sheet, Innovent offers a compelling case for re-rating as its pipeline matures.

Sichuan Kelun-Biotech: High-Risk, High-Reward Oncology Play

Sichuan Kelun-Biotech (SH:603456) reported RMB 950.4 million in revenue for H1 2025, with commercial sales of RMB 309.8 million [1]. However, the company posted a net loss of RMB 145.2 million, driven by R&D expenses of RMB 611.5 million [1]. Despite the loss, cash reserves remain strong at RMB 4.527 billion, providing flexibility for its pipeline [1].

Kelun-Biotech’s innovation pipeline is its key differentiator. It has over 30 candidates in development, including ADC therapies like sac-TMT and Trastuzumab Botidotin, which are in pivotal trials [1]. Collaborations with MSD on global trials further enhance its potential to address unmet needs in oncology and non-oncology diseases [1]. The company’s adjusted loss of RMB 69.4 million (vs. RMB 145.2 million net loss) highlights effective cost control [1], suggesting improved profitability as key candidates advance.

With a market cap significantly below its intrinsic value—driven by its high-potential pipeline and strong liquidity—Kelun-Biotech is a high-risk, high-reward play for investors willing to bet on oncology innovation.

Nippon Steel: A Cyclical Industrial Giant at a Strategic Inflection Point

Nippon Steel (TSE:5401) faces near-term headwinds but holds long-term re-rating potential. Q1 2025 results were disastrous: a net loss of JPY 195.8 billion, driven by the $14.9 billion acquisition of U.S. Steel and one-time charges [3]. The company now forecasts a JPY 40 billion loss for FY2025 but anticipates a JPY 220 billion profit excluding acquisition-related costs [3].

Cash flow data is mixed: operating cash flow for Q3 2025 was JPY 1.29 billion, but investing and financing outflows totaled JPY 1.77 billion [5]. However, Nippon Steel’s $11 billion investment plan to modernize U.S. Steel’s facilities—including hydrogen-based steelmaking and capacity expansion—positions it to increase U.S. Steel’s annual profit contribution to JPY 250 billion by 2028 [1]. The U.S. government’s “golden share” ensures alignment with national security goals, reducing regulatory risks [4].

Strategically, Nippon Steel’s global capacity now stands at 86 million tons, with a target of 100 million tons by 2030 [1]. A 5-for-1 stock split effective October 2025 aims to broaden its investor base [3], while dividend revisions signal a focus on long-term value creation. For value investors, the stock’s depressed valuation—despite its transformative industrial strategy—offers a compelling entry point.

Conclusion: Re-Rating Potential in Asia’s High-Growth Sectors

Innovent Biologics, Sichuan Kelun-Biotech, and Nippon Steel represent three distinct but equally compelling value opportunities in Q3 2025. Innovent’s dual-engine growth model and robust pipeline justify its discount to fair value, while Kelun-Biotech’s high-potential oncology candidates and strong liquidity make it a speculative gem. Nippon Steel’s cyclical challenges mask a transformative industrial strategy that could unlock significant upside as its U.S. Steel integration progresses.

For value investors, these stocks exemplify the power of patience and strategic foresight in Asia’s dynamic markets.

Source:
[1] Innovent Announces 2025 Interim Results and Business Updates [https://www.prnewswire.com/news-releases/innovent-announces-2025-interim-results-and-business-updates-302539881.html]
[2] KELUN-BIOTECH ANNOUNCES 2025 INTERIM RESULTS [https://www.prnewswire.com/apac/news-releases/kelun-biotech-announces-2025-interim-results-302532146.html]
[3] Nippon Steel posts steep quarterly loss, sees 40bn yen deficit in 2025 [https://www.investing.com/news/earnings/nippon-steel-posts-steep-quarterly-loss-sees-40bn-yen-deficit-in-2025-4165016]
[4] Nippon Steel and U.S. Steel finalize historic partnership, ... [https://abc3340.com/news/local/nippon-steel-and-us-steel-finalize-historic-partnership-securing-100000-jobs]