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On Wednesday, CLSA analyst Zhijie Zhao increased the price target for CSPC Pharmaceutical (TADAWUL:2070) Group Ltd. (1093:HK) (OTC:CHJTF) to HK$13.80, up from the previous HK$12.00, while reiterating a High-Conviction Outperform rating. The revision follows a recent sell-off sparked by the termination of the company’s restructuring plan, which was influenced by complications with certain CSPC Baike legacy products.
Zhao noted that CSPC Pharmaceutical is planning to restart the restructuring process, with a focus on acquiring GLP-1 assets and remaining interests in Megalith Bio. The company aims to align the interests of both A-share and H-share stakeholders. As a response to the restructuring plan’s termination, Zhao has removed Jinyouli from the valuation model.
In light of recent clinical advancements, Zhao has also increased the probability of success estimates for the company’s EGFR ADC. Despite these positive adjustments, revenue and net profit forecasts for 2025-26 have been revised downwards. Revenue expectations have been reduced by 25.0% for 2025 and 17.5% for 2026, while net profit estimates have been lowered by 31.2% for 2025 and 22.1% for 2026.
The adjustments to CSPC Pharmaceutical’s financial projections reflect the immediate impact of the restructuring plan’s cancellation and the potential for future growth through the targeted acquisitions. The company’s commitment to reinitiating the restructuring process and the advancement in clinical trials for its EGFR ADC are key factors in maintaining the High-Conviction Outperform rating.
Investors and stakeholders of CSPC Pharmaceutical are keeping a close eye on the company’s strategic moves to navigate the challenges presented by the legacy product issues and to capitalize on new opportunities in the pharmaceutical industry.
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