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Investing.com - Nomura/Instinet downgraded Sichuan Kelun-Biotech Biopharmaceutical (6990:HK) from Buy to Neutral while raising its price target to HK$434.36 from HK$211.87.
The rating change comes despite management’s projection that its Jiatailai product will achieve CNY800-1,000 million in sales for fiscal year 2025, according to information shared during the company’s earnings call.
Nomura has revised its FY25/26 revenue estimates upward by 31%/16%, while adjusting earnings forecasts by -141%/38%, accounting for potentially higher collaboration revenues. The firm also increased long-term growth estimates following MSD’s initiation of 14 global trials.
The significant price target increase is based on a discounted cash flow analysis using a weighted average cost of capital of 10.4% and terminal growth rate of 4.0%, both unchanged from previous calculations.
Despite the higher price target, Nomura cited Sichuan Kelun-Biotech’s 180% year-to-date share price gain as the primary reason for the downgrade, noting that the stock now trades at 4.7x FY34F revenue of CNY21 billion, which the firm considers "rich" compared to the Hang Seng Index’s 25% gain during the same period.
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