Understanding the Market | GIANT BIOGENE rose over 5% in early trading as the Shaanxi Provincial Drug Administration reported that multiple batches of Kefu Mei products did not detect EGF

GIANT BIOGENE's stock rose over 5% in the morning session, and as of the time of writing, it is up 4.44%, trading at HKD 75.3, with a transaction volume of HKD 422 million. In terms of news, the domestic beauty brand Kefu Mei has recently been embroiled in the "EGF additive scandal." The Shaanxi Provincial Drug Administration issued a statement regarding recent media reports about Kefu Mei's brand "detecting the prohibited additive epidermal growth factor (EGF)," stating that multiple batches of Kefu Mei products did not detect EGF. It is reported that Kefu Mei is the core brand of GIANT BIOGENE, with sales revenue reaching 4.542 billion yuan in 2024, a year-on-year increase of 62.9%, accounting for 82% of the company's total revenue. In addition, GIANT BIOGENE recently announced plans to conduct a rights issue at a discount of approximately 9.50%, aiming to raise a maximum net amount of about HKD 2.294 billion, which will be used for the development of core businesses and ecosystem layout, including brand promotion, marketing, category expansion, overseas business, and R&D investment; as well as to supplement working capital and for general corporate purposes. Citigroup released a research report stating that due to the significant discount, the stock price is expected to be under pressure in the short term. Nevertheless, GIANT BIOGENE's profit outlook remains robust