Morgan Stanley: Downgraded China Traditional Chinese Medicine to "Reduce" rating with a target price of HKD 1.6
Morgan Stanley released a research report stating that it expects the stock price of TRAD CHI MED to decline in the next 30 days, as the company recently issued a profit warning, anticipating a year-on-year decrease in net profit of 165% to 175% in the first half of 2025. The main reasons include the continued shrinkage of its traditional Chinese medicine granule business due to price reductions from centralized procurement and intensified competition, as well as an increase in impairment provisions for related assets. Just considering the first factor, net profit is expected to decrease by 50% to 60% year-on-year, far below market consensus. Given that the centralized procurement process is only halfway completed, the bank believes that related pressures will persist, posing further downside risks to the projected price-to-earnings ratio for 2026; the target price is HKD 1.6, with a "reduce" rating
According to Zhitong Finance APP, Morgan Stanley released a research report stating that it expects the stock price of TRAD CHI MED (00570) to decline in the next 30 days, as the company recently issued a profit warning, forecasting a year-on-year decrease in net profit of 165% to 175% for the first half of 2025. The main reasons include the continuous shrinkage of its traditional Chinese medicine formula granule business due to price reductions from centralized procurement and intensified competition, as well as an increase in impairment provisions for related assets. Just considering the first factor, net profit is expected to decrease by 50% to 60% year-on-year, which is far below market consensus. Given that the centralized procurement process is only halfway completed, the bank believes that related pressures will persist, posing further downside risks to the projected price-to-earnings ratio for 2026; the target price is HKD 1.6, with a "reduce" rating
