<Research>CLSA Prefers CDMOs for Earnings Clarity, Recommends WUXI APPTEC, WUXI BIO, and PHARMARON as Top Choices
AI Impact on CRO/CDMO Sector: Investors are shifting focus towards AI disintermediating middlemen, with expectations that integrated CRDMO platforms will benefit more from AI than specialized CROs, which may face mixed effects from internal AI adoption.
CDMO Preference: CLSA favors CDMOs over CROs for better earnings visibility due to their capacity locking capabilities and long-term projects, with WUXI APPTEC, WUXI BIO, and PHARMARON highlighted as top picks in the sector.
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Midday Update: HSI Rises 197 Points to 26,578; HSTI Gains 53 Points to 5,162; SHK PPT Surges Over 6%; SHK PPT, CK ASSET, TECHTRONIC IND, and CATHAY PAC AIR Reach New Peaks
Market Performance: The HSI rose by 197 points (0.7%) to 26,578, while the HSTI and HSCEI also saw gains, closing at 5,162 and 8,849 respectively.
Active Heavyweights: Notable stocks included Tencent (+2.8%), Meituan (+2.1%), and Alibaba (+1.0%), with significant short selling activity reported for each.
Constituents on the Move: SHK PPT surged by 6.8% to a new high, along with Wuxi Bio (+4.2%) and Trip.com (+3.2%), indicating strong performance among certain constituents.
Short Selling Data: Various stocks experienced high short selling ratios, with CCB and Xiaomi showing declines, while Cathay Pacific also hit a new high with a 2.1% increase.
<Research>CLSA Prefers CDMOs for Earnings Clarity, Recommends WUXI APPTEC, WUXI BIO, and PHARMARON as Top Choices
AI Impact on CRO/CDMO Sector: Investors are shifting focus towards AI disintermediating middlemen, with expectations that integrated CRDMO platforms will benefit more from AI than specialized CROs, which may face mixed effects from internal AI adoption.
CDMO Preference: CLSA favors CDMOs over CROs for better earnings visibility due to their capacity locking capabilities and long-term projects, with WUXI APPTEC, WUXI BIO, and PHARMARON highlighted as top picks in the sector.
<Research>CLSA: Thursday's Drop in WUXI BIO/WUXI XDC Not Based on Fundamental Factors
Market Performance: WUXI BIO and WUXI XDC experienced declines of approximately 7% and 8% respectively, while Hong Kong-listed CRO/CDMO companies overall lost between 2% to 9%.
Analysis of Decline: CLSA's report attributes the decline to technical factors and capital flow rather than fundamental issues, suggesting that the pullback is a short-term volatility rather than a sign of weakening demand.
HSI Drops Over 500 Points; Meituan, Chinese Insurers and Pharmacies Underperform; Standard Chartered Remains Strong; Knowledge Atlas and MiniMax Recover
Market Overview: The Hong Kong bourse opened lower, with the Hang Seng Index (HSI) dropping 509 points or 1.9% to 26,572, amid a turnover of HKD124.419 billion.
Pharmaceutical Sector Decline: Pharmaceutical stocks were the biggest losers, with notable declines in HANSOH PHARMA, SINO BIOPHARM, and CSPC PHARMA, all experiencing significant short selling.
Insurance Sector Struggles: Chinese insurers faced pressure, with major companies like CHINA LIFE and PING AN seeing substantial losses, contributing to a broader decline in the financial sector.
AI Stocks Recovery: Three AI-related semi-IPOs rebounded after previous losses, with MINIMAX-WP, KNOWLEDGE ATLAS, and HAIZHI TECH GP all posting gains and increased trading volumes.
CANBRIDGE-B Rises Over 5% Following Announcement of 14.7% Discounted Share Placement to WUXI BIO Subsidiary
Share Placement Announcement: CANBRIDGE-B (01228.HK) has announced the placement of 84.0336 million shares, representing approximately 14.12% of its enlarged share capital, to WuXi Biologics HealthCare Venture at a price of HKD2.38 per share, which is a 14.7% discount to the previous closing price.
Fundraising Details: The total amount raised from this share placement is expected to be HKD200 million, with net proceeds estimated at around HKD199 million.
JPM Increases WUXI BIO (02269.HK) Price Target to $51 Following Positive Profit Alert and Robust Order Growth
WUXI BIO Financial Performance: WUXI BIO's pre-announced 2025 results exceeded market expectations, with projected full-year revenue of RMB21.8 billion, a 16.7% increase YoY, and a net profit of RMB4.9 billion, surpassing both market consensus and JPMorgan's forecasts.
JPMorgan's Revised Forecasts: JPMorgan raised its sales forecasts for WUXI BIO by 2-5% for 2025-2027 and 6-9% for 2028 and beyond, anticipating sales growth of 17.3% in 2026 and 18.0% in 2027.
Target Price Adjustment: Following the positive outlook, JPMorgan increased its target price for WUXI BIO from $37 to $51 and extended the target price deadline to December 2026, maintaining an Overweight rating.
Market Activity: WUXI BIO's stock experienced a decline of 3.096%, with significant short selling activity amounting to $316.79 million and a short selling ratio of 10.140%.
Midday Update: HSI Rises 197 Points to 26,578; HSTI Gains 53 Points to 5,162; SHK PPT Surges Over 6%; SHK PPT, CK ASSET, TECHTRONIC IND, and CATHAY PAC AIR Reach New Peaks
Market Performance: The HSI rose by 197 points (0.7%) to 26,578, while the HSTI and HSCEI also saw gains, closing at 5,162 and 8,849 respectively.
Active Heavyweights: Notable stocks included Tencent (+2.8%), Meituan (+2.1%), and Alibaba (+1.0%), with significant short selling activity reported for each.
Constituents on the Move: SHK PPT surged by 6.8% to a new high, along with Wuxi Bio (+4.2%) and Trip.com (+3.2%), indicating strong performance among certain constituents.
Short Selling Data: Various stocks experienced high short selling ratios, with CCB and Xiaomi showing declines, while Cathay Pacific also hit a new high with a 2.1% increase.
<Research>CLSA Prefers CDMOs for Earnings Clarity, Recommends WUXI APPTEC, WUXI BIO, and PHARMARON as Top Choices
AI Impact on CRO/CDMO Sector: Investors are shifting focus towards AI disintermediating middlemen, with expectations that integrated CRDMO platforms will benefit more from AI than specialized CROs, which may face mixed effects from internal AI adoption.
CDMO Preference: CLSA favors CDMOs over CROs for better earnings visibility due to their capacity locking capabilities and long-term projects, with WUXI APPTEC, WUXI BIO, and PHARMARON highlighted as top picks in the sector.
<Research>CLSA: Thursday's Drop in WUXI BIO/WUXI XDC Not Based on Fundamental Factors
Market Performance: WUXI BIO and WUXI XDC experienced declines of approximately 7% and 8% respectively, while Hong Kong-listed CRO/CDMO companies overall lost between 2% to 9%.
Analysis of Decline: CLSA's report attributes the decline to technical factors and capital flow rather than fundamental issues, suggesting that the pullback is a short-term volatility rather than a sign of weakening demand.
HSI Drops Over 500 Points; Meituan, Chinese Insurers and Pharmacies Underperform; Standard Chartered Remains Strong; Knowledge Atlas and MiniMax Recover
Market Overview: The Hong Kong bourse opened lower, with the Hang Seng Index (HSI) dropping 509 points or 1.9% to 26,572, amid a turnover of HKD124.419 billion.
Pharmaceutical Sector Decline: Pharmaceutical stocks were the biggest losers, with notable declines in HANSOH PHARMA, SINO BIOPHARM, and CSPC PHARMA, all experiencing significant short selling.
Insurance Sector Struggles: Chinese insurers faced pressure, with major companies like CHINA LIFE and PING AN seeing substantial losses, contributing to a broader decline in the financial sector.
AI Stocks Recovery: Three AI-related semi-IPOs rebounded after previous losses, with MINIMAX-WP, KNOWLEDGE ATLAS, and HAIZHI TECH GP all posting gains and increased trading volumes.
CANBRIDGE-B Rises Over 5% Following Announcement of 14.7% Discounted Share Placement to WUXI BIO Subsidiary
Share Placement Announcement: CANBRIDGE-B (01228.HK) has announced the placement of 84.0336 million shares, representing approximately 14.12% of its enlarged share capital, to WuXi Biologics HealthCare Venture at a price of HKD2.38 per share, which is a 14.7% discount to the previous closing price.
Fundraising Details: The total amount raised from this share placement is expected to be HKD200 million, with net proceeds estimated at around HKD199 million.
JPM Increases WUXI BIO (02269.HK) Price Target to $51 Following Positive Profit Alert and Robust Order Growth
WUXI BIO Financial Performance: WUXI BIO's pre-announced 2025 results exceeded market expectations, with projected full-year revenue of RMB21.8 billion, a 16.7% increase YoY, and a net profit of RMB4.9 billion, surpassing both market consensus and JPMorgan's forecasts.
JPMorgan's Revised Forecasts: JPMorgan raised its sales forecasts for WUXI BIO by 2-5% for 2025-2027 and 6-9% for 2028 and beyond, anticipating sales growth of 17.3% in 2026 and 18.0% in 2027.
Target Price Adjustment: Following the positive outlook, JPMorgan increased its target price for WUXI BIO from $37 to $51 and extended the target price deadline to December 2026, maintaining an Overweight rating.
Market Activity: WUXI BIO's stock experienced a decline of 3.096%, with significant short selling activity amounting to $316.79 million and a short selling ratio of 10.140%.
