00570 Overview

Morgan Stanley's Prediction: Morgan Stanley forecasts a 70-80% chance that TRAD CHI MED's stock price will decline in the next 30 days, assigning it an Underweight rating with a target price of HKD1.5.

Profit Warning Impact: The anticipated profit warning is expected to contribute to a loss for TRAD CHI MED in FY25, marking the first loss since 2013.

Market Challenges: The company is facing a shrinking market size and has not revealed plans for expansion, leading to low visibility regarding its performance in 2026.

Short Selling Activity: TRAD CHI MED has experienced significant short selling, with a ratio of 14.021% and a total short selling amount of $6.87 million.

Earnings Forecast Adjustment: Morgan Stanley has lowered its earnings forecasts for TRAD CHI MED (00570.HK) for 2025-2040 by 10-14% due to increased impairment provisions linked to price cuts in Chinese medicine formula granules.

Target Price and Rating: The broker reduced the target price from $1.6 to $1.5 while maintaining an Underweight rating on the stock.

Market Performance: The company's results have consistently fallen short of market expectations, and the quality of earnings has declined, partly due to a negative perception of governance following the termination of a significant transaction last year.

Selling Pressure Anticipated: Continued selling pressure on the stock is expected as event-driven investors are likely to further reduce their holdings.

Market Performance: The HSI rose by 186 points (0.7%) to close at 25,967, with total market turnover reaching $245.256 billion. The HSCEI and HSTECH also saw gains, finishing at 9,300 and 5,951 respectively.

Tech Stocks Movement: Major tech stocks like TENCENT, BABA-W, and JD-SW experienced increases of 1.5-1.7%, while XIAOMI and BIDU-SW saw smaller gains. MEITUAN-W surged by 4.1%, contrasting with declines in KUAISHOU, NTES-S, and BILIBILI-W.

Consumer and Pharma Sector Trends: New consumer stocks like POP MART and MIXUE GROUP faced significant declines, while sportswear stock LI NING rose 6.6% after a rating upgrade. In the pharmaceutical sector, several stocks including SINO BIOPHARM and CSPC PHARMA reported losses.

Economic Indicators: China's Loan Prime Rate for October 2025 remained unchanged at 3.0%, and the GDP growth rate for Q3 was reported at 4.8%, slightly lower than the previous value of 5.2%.

Market Performance: The Hang Seng Index (HSI) rose by 359 points (1.4%) to close at 26,518, with significant gains also seen in the HSTI and HSCEI, which increased by 156 points (2.5%) and 152 points (1.6%) respectively, and a market turnover of $288.77 billion.

Active Heavyweights: Notable stock performances included Alibaba (BABA) up 9.2% to $174, Xiaomi (XIAOMI) up 2.6% to $56.9, and Tencent (TENCENT) up 2% to $648.5, with substantial short selling activity across these stocks.

HSI & HSCEI Constituents: SMIC saw a significant rise of 5.7% to $76.75, while other notable gainers included Xinyi Solar and Kuaishou, both showing strong percentage increases, whereas Giant Biogene experienced a notable decline of 12%.

Short Selling Trends: The short selling ratios varied widely among stocks, with some like Xinyi Glass and Kuaishou showing high ratios, indicating varying levels of investor sentiment and market speculation.