China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

[RemeGen (9995 HK) Target Price Change]: Chinese Biotech Must Confine to the Biotech Role

[RemeGen (9995 HK, BUY, TP HK$34) Rating Change]: Time to Do Some Bottom Fishing…UG to BUY

China/Asia TMT

Shawn Yang

Equity Bottom-Up

<ul>
<li>RemeGen reported C2H22 top line in-line with our estimate but 9.4% below consensus. Gross margin, however, beat our estimate by 21ppt. Net-net, non-IFRS operating income missed our expectation by 15%; </li>
<li>The result highlighted RemeGen’s investment case hinging on successful license out. Product revenue itself cannot carry the company to profitability; </li>
<li>With WACC of 17%, we have already provisioned for the license out absence. But we still cut TP by HK$6 to reflect the increasing spending going forward.</li>
</ul>


RemeGen reported C2H22 top line in-line with our estimate but 9.4% below consensus. Gross margin, however, beat our estimate by 21ppt. Net-net, non-IFRS operating income missed our expectation by 15%; 
The result highlighted RemeGen’s investment case hinging on successful license out. Product revenue itself cannot carry the company to profitability; 
With WACC of 17%, we have already provisioned for the license out absence. But we still cut TP by HK$6 to reflect the increasing spending going forward.


[RemeGen (9995 HK) Target Price Change]: Provision for License Out Absence Is Adequate

Remegen

[RemeGen (9995 HK) Target Price Change]: Provision for License Out Absence Is Adequate