Morgan Stanley: Downgrades TRAD CHI MED(00570) rating to "Underweight" target price lowered to 1.7 Hong Kong dollars.

Morgan Stanley released a research report stating that TRAD CHI MED (00570) issued a profit warning, performing far below market expectations. As a result, they decided to downgrade its rating from "market-perform" to "underweight", and lowered the target price from 2.6 HKD to 1.7 HKD. The bank predicts that TRAD CHI MED's earnings in 2025 and beyond will slightly recover, but it still depends on the guidance provided by the management when announcing the performance. It is worth noting that since the new management took office at TRAD CHI MED in September last year, and the cancellation of the privatization deal in October, communication between the company's management and the market has been limited. Morgan Stanley lowered its profit forecast for TRAD CHI MED in 2024 by 80%, and lowered the profit forecast for 2025 to 2030 by 22% to 34% to reflect the company's annual profit warning. It is estimated that net profit in 2024 will decrease by 90% to 100%, significantly lower than the market and the bank's forecasts. Reasons include lower prices, market competition, and the impact of rising raw material costs on the sales and profits of formulated granules; credit, goodwill, and factory impairment; as well as subsidiary tax adjustments.