Technical analysis indicates that the stock price is on the verge of rebounding, how can REMEGEN (09995) achieve long-term valuation regression after profit warning?

REMEGEN (09995) disclosed its performance forecast for the year 2024 on January 16. The announcement showed that the company expects its annual revenue for 2024 to be approximately 1.715 billion Chinese Yuan, an increase of about 58% compared to the previous year; It is expected that the net loss attributable to shareholders for the period will be approximately 1.47 billion Yuan, a decrease of about 3% compared to the previous year. It is not difficult to see from the above financial data that REMEGEN's core product revenue is growing rapidly in 2024. As mentioned in the announcement, the sales revenue of the company's core products Taiga etuximab and Vindisitumab monoclonal antibodies has been rapidly increasing, the product gross profit margin has been continuously growing, and the sales expense ratio has significantly decreased. Therefore, although the company is expected to have a net loss for 2024, it is showing an overall trend of reduced losses. It is observed that based on PS (TTM) valuation calculation, as of the close on January 17, its PS (TTM) valuation is only 4.16 times, which is 6% lower than the historical data of the past three months and much lower than the industry average of 5.47 times. In other words, REMEGEN, with an annual revenue of over 1.7 billion Yuan, has become the "cheapest target" among commercialized biopharmaceutical companies in the Hong Kong stock market. However, despite REMEGEN's current valuation being significantly lower than its historical average, the market does not seem to be convinced. On January 17, REMEGEN's stock price opened lower in the morning, rose during the day, and continued to fall in the afternoon, ending with a 2.53% decrease. Will a "shrinking volume positive cross" appear, signaling a reversal? Looking at the recent performance of REMEGEN in the Hong Kong stock market, after a three consecutive rise at the end of October last year, its stock price showed some fluctuations in November, followed by a continuous decline in December until a slight rise on January 13 ended the previous 25-day downward trend. On January 13, REMEGEN's stock price rose after hitting a low of 11.52 Hong Kong dollars in the market, reaching a high of 12.36 Hong Kong dollars and ultimately closing with a 2.90% increase. The stock then showed three small positive candlesticks in the following three trading days, with a technical formation of a "shrinking volume positive cross" appearing on January 15. The trading volume that day was only 748,000 shares, much lower than the daily average trading volume of 1.3257 million shares since December last year. With a slight increase in volume of 843,000 shares on January 16, REMEGEN's stock price closed at 12.64 Hong Kong dollars, crossing the previous high point of 12.54 Hong Kong dollars, which can be considered a bullish signal. In terms of MACD technical analysis, on January 17, REMEGEN's stock had a positive trend of the DIFF line breaking upward in a negative situation of both DIFF and DEA, indicating a possible golden cross formation below the 0 axis, suggesting a trend of easing bearish sentiment in the current market and an increased likelihood of a rebound. Regarding moving averages, on January 15, REMEGEN's stock's 5-day moving average stopped falling and started to rise to the right, and on January 17, the 10-day moving average also showed a similar trend of halting the decline. From the perspective of moving averages, if the subsequent 10-day moving average separates from the 5-day moving average and moves upward, indicating a strengthening of bullish forces, then a buying opportunity may arise. It is not difficult to see that REMEGEN meets the conditions for a bottom reversal both in terms of valuation and technical analysis. To some extent, this year's forecast announcement may be the catalyst for its subsequent share price rebound. However, the company's performance after the release of the profit forecast announcement the next day has added some uncertainty to the expectation of a stock price rebound. Therefore, finding bright spots in the fundamentals to drive market sentiment may be the key to REMEGEN's future stock price movement. Can a short-term catalyst for an uptrend be found? Recently, at the JPM conference, REMEGEN announced a series of significant developments that it is expecting by 2025. In terms of core products, the company's Taigasuxi in China's severe myasthenia gravis (MG) indication, as well as the treatment of HER2-positive liver metastatic breast cancer with Vindisitumab monoclonal antibody, are expected to be approved; at the same time, the company will submit a series of new marketing applications, including Taigasuxi for the treatment of IgA nephropathy (IgAN) and primary Sjogren's syndrome (pSS), the VEGF/FGF dual-target fusion protein drug RC28 for the treatment of diabetic macular edema (DME), and Vindisitumab monoclonal antibody for the first-line treatment of urothelial carcinoma and HER2 low-expressing breast cancer indications. In the field of cancer treatment, in addition to Vindisitumab monoclonal antibody, the company currently has 5 clinical stage cancer treatment drugs, including RC88, a targeted MSLN ADC investigational drug, RC148, a PD-1/VEGF bispecific antibody, RC108, an ADC product targeting c-MET, RC118, an ADC product targeting CLDN18.2, and RC248, an ADC product targeting DR5. These products are undergoing nearly 30 clinical studies, covering indications such as urothelial carcinoma, cervical cancer, breast cancer, gastric cancer, and non-small cell lung cancer. It can be seen that in addition to Taigasuxi and Vindisitumab monoclonal antibody, REMEGEN is accelerating the layout of new ADC anti-tumor drug products. According to the company's presentation at the JPM conference, REMEGEN's RC278 has achieved innovation and technological iteration in terms of payload, linker, and site-specific binding, and is expected to become a potential FIC/BIC ADC drug. However, this drug is unlikely to be commercialized in the short term. From the perspective of performance-stock price catalyst, Taigasuxi remains the main support for REMEGEN in 2025. It is understood that Taigasuxi, as a global FIC target BLyS/APRIL dual inhibitor, has entered critical clinical stages for systemic lupus erythematosus (SLE), severe myasthenia gravis, IgA nephropathy, and Sjogren's syndrome. Taking its main SLE indication as an example, in overseas markets, including Taigasuxi, a total of 5 innovative products are in phase III clinical trials, and the market competition is fierce.Its Xipu MG domestic Phase III clinical trial has reached the main endpoint and is expected to be approved for marketing in the second quarter of this year. According to Frost & Sullivan report, there are approximately 1.2 million MG patients worldwide, including 220,000 in China, and the global market is expected to reach $7.24 billion by 2030.However, from the perspective of the competitive market, current targeted therapies for myasthenia gravis can be divided into targeting B cell pathways, complement C5 inhibitors, and neonatal Fc receptor (FcRn) antagonists. Among them, complement C5 and FcRn targeted therapies have sufficient clinical research evidence, and based on existing clinical data, FcRn targeted therapy for MG has better clinical benefits. It can be seen that among the 5 MG treatment products on the market, all are complement C5 inhibitors or neonatal FcRn antagonists. Whether Ravicti can create a new market with its new indications remains to be seen after its domestic market launch this year. On the other hand, although Ravicti is an innovative drug with potential for multiple indications, amidst the backdrop of continuous innovation going abroad in the domestic market, it has not yet found a suitable overseas buyer to achieve major BD, which is one of the reasons limiting REMEGEN's valuation imagination and long-term value trajectory. Therefore, currently, the trend of a rebound in stock prices in the short term is more apparent in REMEGEN from a technical perspective, but in the long term, the growth of the company's valuation still requires major milestone catalysts.