The stock price was cut in half within six months, will MEDTIDE (03880) struggle to gain market favor despite annual earnings and good profits?

On February 26, before the market opened, MEDTIDE (03880) released its 2025 annual profit announcement. According to the announcement, MEDTIDE expects its 2025 fiscal year revenue to be between 555 million and 585 million RMB, a year-on-year increase of 25.5% to 32.3%; at the same time, the company expects its current net profit to reach 200 million to 230 million RMB, a year-on-year significant increase of 237.8% to 288.5%. In the announcement, MEDTIDE attributed its strong revenue growth to the successful implementation of its "follow-the-molecule" strategy, the advantages of its integrated CRDMO platform, timely project deliveries, and excellent execution. With the simultaneous rise in annual revenue and profit, MEDTIDE naturally received positive feedback from the secondary market on the same day. Observing that the company's stock price quickly rose after the opening, reaching a peak of 27 Hong Kong dollars within the first hour of trading, with a maximum increase of 6.72%. The stock price later fluctuated but remained above the daily average price line, ultimately closing up 5.85%. However, this increase lasted only one day. The day after the profit announcement, MEDTIDE's stock price opened and quickly fell, with a decrease of up to 6.58% in the morning session, almost erasing all the previous day's gains. Looking back to when the stock reached a high of 41.72 Hong Kong dollars in August last year, MEDTIDE has been in a downward trend, falling to a low of 21.50 Hong Kong dollars within six months, halving its stock price. After the cornerstone lock-up period expired, is there accelerated outflow of main capital? On December 30 last year, MEDTIDE saw the expiration of the cornerstone lock-up period. Prior to this, the company's stock price had experienced a continuous three-month decline due to sector fluctuations, with the average daily price stabilizing below the company's IPO issue price of 30.60 Hong Kong dollars from late November to early December. It was only on December 15 last year, 15 days before the cornerstone lock-up period expired, that MEDTIDE's stock price began to rebound, moving out of a slump and achieving eight consecutive days of price increases. Although compared to other companies facing lock-ups at the same time, the percentage of cornerstone lock-ups for MEDTIDE was not high. In the IPO subscription in June last year, Hangzhou Tigermed Consulting introduced two cornerstone investors who collectively subscribed for approximately 2.565 million shares (USD 10 million) of the offering shares, accounting for 15.27% of the global offering shares and 1.81% of the total shares after the global offering was completed. From the trading perspective, on the day and the day after the cornerstone lock-up expiration, MEDTIDE's stock price increased by a small margin of 0.94% and 1.20%, respectively. However, the stock price only reached a high of 30.50 Hong Kong dollars during this period and did not return to the IPO issue price. In addition, even though there were slight continuous increases in the stock price before the expiration of the lock-up, the stock price did not rise above the upper BOLL line and form an upward breakout, and there was no significant increase in trading volume to support it, thus failing to form an effective solid candlestick breakthrough in technical terms, falling into a "false breakout" situation according to the BOLL line indicator. Therefore, after it was confirmed that there was a lack of off-market chip support on December 31, MEDTIDE's stock price continued a rapid decline for three trading days and continued to fluctuate between the lower and middle BOLL lines in the subsequent downward trend. During the period from January 2 to February 9, there was a clear transition from unified to divergent sentiment among on-market holders of MEDTIDE. Fund flow data showed that amid the stock price's fluctuations and declines, there was a significant outflow of large capital, with close to 4 million Hong Kong dollars flowing out of the market in February. Looking at the broker trading data, the top five selling positions for MEDTIDE were held by WanHai, Futu Securities, Guangda, Interactive Brokers, and GF SEC, selling 372,100 shares, 198,200 shares, 171,000 shares, 150,700 shares, and 120,200 shares respectively. On the buying side, the top five positions were held by East Money, GuoYuan, HSBC Shanghai, CMSC, and Standard Chartered Bank, buying 424,500 shares, 372,100 shares, 88,200 shares, 81,800 shares, and 51,100 shares respectively. However, on February 5, MEDTIDE's stock price fell by 5.56%, hitting a new low of 21.50 Hong Kong dollars during the trading day. At the same time, the company's stock price dropped below the BOLL line, showing an oversold signal on the market. As a result, on February 6, the company's stock price began to show signs of a technical rebound and returned to the middle BOLL line position within four trading days. However, the sentiment surrounding MEDTIDE, both on and off the market, remained subdued, with the stock price fluctuating above and below the middle BOLL line and failing to continue its upward trajectory. It was under such market conditions that MEDTIDE released its annual profit announcement. However, the profit announcement did not seem to be able to boost the company's stock price out of its slump. Looking back at the announcement, it can be seen that although the company's annual revenue is expected to increase by 25.5% to 32.3% year-on-year and the current net profit is expected to increase by 237.8% to 288.5% year-on-year, the company also indicated in the announcement that after excluding one-time financial gains and losses, its current adjusted net profit would fall within the range of 200 million to 230 million RMB, with a significantly narrower year-on-year growth rate of 16.3% to 33.7%. In the announcement, MEDTIDE explained that in 2025, it recognized fair value gains on financial liabilities when they were converted to equity upon the company's H-share listing. In contrast, in 2024, fair value losses were recorded in this item. This means that a significant portion of the nearly threefold increase in net profit comes from non-operational accounting adjustments rather than a proportional improvement in the company's core business profitability. Such performance to some extent has raised concerns among investors about the peptide CDMO industry and the company itself. Looking at the downstream industry situation, according to data from Frost & Sullivan, by sales revenue, the global peptide drug market increased from $60.7 billion in 2018 to $89.5 billion in 2023, with a compound annual growth rate of 8.1%, and is expected to further grow to $261.2 billion by 2032, with a compound annual growth rate of 12.6%. In China, the market size of peptide drugs based on sales revenue increased from 48.2 billion RMB in 2018 to 59.7 billion RMB in 2023, with a compound annual growth rate of 4.4%, and is expected to further increase to 251.2 billion RMB by 2032, with a compound annual growth rate of 17.3%. While the market is still embracing the "billion-dollar blue ocean," top companies within the industry and some market investors have quietly begun a "strategic reassessment period". On August 5 last year, Pfizer announced the termination of eight clinical stage projects when presenting its Q2 quarterly results, including its last GLP-1 receptor agonist, PF-06954522, marking Pfizer's complete withdrawal from the GLP-1 track for which they had three research products. If Pfizer's project termination only represents a swift exit from the GLP-1 track, just two days later, Eli Lilly, who had presented an impressive Q2 performance with a 25% increase in revenue, saw its stock price plunge by 14% in the secondary market, one reason being that the clinical data for its oral weight loss drug Orforglipron did not meet expectations, leading to panic selling. Behind this were the fierce competition and shrinking profit margins in the GLP-1 market. However, while industry giants are intensifying market competition in the GLP-1 track, they are also engaged in a "capacity race". Facing explosive global demand for the GLP-1 market, pharmaceutical companies both at home and abroad have launched intense capacity races in peptide CDMO, with domestic leading CDMO companies accelerating production expansion, and innovator drug companies like Eli Lilly also building their own capacity. As an example within the peptide field, the Noetik Biology's Jiande factory workshop 7 was officially put into operation, adding 220,000 liters of GMP-grade capacity; ChengDu Sheng Nuo Biotec's "peptide innovative drug CDMO, API industrialization project" workshops 106, 107, and 108 have successively commenced production, and once fully operational, will add 395 kilograms of peptide API capacity. Currently, China's planned GLP-1 peptide API capacity is about 33-40 tons, and according to CICC estimates, by 2030, the demand for semaglutide and tirzepatide API will only be about 50 tons, likely exceeding global short-term demand. At a time when industry "price wars" are emerging, domestic leading CDMO companies and international giants are accelerating technology iteration on the one hand, while on the other hand, securing high-quality CDMO resources through self-built capacity and long-term cooperation, squeezing the living space of new entrants and small to medium-sized players. As global GLP-1 peptide raw material capacity reaches saturation from 2025 to 2026, industry reshuffling in the peptide CDMO field may become inevitable. Against this backdrop, how MEDTIDE maintains its industry development position and its robust fundamentals may become a focus of investor attention.