The stock price dropped by nearly 70% in 8 months, how does BOAN BIOTECH (06955) "ensure smooth communication"?

On March 31 this year, the day after the disclosure of the 2025 annual performance report, the intraday stock price of BOAN BIOTECH (06955) touched a low of 6.12 Hong Kong dollars, setting a new low for the company since its IPO. In fact, since hitting a high of 19.90 Hong Kong dollars on August 8 last year, BOAN BIOTECH's stock price has been in a downtrend lasting more than 8 months. The recent low has widened the range of the stock price decline to 69.25%. Thanks to the uptrend in the first half of last year, even with a market value of only 5.312 billion Hong Kong dollars at the end of last year, BOAN BIOTECH still managed to stay above the threshold of 6.565 billion Hong Kong dollars for the 2025 Hong Kong Stock Connect review period, successfully meeting the requirement for continued trading. However, with the continuous decline in the stock price, as of April 30, BOAN BIOTECH's daily average market value during the review period has dropped to 6.235 billion Hong Kong dollars, below the 6.75 billion Hong Kong dollar threshold, and is now on the verge of being removed from the Stock Connect program. Can they win the battle to stay in the Stock Connect? From a technical standpoint, since August last year, BOAN BIOTECH has been in a downtrend with "price falling and volume shrinking". Overall, after hitting a high and BOLL upper boundary on August 8 last year, the stock price of BOAN BIOTECH formed a "doji star" the next day, and began to technically regress towards the BOLL lower boundary. The stock price has continued to fluctuate between the BOLL lower and middle boundaries for the next 3 months, with market sentiment remaining depressed. To further clear out the floating shares, on September 16, BOAN BIOTECH saw a rally followed by a pullback, leading to a more than 12% increase. However, this rally further widened the difference in opinions within the market, with a trading volume of 81.3288 million shares on that day, increasing the concentration of the company's shares. Despite this rally, market sentiment was not boosted, and technically, the BOLL of BOAN BIOTECH began to narrow significantly, guiding the stock price to continue to oscillate lower. The stock price continued to mechanically oscillate along the BOLL lower boundary, and the overall trend showed a lack of volume with a downward direction. In this prolonged period of 4 months of low price movement, there were only 4 trading days with a daily trading volume of over 10 million shares, indicating a more depressed market sentiment compared to before. Even though there was a rally towards the BOLL upper boundary on November 27 last year, there was no significant increase in trading volume to support it, and no effective breakout of the candlesticks, making it a typical "false breakout" according to BOLL line indicators. Subsequently, the stock price continued to oscillate downward until hitting a low on January 2 this year. After January 2, BOAN BIOTECH's stock price briefly touched the BOLL upper boundary, and on January 9, there was a rare increase in volume and price. However, this rebound was considered a temporary oversold rebound. After the volume and price peaked on January 9, the trading volume once again significantly shrank, and the stock price quickly dropped after hitting the BOLL upper boundary. From January 14 onwards, BOAN BIOTECH's stock price entered another 2 and a half months of decline, continuously setting new lows since its listing. The continued decline in the stock price has put BOAN BIOTECH on the edge of being removed from the Stock Connect. According to data, the next regular adjustment for the Hang Seng Index and the Hong Kong Stock Connect is in June this year, with the results of the review being announced on August 25, and the review period covers from July 1, 2025, to June 30, 2026. Currently, BOAN BIOTECH's daily average market value within this review period is 6.235 billion Hong Kong dollars, below the threshold of 6.75 billion Hong Kong dollars required for continued trading. As it is already May, there are only 2 months left before the end of the latest review period for the Hong Kong Stock Connect. Therefore, if BOAN BIOTECH cannot significantly increase its stock price to raise its daily average market value level during this period, it is likely to be removed from the program in the next round of adjustments. Annual report showing "increased revenue but not increased profit", what supports the stock price? On March 30, BOAN BIOTECH released its 2025 annual report. The financial report shows that during the reporting period, the company achieved operating income of 785 million yuan, an increase of 8.06% year-on-year. Among them, the company's current product sales revenue was 734 million yuan, a year-on-year increase of 6.4%. In terms of profitability, due to factors such as the launch and promotion of new products, changes in government subsidies, and market competition during the reporting period, the company's gross profit margin was 71.7%, a slight decrease of 3.0 percentage points year-on-year; EBITDA was 134 million yuan, a decrease of 25.2% year-on-year; although 2025 was BOAN BIOTECH's second consecutive year of profitability, its net profit attributable to the owner was only 7 million yuan for the period, a significant decrease of 90.24% year-on-year. Regarding the phenomenon of "increased revenue but not increased profit" reflected in the financial report, the company explained that this was due to the high base period last year, the reduction in government subsidies and BD revenue, and increased sales expenses for new products. Looking at the details of expenses, during the reporting period, in order to further promote the commercialization of new products such as Boyouping and Boyoujing, BOAN BIOTECH significantly increased its marketing efforts, resulting in a sales expense ratio of 43.4%, an increase of 4 percentage points year-on-year. However, the company also improved management and research efficiency, with a management expense ratio of 5.2%, a decrease of 1.2 percentage points year-on-year; and a research expense ratio of 18.8%, a decrease of 1.8 percentage points year-on-year. However, for a pharmaceutical company in the commercialization stage, the cash flow performance of BOAN BIOTECH is still impressive. Data shows that the company's current cash and cash equivalents reached 1.13 billion yuan, a significant increase of 468.3% year-on-year; at the same time, the company's operating net cash from negative turned positive to 347 million yuan, and the corresponding leverage ratio dropped to 28.59%. This has become an important financial guarantee for BOAN BIOTECH's future research and globalization. Currently, the market is undoubtedly more concerned about the progress of BOAN BIOTECH's innovative pipeline. According to the annual report, in 2026, the commercialization of 3 innovative drugs by the company is expected to be implemented intensively: BA1203 (PD-1/IL-2), BA2201 (TL1A/IL23 double antibody), and BA1304 (EGFR/B7H3 ADC) are expected to submit IND applications. Among them, BA1203, as a PD-1/IL-2 antibody cytokine fusion protein, besides having a highly active PD-1 antibody, its IL-2 module enhances safety by selectively releasing IL-2 in tumors through two masking mechanisms, "cis activation" and "tumor microenvironment-specific enzymatic activation". It is expected to submit a Chinese IND application in Q2 this year; in addition, BA2201, a dual antibody drug targeting TL1A and IL23p19, uses a novel 1+1 structure and long-acting Fc engineering in its antibody design, demonstrating good drug properties and efficacy in vivo and in vitro, with potential for significant BD impact, and could become a catalyst for the company's future stock price rebound. However, whether these catalysts can materialize before the end of the current period's Hong Kong Stock Connect review period may determine whether BOAN BIOTECH can successfully continue trading in the program. Looking at BOAN BIOTECH's Hong Kong Stock Connect holding ratio, since the beginning of this year, while the company's stock price has been declining, its holdings by Hong Kong Stock Connect investors have significantly increased, exceeding 22% as of April 30. According to the rules, once a company is removed from the Hong Kong Stock Connect, mainland investors cannot buy more shares and can only sell their existing holdings. This means that with the company being removed from the program, mainland investors will not contribute to liquidity and may instead become selling pressure. With the current holding ratio of BOAN BIOTECH through the Hong Kong Stock Connect, if the company is removed from the program, the selling pressure from over 20% of the shares could further negatively impact its future stock price.