The stock prices of Hong Kong-listed CXOs have risen collectively recently. After the profit warning, will MEDTIDE (03880) continue to decline against the market trend or bounce back from being oversold?

On July 31, after the market closed, MEDTIDE (03880) published its profit warning for the first half of the fiscal year 2026. The company anticipates its revenue for the period to be approximately RMB 229.8 million to RMB 239.2 million, representing a year-on-year decrease of about 5.7% to 9.4%; net profit is expected to be around RMB 49.4 million to RMB 57.1 million, down approximately 44.0% to 51.6% year-on-year; the adjusted net profit is also expected to decrease year-on-year by approximately 43.1% to 50.6%. It was observed that MEDTIDE's stock price reached a cyclical peak of HKD 25 during intraday trading on July 15 and began a technical correction the next day. Up until the market close on July 31, the company's stock price fluctuated near the middle band of the Bollinger Bands. However, following the disclosure of the significant net profit reduction in the profit warning, the willingness to sell within the market clearly increased. On August 3 and 4, MEDTIDE's stock price experienced consecutive days of large declines, dropping a total of 11.20%, effectively erasing nearly all gains made in early June. Profit Warning Announcement and Stable Decline From MEDTIDE's recent market performance, although the overall volatility appears substantial, characterized by several consecutive red candles and significant declines, the trading volume beneath the candlestick chart has remained stable. Data shows that from July 29 to August 3, the four trading days before and after the profit warning announcement, the daily trading volumes for MEDTIDE were 104,400 shares, 101,600 shares, 101,100 shares, and 108,500 shares, respectively. Even on August 4, when the stock price saw a significant decline, the trading volume was only 121,300 shares. This price drop with stable volume indicates, to some extent, that the main capital in the market did not panic and flee due to the company's profit warning. From the profit warning announcement itself, MEDTIDE attributed its performance fluctuations mainly to the following comprehensive factors: The decrease in revenue is attributed to timing differences in revenue recognition: the delivery of some customer orders and revenue recognition are expected to be delayed until the second half of 2026, resulting in a temporary reduction in mid-term revenue. The main reasons for the decline in profit are, firstly, that several cash and cash equivalents, as well as accounts receivable, are denominated in USD. Due to the appreciation of the RMB during the reporting period, foreign exchange losses were incurred on the balance sheet, negatively impacting profits; secondly, the disappearance of a non-recurring income item; and lastly, the year-on-year decline in sales revenue leading to a decrease in gross profit. Finally, MEDTIDE emphasized in the announcement that the fluctuations in the above mid-term performance did not affect its core business strength and long-term development prospects. As cooperation with clients deepens and pipeline advancements are made, the company successfully secured a large order from overseas clients in July 2026, further strengthening its order reserve. From a market perspective, during the recent decline in MEDTIDE's stock price, although the price kept falling, the trading volume remained consistent without a cliff-like mass exit, indicating that the main funds were not unloading heavily but were merely passively following the market to digest floating shares. Looking at the chip structure, comparing the on-market chip structure of MEDTIDE on August 5 with that of June 5, it is evident that although the company's stock price demonstrated an M-shaped trend over these two months, the main funds in the market have consistently remained locked in at low prices of HKD 21-22, which is below the average chip cost. In contrast, there has been significant movement in the chips above the cost line, with many holders who purchased at prices above HKD 27 choosing to "cut their losses" during the prolonged low-price run, driving the overall chips closer to the average cost line. Currently, although several trading days have passed with stable volume trying to find a bottom, as of August 5, MEDTIDE's stock price continues to set new phase lows, indicating that the bearish forces have not been completely released. MEDTIDE has not yet seen multiple consecutive days of rising low points to definitively end the downward trend, and the key volume moving average has not shown a significant turnaround. Generally speaking, in the absence of new incremental capital tentatively entering the market, investors need to wait for the market's capital interest to increase, as well as a shift in market trading sentiment from cold to warm. Can MEDTIDE achieve a valuation rebound amid the CXO boom in Hong Kong stocks? Recently, Hong Kong pharmaceutical concept stocks have collectively risen, with the CXO and innovative drug sectors experiencing multiple points of breakout, driving a strong rebound in the Hang Seng Healthcare Index. On August 4 and 5, the index rose by 2.02% and 1.18%, respectively. In fact, the Hong Kong pharmaceutical sector began to recover in late June this year, mainly due to the performance of leading CXO companies exceeding expectations, which fueled sentiment across the sector and promoted concurrent rises in innovative drugs and medical devices. For example, on August 4, the Hong Kong CXO sector saw a wave of individual stocks rise collectively, with WuXi AppTec's stock price soaring 11.17%, while Pharmaron Beijing and Hangzhou Tigermed Consulting both rose over 5%. The positive feedback from the secondary market can be attributed to the strong performance of leading companies in the Hong Kong CXO industry: for example, WuXi AppTec achieved record high revenues and profits in Q2 2026, not only raising its annual guidance but also declaring a mid-term dividend of HKD 1.506 billion, thereby validating the recovery in global pharmaceutical R&D demand. Another leading company, Pharmaron Beijing, reported over 30% growth in new orders, clearly demonstrating the high prosperity of the industry. From the mid-term performance reports disclosed by leading Hong Kong CXO companies, it is evident that the Hong Kong CXO sector now has the foundation for long-term allocation value recovery, but a comprehensive uptrend is difficult to sustain. The differentiation within the sector may guide the market towards a more structurally upward trend with fluctuations. The sustainability of CXO orders will also become an important basis for investors to differentiate the fundamental aspects of individual companies. In the segmented field of peptides, Cognitive Market Research data shows that the global peptide API market is expected to reach approximately USD 9.6 billion by 2025, with a projected compound annual growth rate of 23.50% from 2025 to 2033. As the development of innovative peptide drugs heats up, the corresponding outsourcing demands are likely to continue to expand. According to Frost & Sullivan forecasts, the global GLP-1 drug market increased from USD 9.3 billion in 2018 to USD 38.9 billion in 2023, with a compound annual growth rate of 33.2%, and it is expected to grow further to USD 129.9 billion by 2032. In China, the GLP-1 market grew from USD 10 million in 2018 to USD 1.3 billion in 2023, with a compound annual growth rate of 65.3%, and it is expected to increase further to USD 2.32 billion by 2032, with a compound annual growth rate of 37.3%. In addition to the medium to long-term market prosperity, in the first half of 2026, Asymchem Laboratories, as one of the leading peptide CXOs, has 19 of its 52 peptide clinical projects related to weight loss. The company disclosed in its Q1 report that it plans to increase its peptide solid-phase synthesis capacity from 45,000 liters to 69,000 liters by the end of the year, a substantial increase of 53%, and this expansion pace aligns closely with the growth rate of its current orders. As for MEDTIDE, as the third-largest peptide CRDMO globally, MEDTIDE has previously achieved FDA registration for terlipressin active pharmaceutical ingredients, and its semaglutide active pharmaceutical ingredients are also on the FDA's green list; on July 31, the company completed the pre-license inspection (PLI) for HEPCLUDEX active pharmaceutical ingredients for FDA approval. A series of business advancements also corroborate the companys emphasis in its profit warning, stating that "the performance fluctuations have not impacted its core business strength and long-term development prospects." From a valuation perspective, following a series of stock price declines, MEDTIDE's latest PE valuation is only 12.43 times, significantly lower than the industry average of 23.34 times, and also about 17% lower than its PE valuation over the past three months. The current valuation has fallen below the company's reasonable valuation range. This may suggest that there exists a short-term opportunity for a rebound in this peptide CXO stock due to excessive declines.