The stock price has halved within half a year, and despite TIDE Pharmaceutical (03880)'s annual profit forecast being positive, it still fails to attract market favor?

Before the market open on February 26, Ted Medical (03880) announced an optimistic profit forecast for 2025. According to the announcement, Ted Medical expects its revenue for fiscal year 2025 to be between 555 million and 585 million RMB, representing a year-over-year increase of 25.5% to 32.3%. At the same time, the company projects net profit for the period to reach 200 million to 230 million RMB, a significant year-over-year growth of 237.8% to 288.5%.

In the announcement, Ted Medical attributed its strong revenue growth to the successful implementation of its “Follow Molecule” strategy, the advantages of its integrated CRDMO platform, timely project delivery, and excellent execution.

With both revenue and profit rising annually, Ted Medical naturally received positive feedback from the secondary market that day. Zhitong Finance APP observed that the stock price surged quickly after the open, reaching a daily high of HKD 27 within the first hour, a maximum increase of 6.72%. Although the stock price fluctuated afterward, it remained above the daily moving average, closing up 5.85%.

However, this rally lasted only one day. The day after the profit forecast was released, Ted Medical’s stock opened sharply lower, dropping as much as 6.58% in early trading, nearly erasing the previous day’s gains. Looking at a longer timeframe, since hitting a high of HKD 41.72 in intraday trading last August, the stock has been on a downward trend, falling to a low of HKD 21.50 within six months, effectively halving in value.

Post-lockup expiration, major funds accelerated their outflows?

On December 30 last year, Ted Medical experienced a cornerstone lockup expiration. Prior to this, the stock had been under pressure for three months due to sector volatility, with the average daily price falling below the IPO issue price of HKD 30.60 in late November to early December. It wasn’t until December 15—15 days before the lockup expiration—that the stock began to stabilize and rebound, forming a pattern of eight consecutive positive trading days.

Compared to other companies facing lockups at the same time, Ted Medical’s cornerstone allocation lock-up ratio was relatively low. In its June IPO, Tigermed introduced two cornerstone investors who subscribed to approximately 2.565 million shares (worth USD 10 million), accounting for 15.27% of the global offering and 1.81% of the total shares after the offering.

On the lockup expiration day and the following day, Ted Medical’s stock rose slightly by 0.94% and 1.20%, respectively. However, the highest price during this period was only HKD 30.50, still below the IPO price. Although the stock experienced a gradual rise before the lockup, it failed to break above the Bollinger upper band, which did not open upward, and there was no significant increase in trading volume to support a breakout. Technically, this was a “false breakout” indicator.

As a result, after confirming the lack of off-market support on December 31, Ted Medical’s stock price declined rapidly over the next three trading days and continued to fluctuate within the middle and lower Bollinger bands.

Between January 2 and February 9, the sentiment of on-market holders shifted noticeably from consensus to divergence. Capital flow data showed that during the stock’s sideways decline, large institutional sell orders significantly outflowed, with nearly HKD 4 million leaving the market in February.

Broker trading data indicates that the top five sell-side traders were Wanhai, Futu Securities, Everbright, Interactive Brokers, and GF Securities, selling 371,200, 198,200, 171,000, 150,700, and 120,200 shares, respectively. On the buy side, the top five buyers were Dongwu, Guoyuan, HSBC Hong Kong, China Merchants Securities, and Standard Chartered Bank, purchasing 424,500, 372,100, 88,200, 81,800, and 51,100 shares, respectively.

Can profit forecasts help lift the stock price?

On February 5, Ted Medical closed down 5.56%, with the lowest intraday price hitting HKD 21.50, a new low since listing. At the same time, the stock fell below the Bollinger lower band, signaling an oversold condition.

On February 6, the stock began to show signs of technical rebound, returning to the middle Bollinger band within four trading days. However, investor sentiment remained subdued, and the stock continued to fluctuate around the middle band without further upward momentum. Under this market condition, Ted Medical announced its annual profit forecast. Yet, the forecast did not seem to lift the stock out of its slump.

Looking at the announcement, although the company expects revenue to grow 25.5% to 32.3% year-over-year and net profit to increase sharply by 237.8% to 288.5%, it also stated that, excluding one-time financial gains and losses, its adjusted net profit for the period would be between 200 million and 230 million RMB, with a much narrower YoY growth of 16.3% to 33.7%.

The company explained that the 2025 profit increase includes a fair value gain on financial liabilities measured at fair value through profit or loss, due to the redemption of debt when converting to equity upon H-share listing, whereas in 2024, this item recorded a fair value loss.

In other words, a significant part of the nearly threefold net profit growth stems from non-operational accounting adjustments rather than core business profitability. This performance has raised some concerns among investors about the industry and the company’s fundamentals.

From the downstream industry perspective, according to Frost & Sullivan, the global peptide drug market grew from USD 60.7 billion in 2018 to USD 89.5 billion in 2023, with a CAGR of 8.1%, and is expected to reach USD 261.2 billion by 2032, at a CAGR of 12.6%. China’s peptide drug market increased from RMB 48.2 billion in 2018 to RMB 59.7 billion in 2023, with a CAGR of 4.4%, and is projected to grow to RMB 251.2 billion by 2032, at a CAGR of 17.3%. While the market is still being touted as a “trillion-yuan blue ocean,” leading companies and some investors are quietly entering a “strategic reassessment period.”

On August 5 last year, Pfizer announced the termination of eight clinical-stage projects in its Q2 earnings report, including its last GLP-1 receptor agonist, PF-06954522, signaling a retreat from the GLP-1 pipeline.

If Pfizer’s pipeline cutbacks represent a retreat in the GLP-1 sector, then two days later, Eli Lilly reported a strong Q2 performance but saw its stock plunge 14% in the secondary market. One reason was the underwhelming clinical data for its oral weight-loss drug Orforglipron, causing market panic selling. Behind this was intensified competition in the GLP-1 market and shrinking profit margins.

Meanwhile, industry giants are both increasing market competition and engaging in capacity races.

According to Zhitong Finance APP, in response to explosive demand in the global GLP-1 market, domestic and international pharmaceutical companies are fiercely competing for peptide CDMO capacity. Leading Chinese CDMO firms are expanding rapidly, while companies like Lilly are building their own production facilities.

For example, in the peptide sector, Nanjing-based Nanjing Nante Biological’s Jian De plant has officially started production, adding 220,000 liters of GMP capacity; Shengnuo Biological’s peptide innovation drug CDMO and raw material projects (plants 106, 107, 108) are gradually coming online, with a total capacity increase of 395 kg of peptide raw materials.

Currently, China’s planned GLP-1 peptide API capacity is about 33–40 tons. According to CICC estimates, by 2030, the raw material demand for semaglutide and tirzepatide will be around 50 tons, likely exceeding short-term supply. As industry price wars emerge, leading domestic CDMO firms and multinational giants are accelerating technological development, expanding capacity, and securing high-quality CDMO resources through self-built facilities and long-term partnerships. Meanwhile, new entrants and small players face increasing survival challenges.

As global GLP-1 peptide raw material capacity approaches saturation around 2025–2026, industry reshuffling in the peptide CDMO sector seems inevitable. Under this backdrop, how Ted Medical maintains its industry position and stable fundamentals may become a key focus for investors.