Key Takeaways:
Hangzhou Tigermed Consulting Co. (3347.HK) shares fell more than 7% after the company reported a 70.4% plunge in first-quarter net profit, a drop that analysts said masks a solid underlying operational performance.
"Excluding one-off items, net profit attributable to shareholders grew 17.7% YoY to RMB120 million," a UBS research report said, reiterating a Buy rating on the stock. The bank raised its price target on Tigermed's H-shares to HKD 59.9 from HKD 56.7.
The clinical research organization reported revenue of RMB 1.8 billion for the first quarter, a 15.2% increase from the same period a year earlier and in line with market expectations. However, reported net profit fell to RMB 49.04 million, dragged down by a RMB 195 million fair value loss related to the company's consolidated investment funds. This accounting charge increased the profit attributable to non-controlling interests, which in turn reduced the profit attributable to shareholders.
The sharp stock decline highlights investor focus on headline profitability, even as the company's core business shows signs of recovery. Analysts at CLSA noted that new orders improved with enhanced visibility, with cumulative new orders for the four months ended in April exceeding RMB 3 billion. The brokerage maintained its Outperform rating and a price target of HKD 56.1, noting that management kept its full-year new order growth target of 21%.
The results suggest Tigermed's underlying business is stabilizing after a challenging period for the biotech services sector. Investors will watch the company's half-year results in August for confirmation that new order momentum is translating into sustained profit growth.
This article is for informational purposes only and does not constitute investment advice.
