CICC has released a research report stating that, due to short-term pressure on cosmetics sales, it has lowered its net profit forecasts for GIANT BIOGENE (02367) for 2025 and 2026 by 25% and 33%, respectively, to RMB1.91 billion and RMB2.14 billion. The current stock price implies 20x and 18x P/E for 2025 and 2026.
The firm maintains its Outperform rating but has reduced the target price by 20% to HK$56, reflecting 29x and 25x P/E for 2025 and 2026, with a potential upside of 41%. Key points from CICC include:
**Recent Developments** On December 2, the company announced plans to repurchase up to 104 million shares (10% of issued shares) and communicated its strategic roadmap for 2026, covering product portfolio expansion, brand operations, and channel development. CICC views the buyback as a sign of management confidence and believes the company’s R&D capabilities, brand strength, and team cohesion remain solid. Optimizing product mix, adjusting operational strategies, and growth in its secondary medical aesthetics business are expected to drive improvements.
**Share Repurchase Highlights Long-Term Confidence** GIANT BIOGENE plans to use its own funds to repurchase up to 104 million shares (10% of issued shares), which may be canceled or held as treasury stock. CICC sees this as a positive signal for long-term growth, potentially boosting EPS and shareholder returns.
**Clear 2026 Product and Channel Plans** 1) **Product Side**: The company has a robust pipeline for 2026, including: - Four key new products under the *Kangfumei* brand, alongside expanded distribution and upgrades for existing lines. - Upgrades and new launches for the *Keling* brand. 2) **Channel Expansion**: Online efforts will focus on influencer partnerships and in-house operations, while offline expansion targets medical institutions, OTC, and retail chains. Southeast Asia expansion is also underway. CICC expects contributions from secondary product lines to support healthy growth in cosmetics.
**Medical Aesthetics Business Progressing Well** With a growing team and strong commercialization readiness, the medical aesthetics segment is poised to become a growth driver. CICC remains bullish on the company’s long-term prospects, citing its R&D edge and brand resilience.
**Risks**: Intensifying competition and potential delays in product registrations.
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