$WUXI BIO(02269)$ There is a lot to like in Wuxi Bio. I have been following this company for donkey years but have never committed. Wuxi Bio is one of the largest, if not the largest contract manufacturer in booming China biologics industry.
The reason from the earlier non-commitment stems from its previous high price during the 'everything biomedical up' peak COVID pandemic period. It doesn't matter if the biological sciences company is developing a COVID related solution, as long as there is a rumour suffices.
Higher stock price leads to even higher prices. This is the natural law of the rich gets richer. A rich valuation attracts more participants to join 🥳. This high valuation leads subsequently to stock split and more spoilts being shared. Everyone involved was happy if not overjoyed. I was turned off by its rich valuation and could only watched on the sideline.
As far as it begins, just like COVID 🌊, all these came crashing down, just as the 🌊 promises. First, COVID has somewhat subsided, at least around the 🌍. But more importantly, the US government decided to "go to war" with China. It started with Hwawei, then Tik Tok and everything China. More serious are the constant threats to delist Chinese companies from the US stock exchanges. The main excuse is the difficulty to examine the accounts of China based companies for tax purposes.
New Year new beginnings. As per post Christmas period, it has since been confirmed that major US stock exchanges listed Chinese firms have since complied with US stock exchanges regulations and audits were successfully completed. With higher certainty and with the shares price of Wuxi Bio hovering at its recent low, JP Morgan increases its stake to over 7%. The company recently also announced a licencing agreement with a major US biotech firm. Make no mistake, Wuxi Bio is not just a contract manufacturer. It does cutting edge research as well. It will be earning royalty from this newly signed agreement.
Finally, to share the stock price chart indicators. I have shared RSI (relative strength index) indicators recently, so I will use this to discuss Wuxi Bio. If you remember, the upper bands for extended RSI (6,16,24) are 80,70,60. RSI Indicators (6,16,24) in the sub-chart for Wuxi Bio stand at 86,79,69 respectively. This reads overbought, overbought, overbought!
As mentioned in that sub-posting (check back indicator teaching posting), overbought signal from RSI indicators do not imply an immediate correction of price will take place. However, correction is imminent. The price action has simply move too fast ahead of itself since Christmas ⛄ period.
This posting is definitely not an inducement to take a position in Wuxi Bio. It is just a sharing that you might take note of the vast potential in Chinese biologics sector. Wuxi Bio is a leader but it is not the only one. Just look at the development in US biotech sector, if China biotech firms could do even 10% as well, where do think this will take them?
Comments
Firstly its selected few companies that had gone thru the audit review in HK between US team n HK audit firms that's all.
Think they are trying to formulate a framework from which future reporting will follow.
Final outcome unknown yet
@LMSunshine what u think ?