UBS: Downgrade GIANT BIOGENE (02367) rating to "Neutral" and cut target price to 39.5 Hong Kong dollars.

UBS released a research report stating that the rating of GIANT BIOGENE (02367) has been downgraded from "buy" to "neutral" mainly due to increased uncertainty in short-term revenue and profit prospects. At the same time, profit forecasts for 2025 to 2027 have been cut by 25% to 41%, while revenue forecasts for the period have been revised down by 20% to 36%, with the target price slashed from HK$79.5 to HK$39.5. The report points out that market competition has intensified, with other skincare brands or products with more attractive pricing and based on the same core component of recombinant collagen emerging. Although the company's product innovation is rapid, there is still uncertainty as to whether new products will be successful next year. Additionally, maintaining high profitability in the face of intensified competition and weakened marketing efficiency is challenging. With reduced marketing efficiency and deleveraging in operations, UBS expects GIANT BIOGENE's net profit margin to be eroded by 2 to 3 percentage points.