CICC: Maintain outperform rating on GIANT BIOGENE (02367) and lower target price to HKD 56.

CICC released a research report stating that, based on short-term pressure on cosmetic sales, it lowered GIANT BIOGENE's (02367) net profit forecast for 2025-2026 by 25%/33% to 1.91/2.14 billion yuan. The current stock price corresponds to a 20/18x P/E ratio for 2025-2026. It maintains an outperform industry rating, based on the adjustment of profit forecasts and the company's long-term competitive advantage, and has lowered the target price by 20% to HK$56, corresponding to a 29/25x P/E for 2025-2026, with a 41% upside potential. Key points from CICC: Company Situation On December 2, the company announced its intention to buy back up to 1.04 billion shares (10% of the issued shares) and communicated with the capital market about strategic planning for the expansion of its product matrix, brand operation, and channel expansion in 2026. The bank believes that the buyback demonstrates management's confidence, while the company's research and development capabilities, brand awareness, and team cohesion remain solid. It is optimistic about the company's long-term growth potential as a leading collagen restructuring company. Proposed buyback of up to 10% of shares to demonstrate management's long-term confidence The company announced its plan to use its own funds to repurchase up to 1.04 billion shares, representing 10% of the issued shares. The bank believes that this buyback plan demonstrates management's confidence in the company's long-term growth and will help increase earnings per share and enhance shareholder returns. Clear plan for product matrix and channel expansion in 2026, with potential for operational improvement 1) Product side: The company has a rich reserve of new products for 2026. According to the company's forecast: In addition to strengthening the core product, collagen bars, the company will launch 4 important new products in the collagen repair, focus, and order series. Furthermore, the Territory Restoration, TonTon, and medical dressing series will expand channel coverage, upgrade, and broaden the range of SKU in the following period. New raw materials and product series will also be reserved; The upgrading of the KERRE brand and the launch of new products are expected to be implemented in 2026. 2) Channel side: The company plans to continue strengthening its online influencer matrix and in-house operational team, and further expand offline clinics, OTC, and CS/KA channel coverage and its own store layout. The expansion into Southeast Asia is also progressing smoothly. The bank believes that the contribution from the second-tier products is expected to increase, driving further healthy growth in the cosmetics business. The smooth progress of the medical aesthetics second line, optimistic about the company's long-term growth prospects The company's medical aesthetics team continues to grow, with extensive experience in the development of previous Class II devices and star cosmetics products, and strong reusability. Commercialization is progressing smoothly. Looking ahead in the medium to long term, the bank believes that the company's research and development capabilities, brand awareness, and team cohesion remain solid. With the recovery of the cosmetics business and the contribution of the medical aesthetics second line, there is still ample room for growth. It suggests paying attention to positioning opportunities. Risk warning: Continued intensification of industry competition; product registration progress falling short of expectations.