FAST NEWS: Junshi Biosciences announces A-Share buyback

The latest: Drug developer Shanghai Junshi Biosciences Co. Ltd. (1877.HK; 688180.SH) said on Sunday its board has approved a plan to buy back some of its A-shares for up to 58 yuan per share, involving a total of up to 30 million yuan ($4.1 million) to 60 million yuan in spending.

Looking up: Such buybacks are usually intended to signal management’s optimism about the company’s future growth prospects, as well as their belief that the shares are undervalued.

Take Note: The size of the buyback is relatively small and does not involve the company’s Hong Kong-listed H-shares, meaning any the positive impact on the share price may be limited.

Digging Deeper: Junshi develops and sells innovative drugs, but has yet to record a profit since its establishment in 2012. Volatile sales due to frequent changes in its commercialization team, combined with heavy R&D spending, led the company’s net loss to widen by 232% last year to 2.39 billion yuan. The company thought it had a potential hit with its VV116 oral Covid drug that was approved for sale in China early this year. But the drug’s contribution was weak as the pandemic receded, and the company’s revenue plummeted by nearly 30% in the first half of 2023.

Market Reaction: Junshi’s Shanghai-listed shares closed up 5.1% at 37.8 yuan by the midday break on Friday. Its Hong Kong shares closed up 4.5% at HK$20.95 by the noon break. The Hong Kong stock currently trades near the lower end of its 52-week range.

Translation by A. Au

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