The biggest retracement in stock prices was over 60%. When did Jiangxi Biotech (06915) break out of the downward channel during the empty window period?

After the market on August 31 this year, Jiangxi Biotech (06915) revealed its first semi-annual report since its listing. During the reporting period, the company achieved revenue of 83.3 million yuan, a year-on-year decrease of about 16.5%; net profit for the same period was 14.366 million yuan, a year-on-year decrease of 61%.

The day after the financial report was released, Jiangxi Biotech's stock price fell sharply by 12.74%. After that, the company's stock price began a one-and-a-half-month decline. In the intraday session on October 14, its stock price fell to a minimum of HK$8.40, taking back the full increase since August 11.

In this context, when did Jiangxi Biotech release a hedging signal to catalyze the subsequent cessation of decline and stabilizing the market became the focus of investors' attention.

When will it break out of the downtrend channel?

Since August 31, the biggest retracement of Jiangxi Biotech's stock price in this round of decline reached 60.19%. However, in fact, before that, its stock price had already gone out of a clear upward trend in mid-late August.

The Zhitong Finance App observed that from August 11 to August 28, Jiangxi Biotech's stock price emerged from August 11 to August 28, thanks to the “commercialization of veterinary TAT to open a second growth curve”, which was priced centrally, compounded by overfalling technology repairs at the time and optimistic expectations for platform-based transformation during the mid-August reporting window period.

Among them, in the two trading days of August 11 and August 12 alone, the cumulative increase in Jiangxi Biotech's stock price reached 57.16%, directly recovering above the company's issue price of HK$11.2. Looking at the overall market stage, if we calculate the minimum of HK$3.95 after breaking on the first day of listing until the intraday high of HK$21.10 on August 28, the biggest increase in the company's stock price during this phase reached 434.18%.

The core logic underpinning this market is the fundamental change in Jiangxi Biotech's switch from a “single-person TAT pharmaceutical company” to an “antiserum platform+human/veterinary two-wheel drive”. This is reflected in the secondary market as capital's centralized pricing favorable to Jiangxi Biotech's “approval and commissioning of veterinary TAT” since July this year.

At the time, as a sub-new stock with only 40 days of listing and only about 25% of the public circulation market, Jiangxi Biotech had an average daily turnover of only 10 million. This means that a small amount of incremental capital can drive up the company's stock price rapidly. The liquidity premium also accelerated the company's stock price increase at the time, which in turn brought technical signals that it was overheating in the short term.

According to the Zhitong Finance App's observation, after half a month of significant increase, the technical side of Jiangxi Biotech's stock price, whether it reached the peak RSI of 75.79, the KDJ-J value of 94.24, or the closing price close to BOLL's upward trajectory on August 28, all reflect signs that Jiangxi Biotech's stock price is overheating in the short term. It also indicates that this new small ticket has reached the middle and late stage of this strong upward trend.

However, short-term overheating on the technical side is clearly not the main reason for the subsequent rebound of the full increase in its stock price in the previous period.

It is easy to see that unlike general technical stock price adjustments, Jiangxi Biotech's stock price did not show the normal trend of capping and slowly falling back on the moving average after August 31. Instead, it directly declined from a high of HK$20.50 after the financial report was disclosed, and was accompanied by a clear decline in liquidity.

As of October 14, Jiangxi Biotech's stock price has fallen below all short- and medium-term moving averages; at the same time, the MACD indicator is still running below the zero axis, while RSI and KDJ have entered the oversold zone but have not shown any signs of bottoming divergence, and ADX as high as 52.23 shows a strong trend continuation signal. Multiple technical cross-checks also indicate that Jiangxi Biotech's stock price is still in a “oversold and unstabilized” downward channel.

In fact, on September 16-18, due to favorable industry catalysts, Jiangxi Biotech's stock price also showed a slight rebound. Its stock price once rebounded to a high of HK$16.51 on September 18.

However, slight fluctuations in volume and price were not supported by technical aspects: its MACD index was still negative, and the closing price for the day was still below the 20-day EMA. There was no obvious sign of bottoming deviation, which meant that the mid-term trend of Jiangxi Biotech's stock price at the time was not effectively repaired.

However, with the concentrated release of multiple pressures, such as sector fluctuations, fundamentals, and technology, on Jiangxi Biotech's low circulation ticket, it finally broke out of a wave of downward trends in volume on October 12. It closed down sharply by 18.26% on the same day, and the corresponding trading volume increased 2.3 times from the previous trading day to 2,047,500 shares.

Is the veterinary drug TAT the key to commercialization or stock price reversal?

On August 18 this year, China Merchants Securities International released a research report covering Jiangxi Biotech for the first time and giving it an “increase in holdings” rating. The target price was HK$23.6.

The core assumptions in the research report are the company's systematic release in the veterinary medicine sector, the resumption of overseas orders, and the smooth progress of the anti-snake venom serum pipeline. The brokerage firm stated in the research report, “Jiangxi Biotech is accelerating the transformation from a single tetanus antitoxin (TAT) leader to a comprehensive antiserum platform. The research pipeline focuses on rigid demand areas where supply is seriously inadequate, and is about to enter the harvest period.”

It is easy to see that Jiangxi Biotech's stock price at this time is already at a large discount compared to the target price mentioned above. On the other hand, this also indicates that the market is already trading negative factors such as pressure on the company's mid-term reports and the decline in short-term profits. However, if the subsequent company's stock price wants to break out of the negative market in the short term and move closer to institutional expectations, verifying the performance of its veterinary TAT may be an important condition.

The Zhitong Finance App learned that globally, the market size of the veterinary tetanus antitoxin market in 2024 is about US$30.2 million. By 2028, the market is expected to grow to $76.8 million, at a CAGR of 26.3%. In the Chinese market, the scale of veterinary tetanus antitoxin in China in 2024 is about 2.2 million US dollars, and it is expected to grow to 9.1 million US dollars in 2028, with a compound annual growth rate of 42.8%. By 2033, the size of the Chinese market is expected to reach a further 24.9 million US dollars.

However, judging from market competition, the domestic veterinary tetanus antitoxin industry is currently highly concentrated. There are only about four large-scale certified manufacturers. Small and medium-sized manufacturers have weak production capacity and technical strength, and the competitive pressure on the industry is far less than on the homogenized chemical veterinary drug circuit.

In this context, the market is clearly willing to bet on the company's expectations of achieving “human drug+veterinary medicine” two-wheel drive, which is one of the core logics that led the company's stock price increase from August 11 to 28.

Judging from the market, Jiangxi Biotech's stock price showed a clear contraction on October 13-14 after the concentrated surge in panic and stop-loss orders caused the stock price of Jiangxi Biotech to break out of the “final decline” on October 12. This also indicates to a certain extent that active selling pressure has been drastically reduced, while investors inside and outside the market are gradually becoming consistent. However, the bottom characteristic of “shrinking” under this low liquidity may also indicate the beginning of a new round of bottom-bound fluctuations or even stabilization in the company's stock price.