Goldman Sachs: Zhifei Biological (300122.SZ): Results Review: 1H26 Below Expectations; Operating Cash Flow Improves; Target Price Cut to Rmb18; Buy
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Zhifei Biological's first-half 2026 results, disclosed August 28, missed Goldman Sachs expectations on both lines: revenue of Rmb4,024mn (down 18% year-on-year versus Rmb4,615mn expected) and a net loss of Rmb809mn, wider than both the Rmb606mn loss a year earlier and Goldman's expected Rmb347mn loss. Flagship HPV9 and shingles vaccines suffered weak demand and intensifying competition, and price cuts to clear inventory compressed gross margin on distributed products to 11%. Operating metrics improved markedly, however: operating cash flow reached Rmb1,974mn, up 22% year-on-year; inventory days fell from 1,102 in 1H25 to 593 at the start of 2026 and 202 in 1H26; and receivables days of 482 improved on both 1H25 (545) and full-year 2025 (552). Goldman expects the destocking transition to persist, but renewed distribution agreements with Merck and GSK significantly reduce near-term operating risk. Self-developed products underpin growth: the quadrivalent flu vaccine is approved, while rabies, PCV15 and MCV4 are under regulatory review; at acquired subsidiary Chen'an Bio, a liraglutide biosimilar was approved in July and insulin degludec awaits filing, opening a second growth curve. After updating its model, Goldman cut the 12-month target price from Rmb20 to Rmb18 and maintains its Buy rating.