The Zhitong Finance App learned that UBS released a research report stating that it will maintain Tiger Pharmaceuticals (03347)'s “buy” rating and target price of HK$52.6. Tiger Pharmaceuticals announced that it will participate in the privatization and business spin-off of Fangda Holdings (01521) through its wholly-owned subsidiary Hong Kong Tiger. The bank believes that although the divestment of Fangda Holdings may affect some global synergies in the short term, the deal is expected to improve Tiger Pharmaceuticals' business portfolio and capital allocation, while supporting the expansion of overseas clinical CRO business, supplementing working capital, and increasing shareholder returns.
According to the report, the cancellation price for each share of Fangda Holdings was HK$2.37, a 107.2% premium over the previous 360-day average share price, which is equivalent to about 91.6 times the price-earnings ratio of Fangda Holdings in 2025. After privatization is completed, Tiger Pharmaceuticals plans to acquire non-target businesses in mainland China, with an initial valuation of about US$205.5 million; target businesses such as bioanalysis and pharmacokinetics (DMPK) will be sold to Charles River Laboratories, with a preliminary valuation of about US$470 million; Li Song, founder of Fangda Holdings, and related trusts or acquisitions of overseas non-target businesses, with an initial valuation of about US$84.4 million.
UBS believes that Fangda Holdings' laboratory network in the US and Europe is an important platform for connecting Tiger Pharmaceuticals to the global market, supports the strategy of simultaneously submitting new drug clinical trial applications (INDs) in China and the US, and helps innovative Chinese pharmaceutical companies expand overseas markets. Therefore, the divestment of Fangda Holdings may affect Tiger Pharmaceuticals' global layout and cross-border drug development competitiveness to a certain extent.
However, the bank pointed out that if the transaction is successfully completed, Tiger Pharmaceuticals can also divest non-core businesses including overseas laboratories, CMC and genomics, so as to focus more on clinical CRO services. In terms of funding arrangements, Tiger Pharmaceuticals plans to use about 60% of net cash proceeds for overseas clinical CRO business expansion and mergers and acquisitions, 20% for daily operations, and the remaining 20% may be used for dividends or share repurchases.