[ET Net News Agency, 4 July 2019] Goldman Sachs initiated coverage on Frontage Holdings
(01521) with a "buy" rating and a target price of HK$3.71.
The research house said Frontage is an integrated CRO (Contract Research Organisation)
focusing on laboratory services covering the entire drug development process.
Goldman sees Frontage as differentiated with potential upside in the US/China market
given its (1) technology-driven global quality services certified by regulators in
US/EU/China, with new capabilities eyeing emerging trends in drug innovations
(biologics/biomarkers), (2) established reputation, particularly in bioanalysis (53% of
FY2018 revenue), (3) sustainable and expanding client base. (KL)
Goldman estimated 2018-2022 sales CAGR of 27.8% and earnings CAGR of 44.8%, driven by
(1) robust demand for bioanalysis services in China, (2) its ability to replicate US
capabilities to China, (3) ramp-up of new safety/tox services with the acquisition of
Concord, which is likely to turnaround in FY2019, (4) new capabilities (e.g. central labs,
biologics) and capacity expansion, and (5) steady demand in BE services in China. (KL)