Regencell Bioscience Holdings Limited operates a Traditional Chinese medicine (TCM) bioscience company. It focuses on the research, development, and commercialization of TCM for the treatment of neurocognitive disorders and degeneration, primarily attention deficit hyperactivity disorder and autism spectrum disorder. The company was incorporated in 2014 and is headquartered in Causeway Bay, Hong Kong.

Hong Kong

Regencell Bioscience Holdings Limited

Healthcare

The company does not pay dividends at all, or it pays them sporadically. There have only been a few years with dividend payments in the past ten years. 

RGC reported revenue of USD 0mn in the last 12 months, down 0% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS fell 15% from FY23 to USD -0.17.

Over the last six months, the stock performance has varied, with an increase following a drop. The stock's price trend wasn't definitive when matched against its global counterparts from the same sector and industry (as depicted above). Over the past six months the stock has exceeded the performance of this peer group by 8283ppts and its growth accelerated by 1627ppts in the past month. This is equally valid for peers from the same country and industry. Given the stock's valuation versus its peers, its total price movement is mildly favourable.

In the last 12 months, the return on capital employed (RoCE) grew to -27.1%, below the peers. 

Another important profitability metric, return on assets (RoA), amounted to -26.5% in the last 12 months, an increase from -40.9% in FY24. 

Regencell Bioscience Holdings Limited reported a return on equity (RoE) of -27.2% in the last 12 months, up from -42.5% in FY24. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been -6.2 in the past several years. This ratio implies a fragile shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are minimal. In combination with stringent business standards, shareholder rights are very highly protected.

RGC has poor trading liquidity. The average private investor can sell his common position in the stock almost immediately. Liquidity is very unstable and becomes extremely unfavourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. Another factor to consider is the substantial number of days with zero trading volumes, i.e., without any ability to sell a position. 

No other major risks have been identified.

The risk of default is high. Among the negative credit factors, we point to slow historical revenue growth, bleak profitability, negligible return on capital, poor working capital management, and poor cash flow generation. We note low margin volatility and an favourable capital structure, among the positive credit factors. 

In highly turbulent market conditions, RGC is exceptionally volatile. In other words, the stock will be among the worst-performers in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be critical. 

In normal market circumstances, RGC is exceptionally volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will change quite unpredictably. The stock's losses on its worst days (less than 1-5% of the time) will range from critical to immense. 

Based on key historical and expected multiples, the stock is greatly overvalued relative to its peers. 

Regencell Bioscience Holdings Limited

$ 501.62

2

Regencell Bioscience Holdings Limited

$ 501.62

2

Risk factor

Profitability factor

Risk / Profitability

About

About

Risk factor

Profitability factor

$ 501.62

About

About

Regencell Bioscience Holdings Limited

$ 501.62

2

Regencell Bioscience Holdings Limited

$ 501.62

2

Risk factor

Profitability factor

Risk / Profitability

About

About

Risk factor

Profitability factor

$ 501.62

About

About

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