<News Alert> Broncus (2216 HK): CFO just resigned
- Broncus just announced that its CFO has resigned.
- Expect share price to react negatively as the market may doubt the credibility of its financial figures. It will release 21A results tomorrow (29/3)
- We believe the company is financially credible as it was recognised by the government in the phoenix plan. Management would also be meeting investors to address the issue this week
- Maintain BUY. TP HK$13.47
Our view:
The news comes as a negative surprise as results are expected to be announced tomorrow (29/3), with earnings call on Wednesday 30/3. Based on our discussion with the company, the former CFO wants to stay in the US with his family, hence the resignation. Resignation of CFO may cause market to doubt the credibility of its financial figures. We, however, believe the company is financially credible because:
- Zhejiang provincial government awarded them as a “phoenix plan” enterprise on 3/3/22 (see: ????Broncus Medical ), indicating that during IPO last September, the company had no major violations of laws and regulations in taxation, social security, administrative litigation, or credit violations (see the requirement to be “phoenix plan” enterprise: ?????????????????????????“????”???2021—2025????? (hangzhou.gov.cn) ). The “phoenix plan” enterprise designation indicates that it is clean;
- After release of results tomorrow, Broncus’ top management will spend a week to talk to investors. Their willingness to face investors prompts us to believe that the company is decent.
We currently maintain BUY rating with TP of HK$13.5.