Core Viewpoint - King’s Ray Biotechnology (01548.HK) reported a net profit of $2.962 billion for the fiscal year 2024, a significant increase of 3202.19% year-on-year, marking a turnaround from losses [2] Financial Performance - The $3.2 billion one-time gain was attributed to accounting maneuvers, specifically the deconsolidation of subsidiary Legend Biotech (LEGN.NASDAQ) [3] - After excluding this gain and a $124 million fair value loss from another subsidiary, the adjusted net profit for King’s Ray's non-cell therapy business remained flat compared to 2023 [4] - The CDMO business revenue plummeted by 37.9%, while synthetic biology revenue grew by 24.6% to $53.7 million, but this only accounted for less than 10% of total revenue [4] Market Valuation - Following the deconsolidation, Legend Biotech's market valuation reached $7.8 billion on NASDAQ, while King’s Ray's market cap was only $4.7 billion, less than 60% of Legend's [5] - The valuation disparity reflects differing market perceptions of the core values of both companies, with Legend's valuation driven by the explosive growth of its product Carvykti, which achieved sales of $963 million in 2024, a 92.7% increase [5] Business Challenges - King’s Ray faces dual challenges: the ongoing deterioration of its CDMO business and growth bottlenecks in synthetic biology [9] - The CDMO business saw a 37.9% revenue decline, with operating losses widening by 46% due to low capacity utilization and high expansion costs in North America [9] - Cash flow remains a concern, with operating cash flow netting only $75.6 million, representing just 2.55% of net profit, indicating significant short-term debt repayment pressure [9] Future Outlook - The resolution of the valuation dilemma for King’s Ray and Legend Biotech hinges on capacity expansion and pipeline progress [11] - Legend Biotech's collaboration with Johnson & Johnson aims to achieve an annual production capacity of 10,000 doses by the end of 2025, which could support the growth of Carvykti in secondary markets [11] - King’s Ray must balance capital operations and business transformation, potentially through share divestment to improve cash flow while focusing on high-growth sectors like synthetic biology [12]