Zai Lab Limited (9688.HK) stock analysis

In our weekly check, Zai Lab Limited is graded D (A to F). Of 22 checks on debt, profit, cash flow and trend: 9 pass, warnings: 2, red flags: 11.

About Zai Lab Limited

Zai Lab Limited is a Healthcare company (Biotechnology) based in China, listed on HKSE as 9688.HK.

What our checks show for 9688.HK

Red flags

• Operating profit does not cover the interest bill (-44.1x): interest is paid from cash or new debt.
• The gross margin fell by 7.3 points, to 56.5%: costs are rising faster than prices.
• Weak EPS forecast
• Earnings per share fell 66.5% a year over the last 3 years.
• The company is losing money: the net margin is -41.9%.
• Free cash flow is negative (-30% of revenue): the business spends more cash than it brings in.
• The price swings a lot: 53.5% annual volatility. Expect large ups and downs.
• The stock has fallen as much as 93% from a peak. Would you have held through that?
• The share count grew by 1033% in 2 years: each shareholder owns a smaller slice.
• Return on capital (ROCE) is zero or negative: the business does not earn on the money put into it.
• Pay in shares equals 0% of free cash flow: it dilutes shareholders.

Warning signs

• Operating cash flow is negative while the company reports a profit: the profit does not arrive as cash.
• The stock is still below its previous peak.

Strengths

• Debt is low: 0.42x equity.
• The net margin rose by 438 points over 5 years, to -41.9%.
• Analysts expect revenue to grow about 18.7% a year over the next years.
• Analysts expect the net margin to improve by 17.2 points from today's -41.9%.
• Revenue grew 27.8% a year over the last 3 years.
• Actively traded: about 7.3 million shares a day.

Next earnings report: 2026-11-05

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Questions

What grade does Zai Lab Limited (9688.HK) have?

In our weekly check, Zai Lab Limited is graded D (A to F). Of 22 checks on debt, profit, cash flow and trend: 9 pass, warnings: 2, red flags: 11. The grade is a risk check, not a buy or sell recommendation.

What are the main risks of 9688.HK stock?

This week's biggest flags for Zai Lab Limited: Weak interest cover, Gross margin falling, Weak EPS forecast. In total 13 of 22 checks show a warning or a red flag.

What does Zai Lab Limited do?

Zai Lab Limited is a Healthcare company (Biotechnology) based in China, listed on HKSE as 9688.HK.

When does Zai Lab Limited report earnings next?

The next earnings report is expected on 2026-11-05. We re-run the checks every week, so the grade can change after it.

The grade is a risk check, not a price forecast, and not investment advice. In our 10-year test (S&P 500, 2016-2026), stocks we graded A or B fell more than 30% 2-3 times less often than D or F, without a lower average return.

Updated 2026-10-31

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