CSPC Pharmaceutical (1093.HK): Acquiring Biotechnology Company Wuhan YZY February 5, 2018 1390

Investment Summary

  • Acquiring a biotechnology company;
  • Proposed spin-off and listing of XNW on Mainland GEM;
  • One product was recognized as orphan-drug in US.

Business Overview

Strong growth expectation. We highlight that the company recorded notable revenue growth in 17Q3 (+24.9% YoY in RMB terms) beyond our expectation. We attribute this to 1) sales hike and rising share of innovative drugs; 2) Caffeine segment reported fast growth and newly-acquired glucose business made more contribution; 3) Vitamin C sales continued to climb. GPM increased by 8.3ppts (17Q3 58.46%, 16Q3 50.17%) due to share of innovative drugs rose which enjoyed higher profit margin. The management expect bottom line to maintain 20%-30% growth in 17E/18E.

About the author

Profile photo of Eurus Zhou

Eurus Zhou
Phillip Securities (HK)

Graduated from Hong Kong Polytechnic University, Master of Finance (Investment Management). Possess bachelor degree majoring in Financial Management from Southwestern University of Finance and Economics. Focus on industry prospect and corporate fundamentals to explore investment value and cover pharmaceutical and consumer industry.

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