CSPC announced 18H1 results last week with strong revenue and profit growth. We maintain EPS forecast of HK$0.59/0.78 for 18E/19E, and target price of HK$24.8 on the basis of a target P/E ratio 42x. (Closing price at 28 Aug 2018)
Financial review. Total sales increased by 49.8% yoy to HK$10.79bn in the first half, mainly due to the sustained strong growth of innovative drugs (now 45.2% of the total revenue), and recovery of Vitamin C business which also drive the profitability of this business up. The profit attributable to shareholders increased by 41.1% yoy to HK$1.85bn. Cash flows from operating activities climbed to HK$2.18bn (HK$1.27bn in 2017). Operation efficiency improves. Average turnover period of accounts receivable increased slightly from 40 days to 37 day, and inventory days dropped from 173 days to 150 days.