CSPC Pharmaceutical (1093.HK): Comments on 18H1 Results August 30, 2018

Investment Summary

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)

Business Overview

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.

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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