SH Pharma (2607.HK) Rapid growth in core segments, promising in innovation transformations January 6, 2020 242

PSR Recommendation: ACCUMULATE Status: Upgraded
Target Price: HKDHKD18.06

Result Update
For the nine months ended September 30, 2019, the company recorded operating income of RMB 146.617 billion, an increase of 19.57% YoY, and its main business continued to grow rapidly. Of which, the pharmaceutical manufacturing sector realized revenue of RMB 17.682 billion, a YoY increase of 24.05%. The pharmaceutical business realized revenue of RMB 129.235 billion, an increase of 18.95% YoY (among which, the pharmaceutical distribution business achieved sales revenue of RMB 121.218 billion, an increase of 18.56% YoY; the pharmaceutical retail business achieved sales revenue of RMB 5.908 billion, an increase of 15.94% YoY). The company realized a net profit attributable to shareholders of listed companies of RMB 3.399 billion, a YoY increase of 0.80%; the main business of the pharmaceutical manufacturing sector contributed a profit of RMB 1.540 billion, a YoY increase of 20.56%; the main business of the pharmaceutical business contributed a profit of RMB 1.526 billion, a YoY increase Increased by 15.73%; the participating companies contributed profits of RMB804 million, an increase of 48.13% YoY. The company’s comprehensive gross profit margin was 13.70%, a decrease of 0.11 percentage point compared with the same period last year; the gross profit margin of the pharmaceutical manufacturing sector was 57.54%, a decrease of 0.10 percentage point compared with the same period last year, and the average gross profit margin of 60 key varieties was 71.71%; the gross profit margin of pharmaceutical distribution was 6.40%, a YoY decrease of 0.27 percentage points; the gross profit margin of pharmaceutical retail was 14.10%, a YoY decrease of 1.02 percentage points.

About the author

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Leon Duan
Investment Analyst

Bachelor Degree in Shandong University of Science, and Master Degrees in Chinese University of Hong Kong Faculty of Science and City University of Hong Kong College of Business. Currently cover Pharmaceuticals and Environmental Protection sectors, good at combining analysis with industry prospects and company fundamentals.

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