HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

Shanghai Pharmaceuticals Holding / Equity Bottom-Up

<ul>
<li>Different from peers whose pharmaceutical assets are scattered in different listed companies, all assets/resources of SH Pharma are integrated within the Company. The intrinsic value of this model is greater.</li>
<li>SH Pharma is in a traditional industry, facing weak profitability and negative policy impacts, Thus, the Company lacks attractiveness and imagination space for investors, leading to long-term undervaluation. </li>
<li>Considering the transformation to more high-margin businesses, SH Pharma’s performance/profitability would improve. Since China hopes to establish a valuation system with Chinese characteristics, there’s valuation repair opportunity for SH Pharma.</li>
</ul>


Different from peers whose pharmaceutical assets are scattered in different listed companies, all assets/resources of SH Pharma are integrated within the Company. The intrinsic value of this model is greater.
SH Pharma is in a traditional industry, facing weak profitability and negative policy impacts, Thus, the Company lacks attractiveness and imagination space for investors, leading to long-term undervaluation. 
Considering the transformation to more high-margin businesses, SH Pharma’s performance/profitability would improve. Since China hopes to establish a valuation system with Chinese characteristics, there’s valuation repair opportunity for SH Pharma.


Shanghai Pharmaceuticals Holding (601607.CH/2607.HK) - The Situation of Undervaluation Would Change

Global Healthcare Analyst

Tina Banerjee

<ul>
<li>
<a href="https://www.smartkarma.com/entities/shanghai-pharmaceuticals-holding" target="_blank" data-smartkarma-citation="entities:228:1" rel="noopener">Shanghai Pharmaceuticals Holding (2607 HK)</a> reported 16% YoY revenue growth to RMB66B in 1Q23, driven by 17% YoY growth in pharmaceutical service segment, which contributed 88% of revenue.</li>
<li>During the quarter, the company recorded net profit of RMB1.5B, up 21% YoY. Net margin expanded 9bps to 2.29%, driven by margin expansion in pharmaceutical manufacturing segment.</li>
<li>Consolidating position in pharma distribution business, surging pharmaceutical manufacturing business, late-stage innovative drug pipeline, and accelerating internationalization strategy enhance conviction on SPH’s ability to maintain double-digit growth through 2025.</li>
</ul>



Shanghai Pharmaceuticals Holding (2607 HK) reported 16% YoY revenue growth to RMB66B in 1Q23, driven by 17% YoY growth in pharmaceutical service segment, which contributed 88% of revenue.
During the quarter, the company recorded net profit of RMB1.5B, up 21% YoY. Net margin expanded 9bps to 2.29%, driven by margin expansion in pharmaceutical manufacturing segment.
Consolidating position in pharma distribution business, surging pharmaceutical manufacturing business, late-stage innovative drug pipeline, and accelerating internationalization strategy enhance conviction on SPH’s ability to maintain double-digit growth through 2025.


Shanghai Pharmaceuticals (2607 HK/601607 CH): Strong Start of 2023; Outlook Continues to Be Positive

Sinopharm Group Co Ltd H / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/sinopharm-group-co-ltd-h" target="_blank" data-smartkarma-citation="entities:32:1" rel="noopener">Sinopharm Group Co Ltd H (1099 HK)</a> reported YoY and sequential growth in revenue and net profit in 4Q23. However, outlook for the sector remains bleak in near-term.</li>
<li>Last year, Sinopharm’s distribution business was impacted by anti-corruption campaign. The momentum of the campaign continues in this year also. This lowers conviction toward improving performance in 1H24 at least.</li>
<li>Despite of mid-single digit revenue growth, Sinopharm’s margin remains stagnant or is declining. Sinopharm still earns more than 70% revenue from low margin earning pharmaceutical distribution business.</li>
</ul>



Sinopharm Group Co Ltd H (1099 HK) reported YoY and sequential growth in revenue and net profit in 4Q23. However, outlook for the sector remains bleak in near-term.
Last year, Sinopharm’s distribution business was impacted by anti-corruption campaign. The momentum of the campaign continues in this year also. This lowers conviction toward improving performance in 1H24 at least.
Despite of mid-single digit revenue growth, Sinopharm’s margin remains stagnant or is declining. Sinopharm still earns more than 70% revenue from low margin earning pharmaceutical distribution business.


Sinopharm Group (1099 HK): Sequential Recovery in 4Q23; Bleak Near-Term Outlook

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Quantitative Analysis

<ul>
<li>We analyse the changes of A-H premium on 146 stocks over the last week. The average A-H premium was 132.9% as of Apr 5th.</li>
<li>The average A-H premium changed by 5.3ppt week-on-week, led by consumer staples, health care, real estate.</li>
<li>We analyzed A-H premium changes in the past week and highlight A-H premium changes for Baiyunshan, Jiangxi Copper, ZTE, Fosun Pharma, Air China, Joinn Lab.</li>
</ul>


We analyse the changes of A-H premium on 146 stocks over the last week. The average A-H premium was 132.9% as of Apr 5th.
The average A-H premium changed by 5.3ppt week-on-week, led by consumer staples, health care, real estate.
We analyzed A-H premium changes in the past week and highlight A-H premium changes for Baiyunshan, Jiangxi Copper, ZTE, Fosun Pharma, Air China, Joinn Lab.


A-H Premium Weekly (Apr 5th): 21 Stocks at 1Y High

<ul>
<li>We analyse the changes of A-H premium on 146 stocks over the last week. The average A-H premium was 124.6% as of Mar 22nd.</li>
<li>The average A-H premium changed by 1.4ppt week-on-week, led by consumer staples, information technology, utilities and offset by financials, health care.</li>
<li>We highlight weekly changes in A-H premium for ZTE, CRCC Times Electric, Air China, Longyuan, Shanghai Fudan, Hua Hong Semi.</li>
</ul>


We analyse the changes of A-H premium on 146 stocks over the last week. The average A-H premium was 124.6% as of Mar 22nd.
The average A-H premium changed by 1.4ppt week-on-week, led by consumer staples, information technology, utilities and offset by financials, health care.
We highlight weekly changes in A-H premium for ZTE, CRCC Times Electric, Air China, Longyuan, Shanghai Fudan, Hua Hong Semi.


A-H Premium Weekly (Mar 22nd): ZTE, CRCC Times Electric, Air China, Longyuan, Shanghai Fudan

China

Shanghai Pharmaceuticals Holding Co., Ltd manufactures pharmaceuticals. The Company develops and sells chemical and Chinese traditional medicines, healthcare products, and other products. Shanghai Pharmaceuticals Holding markets its products throughout China.

Shanghai Pharmaceuticals Holding (601607 CH)

Shanghai Pharmaceuticals Holding (601607 CH)