Global Healthcare Analyst

Tina Banerjee

Equity Bottom-Up

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

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Event-Driven

China Traditional Chinese Medicine / Event-Driven

<ul>
<li>Since “no dividend was proposed for the year ended 31 December 2023”, the privatization is highly likely to succeed. It may not be wise for investors to bet against privatization.</li>
<li>The recent high-level personnel changes in Taiji is “thought-provoking”, which seems to be preparing for the next step of integrating with China TCM. Spin-offs and integrations are expected within Taiji.</li>
<li>We analyzed possible playbook. In this way, CNPGC is able to solve the problem of horizontal competition. China TCM could also relist in A-share to gain higher valuations/better liquidity.</li>
</ul>


Since “no dividend was proposed for the year ended 31 December 2023”, the privatization is highly likely to succeed. It may not be wise for investors to bet against privatization.
The recent high-level personnel changes in Taiji is “thought-provoking”, which seems to be preparing for the next step of integrating with China TCM. Spin-offs and integrations are expected within Taiji.
We analyzed possible playbook. In this way, CNPGC is able to solve the problem of horizontal competition. China TCM could also relist in A-share to gain higher valuations/better liquidity.


China TCM (570.HK) - Latest Updates on Privatization and the Potential Merger with Taiji Group

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>SOUTHBOUND flows showing momentum tendencies this past week on a single-stock basis, still. Hs gave up some ground vs As in Week One.</li>
<li>SOUTHBOUND saw HK$14.4bn of net IN-flows in the 4-day week to 5 Jan 2024. Total flows were HK$96bn.</li>
<li>SOUTHBOUND start the year by buying ETFs, high-div SOEs like China Mobile and CNOOC, coal names, and sports/consumer names.</li>
</ul>


SOUTHBOUND flows showing momentum tendencies this past week on a single-stock basis, still. Hs gave up some ground vs As in Week One.
SOUTHBOUND saw HK$14.4bn of net IN-flows in the 4-day week to 5 Jan 2024. Total flows were HK$96bn.
SOUTHBOUND start the year by buying ETFs, high-div SOEs like China Mobile and CNOOC, coal names, and sports/consumer names.


HK Connect SOUTHBOUND Flows (To 5 Jan 2024); High Div SOEs Still Strongly Bought

<ul>
<li>SOUTHBOUND flows showing momentum tendencies this past week on a single-stock basis. Hs up vs As quite strongly. Liquid Hs even better.</li>
<li>SOUTHBOUND saw HK$1.2bn of net IN-flows in the 3-day week to 29 Dec. Total flows were HK$88bn.</li>
<li>Bullish end to year for SOUTHBOUND owners but they did not mark the close. They were, however, big buyers of high-div SOEs.</li>
</ul>


SOUTHBOUND flows showing momentum tendencies this past week on a single-stock basis. Hs up vs As quite strongly. Liquid Hs even better.
SOUTHBOUND saw HK$1.2bn of net IN-flows in the 3-day week to 29 Dec. Total flows were HK$88bn.
Bullish end to year for SOUTHBOUND owners but they did not mark the close. They were, however, big buyers of high-div SOEs.


HK Connect SOUTHBOUND Flows (To 29Dec23); CNOOC & Telcos to the BUY Side, Tracker Fund Sold Bigly

<ul>
<li>Sinopharm’s 23Q1-Q3 results were below expectations. The main reason for weak performance was due to the anti-corruption campaign, which led to profound and rapid changes in fundamentals and policy end.</li>
<li>In Q4, the impact of anti-corruption would weaken and traditional distribution business would recover.So, 23Q4 performance should be better than Q3, but 23H2 performance would still be worse than 23H1.</li>
<li>We lowered our forecast for 2023 – Revenue and net profit could achieve single-digit growth. Due to the high base in 23H1, growth in 24H1 could still be under pressure. </li>
</ul>


Sinopharm’s 23Q1-Q3 results were below expectations. The main reason for weak performance was due to the anti-corruption campaign, which led to profound and rapid changes in fundamentals and policy end.
In Q4, the impact of anti-corruption would weaken and traditional distribution business would recover.So, 23Q4 performance should be better than Q3, but 23H2 performance would still be worse than 23H1.
We lowered our forecast for 2023 – Revenue and net profit could achieve single-digit growth. Due to the high base in 23H1, growth in 24H1 could still be under pressure. 


Sinopharm Group (1099.HK) - Performance Pressure May Continue Until 2024H1

China

Sinopharm Group Co Ltd is a pharmacy distribution company. The Company also owns several pharmacy enterprise groups in different industries such as logistics, retail stores, pharmaceutical manufacturing, and chemical testing.

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Sinopharm Group Co Ltd H (1099 HK)

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

Sinopharm reported revenue and profit growth in 4Q23, but sector outlook remains bleak due to anti-corruption campaign. Subdued revenue growth and...

Tina Banerjee

China TCM (570.HK) - Latest Updates on Privatization and the Potential Merger with Taiji Group

The privatization is highly likely to succeed. It's not wise for investors to bet against privatization.Taiji's high-level personnel changes...

Xinyao (Criss) Wang

HK Connect SOUTHBOUND Flows (To 5 Jan 2024); High Div SOEs Still Strongly Bought

Strong net buying in the first week of the year by SOUTHBOUND investors in HK Connect. Big buys in ETFs (they go back and forth every week), China...

Travis Lundy

HK Connect SOUTHBOUND Flows (To 29Dec23); CNOOC & Telcos to the BUY Side, Tracker Fund Sold Bigly

HK Connect SOUTHBOUND Flows this week were light on a shortened 3-day week. High-div SOEs like Energy names and the large telcos were significantly...

Travis Lundy

Sinopharm Group (1099.HK) - Performance Pressure May Continue Until 2024H1

Weaker-than-expected performance in 23Q1-Q3 dragged down Sinopharm’s full-year performance growth. Single-digit growth seems inevitable. The...

Xinyao (Criss) Wang

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52-week Range

Market Cap (USDm)

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

​Sinopharm reported revenue and profit growth in 4Q23, but sector outlook remains bleak due to anti-corruption campaign. Subdued revenue growth and...

Tina Banerjee

China TCM (570.HK) - Latest Updates on Privatization and the Potential Merger with Taiji Group

The privatization is highly likely to succeed. It's not wise for investors to bet against privatization.Taiji's high-level personnel changes...

Xinyao (Criss) Wang

HK Connect SOUTHBOUND Flows (To 5 Jan 2024); High Div SOEs Still Strongly Bought

Strong net buying in the first week of the year by SOUTHBOUND investors in HK Connect. Big buys in ETFs (they go back and forth every week), China...

Travis Lundy

HK Connect SOUTHBOUND Flows (To 29Dec23); CNOOC & Telcos to the BUY Side, Tracker Fund Sold Bigly

HK Connect SOUTHBOUND Flows this week were light on a shortened 3-day week. High-div SOEs like Energy names and the large telcos were significantly...

Travis Lundy

Sinopharm Group (1099.HK) - Performance Pressure May Continue Until 2024H1

Weaker-than-expected performance in 23Q1-Q3 dragged down Sinopharm’s full-year performance growth. Single-digit growth seems inevitable. The...

Xinyao (Criss) Wang

Sinopharm reported revenue and profit growth in 4Q23, but sector outlook remains bleak due to anti-corruption campaign. Subdued revenue growth and...