The Zhitong Finance App learned that Morgan Stanley released a research report stating that it lowered the target price of Sinopharm Holdings (01099) by 3.4%, from HK$29 to HK$28. The company's profit forecast for 2024-2030 was lowered by 3%-6%, mainly due to lower sales and gross margin for drug distribution, but the rating still “increased”. The reasons include that the company, as a state-owned enterprise, is the only pharmaceutical dealer owned by the central government, is in a leading position among mainland drug distributors, has a national scale, and can provide a strong safety net.

Damo said that the basic assumptions about Sinopharm are based on its leadership position, continued growth, and low interest costs. Revenue and profits achieved high single-digit growth in 2024-2025, 3-5% higher than the level of China's healthcare industry. The company's financing costs are stable at or below 1% of revenue. Profit margins are also stable, and price reductions are offset by changes in business structure and efficiency improvements.