On June 5th, Gelunhui released a report stating that the current stock price of China's pharmaceutical distribution company has a predicted PE ratio of 8.2 for 2025. However, the predicted compound annual growth rate of earnings per share from 2024 to 2026 is 11.1%, corresponding to a predicted PE ratio of 15.3 and a compound annual growth rate of 6.6% for its American counterparts. The bank believes that the market has not taken into account the potential integration of industry leaders in the Chinese market and has a too negative view of the pressure that pharmaceutical collection and procurement will impose on profit margins. The bank predicts that the valuation of China's pharmaceutical distributors can be increased to a predicted PE ratio of 11.4 in 2025 under the expansion of market share, more diversified product supply, improved earnings visibility and state-owned enterprise reform. Sinopharm is the preferred stock in the industry due to its strong pharmaceutical, medical device and retail operations, as well as its state-owned enterprise structure. The bank has a "buy" investment rating on Sinopharm with a target price raised from HKD27.3 to HKD28.6. SH Pharma, another peer company, has a target price of HKD14.9 with the same investment rating of "buy."