Jingu Finance News | First Shanghai pointed out that CSPC Pharma (01093) achieved revenue of 16.28 billion yuan in the first half of 2024 (+1.3% year-on-year, the same below), with a gross profit of 11.65 billion yuan (+3.7%) and a gross margin of 71.6% (+1.7pts). Based on the financial statements, the profit attributable to shareholders was 2.02 billion yuan (+1.8%), with a net margin for the mother company of 18.5% (+0.1pts). In terms of sectors, the traditional Chinese medicine sector recorded revenue of 13.55 billion yuan (+4.8%), with a significant sequential decline in Q2 revenue; although the price of Vitamin C raw material products is slowly recovering, demand is falling, resulting in a 5.4% year-on-year decrease in sector revenue in the first half to 0.98 billion yuan; the antibiotic raw material sector was impacted by reduced overseas demand, with revenue of 0.87 billion yuan (-6.4%); due to lower prices of caffeine products, the functional food sector revenue was 0.88 billion yuan (-25.2%).

The bank pointed out that the hospital medical model constraints Enbipu DoT, which has not yet maximized its value, with bottlenecks in internal sales. The company has established a dedicated sales team to connect internal and external sales, extending the DoT, which can not only achieve deeper benefits for patients but also support Enbipu sales growth through continued efforts at the retail end.

The bank continued to point out that the company's multiple pipelines are still advancing towards the commercialization stage. PD-1 Immunandi's antibody was approved for 2L cervical cancer in June, and Omajuzumab and Ampho B Liposome are expected to be approved for listing in 2024, while Benzane II, Doxorubicin, Ustekinumab, and Meloxicam Crystal are expected to be approved for listing in 2025. In addition, the FDA has completed GMP site inspections for Ampho B and Ilitikane's two liposomes, and is expected to approve their listing in the United States in the first half of 2025. With the continued approval and listing of new products, as well as the promotion of hospitalization and sales through medical insurance negotiations, the traditional Chinese medicine sector is expected to resume high-speed growth next year.

The bank stated that the company valuation is calculated using the DCF method, with a WACC of 12% and perpetual growth of 1%, resulting in a target price of HK$9.76, corresponding to a 2024 pe ratio of 18.2 times, representing a 56.9% upside potential from the current price, with a buy rating.