According to a report by HSBC Research, pharmaceutical companies focused on innovative drugs have achieved or exceeded expectations in the first half of the year, despite the industry facing anti-corruption investigations. The company prefers pharmaceutical enterprises with a strong pipeline of innovative drugs and international opportunities. The bank has adjusted the target prices of the covered stocks (see the table below) and is bullish on CMS (00867.HK), Sino Biopharm (01177.HK), and Hansoh Pharma (03692.HK).

HSBC Research has stated that the covered companies have seen an average annual increase of 5% and 14% in revenue and adjusted profits in the first half of the year, respectively, which is roughly in line with expectations. The report has lowered the average revenue forecast for these stocks from this year to 2026 by 2%, 5%, and 2%, as well as lowered the average profit forecast by 4%, 4%, and 0%. The bank also expects the tracked companies to achieve a double-digit compound annual growth rate in revenue and profit from 2023 to 2026.

The report provides ratings and target prices for Chinese pharmaceutical H-shares as follows:

Stocks | Rating | Target price (HKD)

Fosun Pharma (02196.HK) | Hold | HK$15 -> HK$13

Hansoh Pharma (03692.HK) | Buy | HK$18.6 -> HK$22

Livzon Pharma (01513.HK) | Buy | HK$35 -> HK$34

Sino Biopharm (01177.HK) | Buy | HK$4.1

CMS (00867.HK) | Buy | HKD 9.5