[ET Net News Agency, 30 August 2019] HSBC Qianhai Securities lowered its target price
for Sinopharm Group (01099) to HK$42.2 from HK$47 and maintained its "buy" rating.
The research house said Sinopharm's 1H earnings missed market expectation due to rising
operating expenses; one-off amortization of goodwill (RMB93m) and higher non-controlling
interest.
Management is more optimistic on earnings performance in 2H as they don't foresee
similar one-off expenses in the near-term. HSBC also remains bullish, expecting Sinopharm
to maintain top-line growth momentum and to further benefit from the market consolidation
trend in 2019-21.
HSBC raised its 2019-21 revenue forecasts by 7.6/14.5/19% to factor in the rising
presence in pharmaceutical distribution and the retail market but cut net profit estimates
by 2.7/1.9/1.6% on higher operating expenses and high non-controlling net profit in 1H.
(KL)