CSPC Pharmaceutical (1093 HK) Company Update Summary
Core Content Overview
CSPC Pharmaceutical Group Limited (1093 HK) reported its 3Q20 results, showing strong revenue and net profit growth. The company's performance highlights its strategic focus on finished drugs and bulk medicines, along with aggressive R&D investment and expansion in sales force.
Key Financial Highlights
- Revenue: RMB6.6bn for 3Q20, up 18.7% YoY
- Net Profit: RMB1.20bn for 3Q20, up 29.1% YoY
- 9M20 Revenue and Net Profit: Represented 76% and 79% of full-year estimates, respectively
- Gross Margin (GPM): Improved by 2.75 ppts to 74.98% in 9M20
- R&D Expense Ratio: Increased by 2.32 ppts to 11.8%
- Selling Expenses Ratio: Decreased by 2.61 ppts
- Admin Expenses Ratio: Declined by 0.71 ppts
Main Growth Drivers
- Oncology Portfolio: Maintained strong momentum with 35.4% YoY growth in 9M20
- Ke'aili: +33% YoY
- Jinyouli: +45% YoY
- Duomeisu: +36% YoY
- NBP (New BioPharmaceutical): Achieved 32% YoY growth in 9M20, indicating acceleration
- May face price negotiation and potential price cuts during the NRDL revision
- Sales force expanded from ~2,300 to over 3,000 people
R&D Investment and Future Outlook
- R&D Spending: RMB2.27bn in 9M20
- Innovative Drugs: Targeting to launch 13 new innovative drugs between 2020 and 2025
- Expected Approvals:
- Amphotericin B cholesteryl sulfate complex for injection (2020E)
- Mitoxantrone hydrochloride liposome injection (2021E)
- Duvelisib (PI3K) and Irinotecan liposome (2022E)
Investment Recommendation
- Rating: Maintain BUY
- Target Price (TP): HK$10.10
- Previous TP: HK$19.12
- TP Adjustment: Reflects earnings revision and share split
- P/E Ratio (FY21E): 19.5x
- Price Performance:
- 1-month: -7.0%
- 3-months: -17.3%
- 6-months: +2.6%
Catalysts
- Earlier-than-expected launch of new products
- Stronger-than-expected product sales
- Successful listing on the Sci-Tech Board
Financial Forecasts (FY20E/FY21E)
| Metric |
FY20E |
FY21E |
YoY Growth (%) |
| Revenue |
RMB25.2bn |
RMB29.3bn |
14% / 16% |
| Net Profit |
RMB4.57bn |
RMB5.58bn |
23% / 22% |
| EPS (RMB) |
0.38 |
0.47 |
- |
| P/E (x) |
19.2 |
15.7 |
- |
| P/B (x) |
3.9 |
3.3 |
- |
Peer Valuation Comparison (FY20E)
| Company |
TP (HK$) |
P/E (x) |
P/B (x) |
ROE (%) |
| CSPC Pharma |
10.10 |
19.2 |
3.9 |
21.1 |
| Sino Biopharm |
N/A |
37.7 |
3.5 |
9.8 |
| Hansoh Pharma |
N/A |
61.2 |
11.7 |
18.7 |
| 3SBIO Pharma |
N/A |
11.6 |
1.4 |
13.6 |
| Livzon Pharma |
N/A |
15.1 |
2.0 |
14.1 |
| Fosun Pharma |
N/A |
22.1 |
2.3 |
9.4 |
| Average |
- |
29.6 |
4.2 |
13.1 |
Key Ratios
| Ratio |
FY18A |
FY19A |
FY20E |
FY21E |
FY22E |
| Gross Margin (%) |
66.3 |
72.0 |
75.0 |
76.0 |
77.0 |
| Net Margin (%) |
17.4 |
16.8 |
18.1 |
19.0 |
20.4 |
| ROE (%) |
20.5 |
20.1 |
21.1 |
21.8 |
24.4 |
| Current Ratio (x) |
1.9 |
2.2 |
2.6 |
2.9 |
3.2 |
Shareholding Structure
| Holder |
Percentage (%) |
| Management |
29.94% |
| Citigroup Inc |
5.87% |
| BlackRock |
4.75% |
| Free float |
59.44% |
Stock Data
| Metric |
Value (HK$) |
| Market Cap |
97,466 million |
| Average 3 months t/o |
479.51 million |
| 52w High/Low |
11.16 / 6.83 |
| Total Issued Shares |
11,974 million |
Analyst Certification and Disclosures
- The research analyst certifies that the views expressed accurately reflect their personal views and that there are no conflicts of interest.
- CMBIS does not provide individually tailored investment advice.
- The report is for informational purposes only and should not be construed as an offer to buy or sell securities.
- The information is subject to change without notice and is based on analyses and interpretations of publicly available data.
CMBIS Ratings
- BUY: Potential return of over 15% over next 12 months
- HOLD: Potential return of +15% to -10% over next 12 months
- SELL: Potential loss of over 10% over next 12 months
- NOT RATED: Not rated by CMBIS
- OUTPERFORM: Industry expected to outperform the relevant broad market benchmark
- MARKET-PERFORM: Industry expected to perform in-line with the relevant broad market benchmark
- UNDERPERFORM: Industry expected to underperform the relevant broad market benchmark
Important Disclosures
- The report contains risks and past performance does not guarantee future results.
- CMBIS is not a registered broker-dealer in the U.S. or Singapore.
- The report is not suitable for all investors and should be used with caution.
- Any use of the report is at the user's own risk.
