1099 國藥控股

SINOPHARM HOLDING CO LTD

Business Summary

Sinopharm Group Company Limited is principally engaged in the distribution of pharmaceutical products and medical equipment. The Company operates through three business segments.

The Pharmaceutical Distribution segment is engaged in the distribution of medicines, medicine devices and pharmaceutical products to hospitals, other distributors, retail drug stores and clinics.

The Retail Pharmacy segment is engaged in the operation of medicine chain stores. The Other Business segment is engaged in the distribution of laboratory supplies, the manufacture and distribution of chemical reagents, as well as the production and sales of pharmaceutical products.

The Company is also engaged in the provision of pharmaceutical logistics services and property rental business in China through its subsidiaries.

Investment Theme

First quarter net profit of 1.145 billion yuan rose 28%.

The number of patients has grown strongly. It is expected that the Group's profit growth will be stable in the first half of this year, and the national drug centralized purchasing policy will have limited impact on its revenue growth this year and next.

It is believed that Sinopharm's acquisition of Chinese scientific equipment to enter the fast-growing equipment distribution market is believed to help promote the Group's future growth.

By the end of 2018, the pharmaceutical retail business had covered 229 cities in 30 provinces across the country, with a total of 5,183 pharmacies, an increase of 740 over the same period last year.

Sinopharm has fallen to the lower limit of 30 yuan in the past three years. Considering the impact of digesting the two-vote system and increasing market share, the price-earnings ratio is only 11 times the lowest in 3 years, even if there is uncertainty in the purchase of 7+4, downward The risk of a breakthrough is not great.

Recommendation

Buy Price: 30.4 Target Price: 36 Cut Loss: 28.5

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