Zhi Tong Cai Jing·2025-11-03 08:43Core Viewpoint - UBS has raised the earnings per share (EPS) forecast for Shanghai Pharmaceuticals (601607) (02607) for 2025 by 7% to reflect a one-time gain from the merger with SHPL, but has lowered the EPS forecasts for 2026 and 2027 by 11% and 10% respectively due to slowing commercial business growth, increased impairment losses, and rising minority interests [1] Financial Performance - For the first three quarters, Shanghai Pharmaceuticals reported revenue of RMB 215.1 billion, a year-on-year increase of 2.6%; net profit attributable to shareholders was RMB 5.15 billion, up 27%; recurring net profit attributable to shareholders was RMB 2.7 billion, down 26.8% [1] - Excluding one-time items, the net profit attributable to shareholders for the first three quarters was RMB 3.98 billion, a year-on-year decrease of 1.9% [1] - In the third quarter, revenue grew by 4.7%, while net profit attributable to shareholders and recurring net profit attributable to shareholders fell by 38.1% and 38.9% respectively, which was below market expectations [1] Impairment Losses - The decline in earnings performance was primarily driven by asset and credit impairment losses in the third quarter, which were RMB 379 million and RMB 201 million respectively, compared to RMB 28 million and RMB 13.9 million in the same period last year [1] Strategic Focus - Management indicated that for the remainder of 2025, the company will continue to focus on the transformation of its industrial and commercial segments: the former will emphasize innovative drugs and traditional Chinese medicine, while the latter will concentrate on Contract Sales Organization (CSO) and innovative drug services [1] - The company expects that key traditional Chinese medicine products and the merger with Shanghai Henlius Biotech (SHPL) will drive positive growth in industrial revenue for 2025, with the commercial segment's growth rate expected to continue to outpace the industry [1]