Core Viewpoint - CICC has initiated coverage on China Traditional Chinese Medicine (00570) with a neutral rating and a target price of HKD 2.40, corresponding to 34.5x and 16.3x P/E for 2026 and 2027 respectively [1] Group 1: Policy Support - The government is increasingly supporting the development of the traditional Chinese medicine (TCM) industry, with policies expected to enhance the TCM service system [2] - The "14th Five-Year Plan" is anticipated to further promote the development of TCM, and the company has a solid layout in the TCM industry chain [2] Group 2: Technological Innovation - The company is focusing on building a technological innovation system to address industry policies such as centralized procurement and medical insurance cost control [3] - Emphasis is placed on the development of innovative TCM drugs and the secondary development of proprietary Chinese medicines to enhance academic competitiveness and new product reserves [3] Group 3: Market Differentiation - While the market is concerned about profit declines due to centralized procurement, the company is actively enhancing marketing reforms and evidence-based medical research, which could help control expense ratios in the long term [4] - Potential catalysts include successful marketing reforms and breakthroughs in the development of new TCM drugs [4] Group 4: Profit Forecast and Valuation - The company’s EPS is projected to be -0.11 CNY, 0.06 CNY, and 0.13 CNY for 2025, 2026, and 2027 respectively [5] - The current stock price corresponds to 31.0x and 14.7x P/E for 2026 and 2027, and given the business adjustment period and the higher P/E compared to the average of Hong Kong TCM stocks, a neutral rating and a target price of HKD 2.40 is reiterated, indicating an upside potential of 11.1% [5]
中金：再次覆盖中国中药给予中性评级 目标价2.40港元