Investment Rating - The report maintains an "Outperform" rating for Shanghai Pharma (2607 HK) with a target price of HKD 13.82, down 5.0% from previous estimates [3][5][17]. Core Insights - Shanghai Pharma's 1H24 results showed revenue of CNY 139.4 billion, a year-on-year increase of 5.1%, with a notable growth in the Contract Sales Organization (CSO) business, which achieved sales of CNY 4.0 billion, up 172% year-on-year [11][12]. - The pharmaceutical manufacturing segment faced challenges, reporting a revenue decline of 13.4% year-on-year, primarily due to price reductions in products from SPH No.1 Biochemical & Pharmaceutical [12][14]. - The company successfully introduced 8 import varieties and added 15 new SPD projects in 1H24, contributing to its growth despite the overall industry pressure [11][12]. Revenue and Profitability - In 1H24, Shanghai Pharma's gross profit margin (GPM) was 11.6%, down 1.3 percentage points year-on-year, while the net profit attributable to shareholders was CNY 2.94 billion, reflecting a 12.7% increase year-on-year [14][13]. - The report projects revenue for 2024, 2025, and 2026 to be CNY 277.8 billion, CNY 299.9 billion, and CNY 323.5 billion respectively, with growth rates of 6.7%, 8.0%, and 7.9% [16][17]. Accounts Receivable - As of 1H24, Shanghai Pharma's accounts receivable totaled CNY 80.9 billion, with a significant portion due within one year, indicating potential cash flow management challenges [15][4]. Valuation Methodology - The valuation is based on a discounted cash flow (DCF) model using a WACC of 6.2% and a perpetual growth rate of 3%, leading to the target price of HKD 13.82 [5][17].
上海医药：2024年中报点评：业绩符合预期；CSO业务增速显著