CSC SECURITIES (HK) LTD·2024-10-30 07:01Investment Rating - The report assigns a "Buy" rating for both A and H shares of the company, indicating a potential upside of 15% to 35% [6][8]. Core Insights - The company reported a revenue of 30.91 billion RMB for the first three quarters of 2024, with a year-over-year growth of 0.7%. The net profit attributable to the parent company was 2.01 billion RMB, down 11.9% year-over-year, but the non-recurring net profit was 1.84 billion RMB, showing a growth of 24.6% year-over-year [6]. - Excluding COVID-related products, the company's revenue for the first three quarters of 2024 grew approximately 5.7%, driven by steady growth in innovative drugs [6][7]. - The company experienced a significant increase in net profit for Q3 2024, with a year-over-year growth of 55.4%, attributed to various factors including a lower base from the previous year and improved product mix [7]. Company Overview - The company operates primarily in the pharmaceutical and biotechnology industry, with a product mix that includes 61.4% from drug manufacturing and R&D, 15.1% from medical devices and services, and 13.4% from pharmaceutical distribution and retail [3]. - The major shareholder is Shanghai Fosun High Technology Group Co., Ltd., holding 33.30% of the shares [2]. Financial Performance - The company’s A-share price as of October 29, 2024, was 26.04 RMB, with a market capitalization of 55.165 billion RMB [2]. - The projected net profits for 2024, 2025, and 2026 are 2.9 billion RMB, 3.5 billion RMB, and 4.1 billion RMB, respectively, with year-over-year growth rates of 20.2%, 22.5%, and 17.3% [8][9]. - The earnings per share (EPS) for the same years are projected to be 1.1 RMB, 1.3 RMB, and 1.5 RMB, with corresponding price-to-earnings (P/E) ratios for A shares of 24X, 20X, and 17X [8][9]. Market Position - The company’s stock has shown a price increase of 13.8% over the past month, 11.7% over the past three months, but a decline of 3.3% over the past year [2]. - The company is actively optimizing its R&D pipeline and financial structure, which is expected to enhance future growth prospects [8].