Investment Rating - The report maintains an "Outperform" rating for Shanghai Pharmaceuticals [2][16]. Core Insights - In Q1 2025, Shanghai Pharmaceuticals achieved revenue of CNY 70.76 billion, a year-on-year increase of 0.9%, while net profit attributable to shareholders was CNY 1.33 billion, down 13.6% year-on-year, primarily due to a decline in profit contributions from the Pharmaceutical Manufacturing segment and one-time losses [3][13]. - The Pharmaceutical Service segment showed resilience with revenue reaching CNY 64.88 billion, up 2.6% year-on-year, driven by innovative business initiatives [3][14]. - The report forecasts revenue growth of 8% for FY2025 and 7% for FY2026, with net profit expected to grow by 9.3% in FY2025 and 9.9% in FY2026 [11][16]. Summary by Sections Financial Performance - Q1 2025 revenue was CNY 70.76 billion, with a net profit of CNY 1.33 billion, reflecting a decline due to various factors including a fine and asset disposal losses [3][13]. - The Pharmaceutical Service segment's revenue was CNY 64.88 billion, with significant contributions from innovative drug distribution and medical device businesses [3][14]. Segment Analysis - Pharmaceutical Manufacturing revenue decreased by 15.3% year-on-year to CNY 5.89 billion, impacted by a high base from the previous year, but showed a quarter-on-quarter increase of 8.0% [14]. - R&D investment in Q1 2025 was CNY 610 million, with R&D expenses remaining stable year-on-year [14]. Profitability and Valuation - The report uses a discounted cash flow model to maintain a target price of HKD 13.73, corresponding to P/E ratios of 7.4x for FY2025 and 6.7x for FY2026 [5][16]. - The gross profit margin for Q1 2025 was reported at 11.2%, with expectations for continued improvement in management efficiency and cost ratios [15].
上海医药（02607）：2025年一季度业绩：符合预期，医药商业创新业务增速瞩目