SINOPHARM(01099) 华兴证券·2024-03-28 16:00Investment Rating - The report maintains a "Buy" rating for the company with a target price of HK19.96 [2][4][12]. Core Insights - The company's 2023 performance was slightly below expectations, with revenue and net profit growing by 8% and 6% year-on-year, respectively. The gross margin decreased by 0.46 percentage points to 8.13% [2][6]. - The company is expected to maintain a high dividend yield, projected at 4.2% for 2023, supported by robust free cash flow [2][12]. - Future revenue growth is anticipated from the distribution business, with a stable growth forecast for pharmaceutical distribution and medical device distribution [2][3]. Financial Data Summary - Revenue Forecasts: The company is projected to achieve revenues of RMB 672.5 billion in 2024, RMB 746.3 billion in 2025, and RMB 824.9 billion in 2026, reflecting a compound annual growth rate (CAGR) of 11% from 2023 to 2026 [1][10]. - Net Profit Forecasts: The net profit is expected to grow from RMB 9.1 billion in 2023 to RMB 13.0 billion by 2026, indicating a CAGR of 13% [1][10]. - Earnings Per Share (EPS): EPS is projected to increase from RMB 2.90 in 2023 to RMB 4.17 in 2026 [1][10]. - Valuation Metrics: The price-to-earnings (P/E) ratio is expected to decrease from 7.0x in 2023 to 4.4x in 2026, indicating a potentially undervalued stock [1][10]. Segment Performance - Pharmaceutical Distribution: Revenue from pharmaceutical distribution is expected to reach RMB 485.2 billion in 2024, growing steadily [17]. - Medical Device Distribution: Projected revenue for medical device distribution is RMB 149.7 billion in 2024, showing consistent growth despite a slowdown compared to previous years [17]. - Retail Pharmacy: Retail pharmacy revenue is forecasted to grow to RMB 48.0 billion in 2024, driven by the increasing demand for specialty drugs [17]. Adjustments and Forecast Changes - The report has adjusted the revenue forecasts for 2024 and 2025 down by 3% due to the company's 2023 performance being slightly below expectations [10][12]. - The gross profit and net profit forecasts for 2024 and 2025 have also been revised down by 8% and 9%, respectively [10][12]. Market Comparison - The company's current P/E ratio of 6.6x is lower than the average of comparable companies, suggesting potential for price appreciation [14][15].