Core Viewpoint - Despite the mid-term performance of leading Chinese pharmaceutical distributors not turning profitable by the first half of 2025, there is structural optimism in the industry due to several factors [1] Industry Summary - Potential relaxation of mainland medical insurance spending may occur [1] - Volume-based procurement may see optimization, influenced by potential anti-involution measures in the healthcare sector [1] - Enhanced cash payment capabilities of medical insurance funds are expected [1] - The domestic interest rate reduction cycle will assist distributors in improving financial leverage [1] Company Summary - Citic Securities raised the target price for China National Pharmaceutical Group (01099) by 22.5%, from HKD 20 to HKD 24.5 [1] - Shanghai Pharmaceuticals (02607) H-shares target price increased by 15.4%, from HKD 12.3 to HKD 14.2 [1] - Target price for China Resources Pharmaceutical (03320) was lowered by 5.1%, from HKD 5.9 to HKD 5.6 [1] - All three companies maintain an "outperform the market" rating, with China National Pharmaceutical Group being the preferred choice [1]

Group 1 - The core viewpoint of the article indicates a structural optimism for the pharmaceutical distribution industry in China despite the mid-term performance not turning profitable by the first half of 2025 [1] - Factors contributing to this optimism include potential relaxation of mainland medical insurance spending, possible optimization of volume-based procurement due to anti-involution measures in the healthcare sector, enhanced cash payment capabilities of medical insurance funds, and a domestic interest rate reduction cycle that may help distributors improve financial leverage [1] Group 2 - Citic Lyon raised the target price for China National Pharmaceutical Group (01099) by 22.5%, from HKD 20 to HKD 24.5 [1] - The target price for Shanghai Pharmaceuticals (02607) H-shares was increased by 15.4%, from HKD 12.3 to HKD 14.2 [1] - However, the target price for China Resources Pharmaceutical (03320) was lowered by 5.1%, from HKD 5.9 to HKD 5.6 [1] - The rating for all the mentioned companies remains "outperform the market," with China National Pharmaceutical Group being the preferred choice [1]