Market Overview - The Hong Kong stock market experienced a slight adjustment, with the Hang Seng Index closing down 0.61% at 23,831 points, ending a four-day rally [1][5] - The market turnover decreased to HKD 827.99 billion, with net inflows of HKD 4.84 billion recorded in the Hong Kong Stock Connect [1][5] - The US stock market opened higher, with the Dow Jones rising 0.9% to 43,386 points, and the S&P 500 increasing by 0.8% to 6,141 points, nearing its historical high [2] Sector Performance - In the Hong Kong market, local real estate, software, and 5G concept sectors saw significant declines, while gold stocks performed well [1][5] - Pharmaceutical stocks led the decline, with Rongchang Bio falling nearly 12% [1][5] - The tourism sector showed strong performance, with Hong Kong Travel rising over 85% [1][5] Investment Opportunities - The report highlights the low valuation advantage of Hong Kong stocks, suggesting continued focus on sectors such as artificial intelligence, robotics, semiconductors, and industrial software [3] - It also recommends attention to innovative pharmaceutical sectors supported by policy, as well as consumer-oriented traditional Chinese medicine and healthcare sectors [3] - Additionally, it suggests looking into undervalued sectors like coal, oil and gas, telecommunications, and consumer goods such as clothing and dining [3] Company Highlights - Fosun Pharma (2196HK) is noted for its comprehensive involvement in the pharmaceutical industry, with a projected net profit of HKD 2.99 billion for 2024, driven by innovative product launches [10] - The company is focusing on innovation and internationalization under its "4IN" strategy, which includes integration and efficiency improvements [10] - The report indicates that Fosun Pharma's current price-to-book ratio is approximately 0.8 times its net assets, suggesting it is undervalued [10]

Investment Rating - The investment rating for the company is "Buy" (maintained) [6] Core Views - The company is expected to continue its growth driven by sustained high investment in R&D and ongoing internationalization and innovation efforts [1][5] - The company reported a rapid profit growth and improved cash flow, with a 2024 revenue of 41.067 billion yuan, a slight decrease of 0.80% year-over-year [1] - The core innovative products, including the PD-1 monoclonal antibody and CAR-T cell therapy, have shown steady revenue growth [1][2] Summary by Sections Financial Performance - In 2024, the company achieved a net profit of 2.770 billion yuan, an increase of 16.08% year-over-year, with a non-GAAP net profit of 2.314 billion yuan, up 15.10% [2] - The gross margin improved, and the selling expense ratio increased by 2.45 percentage points year-over-year, while management expenses decreased by 355 million yuan [2] Business Segmentation - The pharmaceutical segment generated 28.924 billion yuan in revenue, with a segment profit of 3.250 billion yuan, reflecting a year-over-year growth of 65.73% [3] - The medical devices and diagnostics segment reported a revenue of 4.323 billion yuan, a decrease of 1.53% due to declining COVID-related product sales [3] - The healthcare services segment achieved a revenue of 7.647 billion yuan, an increase of 14.61%, although it still reported a loss of 315 million yuan [4] Future Outlook - The company plans to maintain high R&D investment, with a total of 5.554 billion yuan allocated in 2024, representing 16.98% of the pharmaceutical business revenue [5] - The company is advancing its internationalization strategy, with several products receiving approvals in the US and Europe [6][11] - The earnings per share (EPS) forecast for 2025-2027 is projected at 1.22, 1.37, and 1.57 yuan, respectively, with a price-to-earnings (P/E) ratio of 20 times based on the closing price on May 13, 2025 [12]

Investment Rating - The investment rating for the company is "Buy" (maintained) [6] Core Views - The company is expected to continue its growth driven by ongoing innovation and internationalization efforts [1][5] - The company reported a rapid profit growth and improved cash flow for 2024, with operating revenue reaching 41.067 billion yuan, a year-over-year decrease of 0.80% [1] - The company achieved a net profit of 2.770 billion yuan in 2024, an increase of 16.08% year-over-year, with a non-GAAP net profit of 2.314 billion yuan, up 15.10% [2] Summary by Sections Performance Overview - The company’s revenue for 2024 was 41.067 billion yuan, with innovative products contributing to steady growth [1] - Operating cash flow improved to 4.477 billion yuan, a year-over-year increase of 31.13% [1] Business Segmentation - The pharmaceutical segment generated revenue of 28.924 billion yuan in 2024, with a segment profit of 3.250 billion yuan, reflecting a year-over-year growth of 65.73% [3] - The medical devices and diagnostics segment reported revenue of 4.323 billion yuan, a decrease of 1.53% year-over-year, primarily due to declining COVID-related product sales [3] - The healthcare services segment achieved revenue of 7.647 billion yuan, a year-over-year increase of 14.61%, although it still reported a segment loss of 315 million yuan [4] Future Outlook - The company plans to maintain high R&D investment, with total R&D expenditure reaching 5.554 billion yuan in 2024, representing 16.98% of pharmaceutical revenue [5] - The company is advancing its internationalization strategy, with several products receiving approvals in international markets, including the US and Europe [6] - Earnings per share (EPS) forecasts for 2025-2027 are projected at 1.22, 1.37, and 1.57 yuan, respectively [12]

Core Viewpoint - Fosun Pharma has returned to double-digit profit growth in 2024 after a decline in 2023, with a net profit of 2.77 billion yuan, a year-on-year increase of 16.08% despite a slight revenue drop of 0.8% to 41.068 billion yuan [1][2]. Group 1: Financial Performance - In 2024, Fosun Pharma's revenue was 41.068 billion yuan, down 0.8% year-on-year, while net profit reached 2.77 billion yuan, up 16.08% [1]. - The oncology and immunomodulation segment generated 8.085 billion yuan in revenue, a year-on-year increase of 5.84%, driven by sales growth of several key innovative drugs [2]. - Subsidiary Fuhong Hanlin achieved approximately 5.724 billion yuan in revenue, a 6.1% increase, and a net profit of about 821 million yuan, marking a 50.3% growth [2][3]. Group 2: Strategic Focus and Asset Management - Fosun Pharma is focusing on the development of innovative drugs and high-value medical devices, leading to a transformation in product structure and strategy [1]. - The company is actively divesting non-core assets, having raised nearly 3 billion yuan in cash since the beginning of 2024, and aims to optimize asset structure and enhance asset efficiency [6]. - The company plans to continue shedding non-strategic and low-efficiency assets to concentrate resources on core business areas, with a goal of maintaining a healthy cash flow [6]. Group 3: Impact of Biosimilar Drug Procurement - The potential nationwide procurement of biosimilar drugs is expected to impact the market, with the first round likely to occur within the year, although specific products and rules remain uncertain [4]. - The development of biosimilar drugs has significantly improved drug accessibility and contributed to cost savings in healthcare, despite the high R&D costs associated with these products [4][5]. - Fosun Pharma's chairman expressed the need for a balance between expanding drug accessibility through procurement and allowing space for the biosimilar industry to grow [4].

Core Viewpoint - The report highlights the significant advancements and strategic initiatives of Shanghai Fosun Pharmaceutical (Group) Co., Ltd. in the pharmaceutical and medical device sectors, emphasizing innovation, compliance, and market expansion as key drivers for growth in 2024. Company Overview - The pharmaceutical industry is driven by innovation, with the government prioritizing the development of innovative drugs as a new emerging industry [5][6] - The company has maintained a strong position in the industry, ranking 4th in the "2023 Annual Top 100 Chinese Pharmaceutical Industry" list [12] Industry Development Status - The implementation of the "Drug Standard Management Measures" in January 2024 aims to enhance drug quality and safety [8] - Continuous anti-corruption efforts in the medical and pharmaceutical sectors are expected to promote long-term healthy development [8] - The government has introduced policies to support the upgrade of medical equipment, providing new sales opportunities for the medical device industry [9] Business Highlights - The company achieved operating revenue of 41.067 billion yuan in the reporting period, with significant growth in innovative products [26] - The net profit attributable to shareholders increased by 16.08% to 2.770 billion yuan, with a net profit excluding non-recurring gains and losses rising by 15.10% [26] - The company has focused on innovation, with R&D investment totaling 5.554 billion yuan, of which 3.644 billion yuan was dedicated to R&D expenses [27] Product Development - The company has received approvals for 16 indications across 7 innovative drugs and biosimilars during the reporting period [28] - The innovative PD-1 monoclonal antibody, Hanshu (SruLi), received approval for a new indication in China [29] - The company has successfully launched several products in international markets, including the biosimilar trastuzumab in the US and Canada [29][30] Global Expansion - The company has established a strong global presence, with a commercial team of over 1,000 people covering markets in the US, Africa, and other regions [42] - The company has formed strategic partnerships to enhance its international market access and product commercialization [38][39] Compliance and Regulatory Environment - The company is committed to adhering to regulatory requirements and enhancing compliance in response to the ongoing anti-corruption initiatives in the pharmaceutical industry [25] - The company has implemented measures to ensure the quality and safety of its products, aligning with national standards and regulations [41]