Citi released a research report stating that it maintains a "buy" rating on sh pharma (02607), with a 6%, 5%, and 5% downward revision in earnings per share forecast for 2024 to 2026, reflecting challenges faced by pharmacy businesses, as well as narrowing profit margins in distribution business. The target price for the listed in hong kong shares has been lowered from 16.2 Hong Kong dollars to 15.3 Hong Kong dollars.
The report mentions that the company's third-quarter revenue increased by 8% year-on-year to 70 billion RMB each (below), affected by a decrease in gross margin, with net profit dropping by 6% year-on-year to 1.1 billion RMB, and gross margin during the period dropping to 10%, compared to 10.6% in the same period of the previous fiscal year. The company's management expects to receive approval for an innovative drug next year, anticipating sales of the traditional chinese medicine, "Wei Fu Chun," to reach 1 billion RMB next year, with the other four traditional chinese medicine products each generating 0.1 billion RMB in revenue.
