Shanghai Pharmaceuticals Holding Co Ltd Class H
02607: XHKG (HKG)
| Morningstar Rating for Stocks | Fair Value | Economic Moat | Capital Allocation |
|---|---|---|---|
| LOCK|.JXkJVw | LOCK|%! | LOCK|RMYC$VB |
Shanghai Pharmaceuticals Earnings: Raise Fair Value Estimate by 18% on Operating Margin Improvements
We raise Shanghai Pharmaceutical’s, or SPH’s, fair value estimate to HKD 13.70 per share from HKD 11.60 per share following the improvement in its operating margin after management cost-control programs. The 2024 adjusted operating margin of 3.6% is 30 basis points higher than we expected. Hence, we lift 2025-28 adjusted operating margins to an average of 2.9% from 2.6% due to cost cuts in both administration and marketing. While we now see the shares as modestly undervalued, we think the key upside to SPH depends on a more innovative portfolio.
