CSPC Earnings: Cutting Valuation by 13% Following Revenue Miss; Shares Still Modestly Cheap

We cut CSPC’s fair value estimate to HKD 6.00 per share from HKD 6.90 following its 2024 revenue miss. The miss is largely attributable to its three finished drugs, which were negatively affected by the volume-based procurement and price cuts. While our view of CSPC being able to deliver positive revenue growth in 2025 remains unchanged, we think the challenges are greater than we initially expected. As such, we lower both our near-term and long-term revenue growth rates. We continue to see CSPC shares as modestly undervalued. However, the near-term concern of whether CSPC can bring enough new product launches to offset the NBP patent cliff will likely weigh on its share performance.