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CSPC Pharma Shares Fall After Weaker 1Q Profit

By Clarence Leong

 

Shares of CSPC Pharmaceutical Group Ltd. fell after its first-quarter net profit weakened, amid a sluggish performance for the healthcare sector in Hong Kong.

CSPC's stock lost up to 8.2% in early Thursday trade, and was last down 5.0% at HK$7.45. It has dropped 12% so far this year.

The Chinese company on Wednesday posted 1.40 billion yuan ($209.2 million) net profit for the first three months of the year, 4.6% lower compared with the same period the year earlier, dragged by fair-value losses for its financial assets. Revenue for the quarter rose 17% to CNY7.87 billion.

CSPC's underperformance came amid declines for its peers including Wuxi Biologics (Cayman) Inc. and Zai Lab Ltd., which shed 3.4% and 6.0%, respectively.

Daiwa Capital Markets kept a hold rating on CSPC's stock following its results, noting that the patent on CSPC's revenue driver--a drug known as NBP which is used to treat a nervous-system disease and contributed about 32% of revenue in 2020--is set to expire by end-2023. "The next revenue growth engine is missing," Daiwa analyst Dennis Ip said in a research report. He added that he is more conservative on the stock while waiting for the clinical trial results of two potential new products.

Analysts at Nomura trimmed their earnings forecasts for the drug maker by 0.6% for 2022 and 2.3% for 2023 in anticipation of a lower gross profit margin. The Japanese investment bank lowered the stock's target price to HK$11.64 from HK$12.32, mainly to reflect a weaker yuan. But Nomura reaffirmed its buy rating, citing the company's stable growth profile.

 

Write to Clarence Leong at clarence.leong@wsj.com

 

(END) Dow Jones Newswires

May 26, 2022 00:16 ET (04:16 GMT)

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