Analyst Note| Jay Lee |
Narrow-moat 3SBio reported revenue and earnings that were in line with our expectations. Our fair value estimate is unchanged at HKD 11.70 per share. 3SBio’s pipeline is still early-stage, and slowing growth in the existing portfolio and pressure on margins will continue to weigh on sentiment for the foreseeable future. However, shares are trading at a 40% discount to our fair value and near the five-year lows, and we generally believe that a price below HKD 7.00 offers considerably more upside than downside.