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Shanghai Pharmaceuticals Holding Co Ltd Class H 02607

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Stock XHKG Rating as of
HKD 12.52 +0.12 (0.97%)
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As of Delayed Price Closed
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Company Report

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Shanghai Pharmaceuticals: Reinitiating Coverage on the Second-Largest Chinese Medical Distributor

Yurou Zheng

We reinitiate on Shanghai Pharmaceuticals Holding, or SPH, with a narrow moat rating and a fair value estimate of HKD 13.50 per H share. SPH is the second-largest pharmaceutical distributor by revenue in China. The stock is currently trading at a 17% discount to our fair value estimate. SPH has little revenue cyclicality. While some of SPH’s drug pipelines are currently conducting clinical trials in the North American region, we think its exposure to geopolitical risks is small. As of 2023, only 1.2% of total revenue comes from overseas.

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Price vs Fair Value

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02607 is trading at a 389% premium.
Price
HKD 12.52
Fair Value
HKD 17.50
Uncertainty
Medium
1-Star Price
HKD 11.54
5-Star Price
HKD 8.58
Economic Moat
Byzkkr
Capital Allocation
Wwdkbprk

Bulls Say, Bears Say

Bulls

Price cuts for VBP are more lenient, raising SPH’s operating margin.

Bears

The current cycle of interest-rate cuts in China reverses, leading to higher short-term interest servicing costs for SPH.

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Trading Information

Previous Close Price
HKD 12.40
Day Range
HKD 12.34–12.64
52-Week Range
HKD 10.18–16.16
Bid/Ask
HKD 12.52 / HKD 12.54
Market Cap
HKD 46.37 Bil
Volume/Avg
2.6 Mil / 2.7 Mil

Key Statistics

Price/Earnings (Normalized)
12.77
Price/Sales
0.16
Dividend Yield (Trailing)
5.30%
Dividend Yield (Forward)
5.30%
Total Yield
5.30%

Company Profile

Shanghai Pharmaceuticals is the second-largest medical distributor in China by revenue. It is vertically integrated and provides healthcare services in research and development, manufacturing, distribution, and retail. As of 2023, medical distribution is the largest segment, accounting for 89.8% of total revenue. It also has coverage of 31 provinces and cities nationwide.
Sector
Healthcare
Industry
Medical Distribution
Stock Style Box
Large Value
Total Number of Employees
48,164
Website
https://www.sphchina.com

Competitors

Valuation

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Metric
02607
COR
01099
Price/Earnings (Normalized)
 12.7717.277.15
Price/Book Value
 0.6040.890.83
Price/Sales
 0.160.160.10
Price/Cash Flow
 17.7113.793.47
Price/Earnings
02607
COR
01099

Financial Strength

Metric
02607
COR
01099
Quick Ratio
 1.000.501.05
Current Ratio
 1.340.891.39
Interest Coverage
 4.989.107.35
Quick Ratio
02607
COR
01099

Profitability

Metric
02607
COR
01099
Return on Assets (Normalized)
 1.72%4.19%4.43%
Return on Equity (Normalized)
 5.29%373.63%24.34%
Return on Invested Capital (Normalized)
 3.75%47.73%9.74%
Return on Assets
02607
COR
01099
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