[ET Net News Agency, 21 August 2019] Credit Suisse lifted its target price for China
Medical System (CMS)(00867) to HK$9.58 from HK$9.1 and maintained its "outperform" rating.
The research house said CMS's 1H results slightly beat Credit Suisse's expectation,
mainly due to better-than-expected gross and net margin. Deanxit and Plendil's hospital
sales (60% of total sales) may face GPO pressure as early as 2H 2020, therefore, Credit
Suisse expects this segment to grow at 4-5% in the next three years.
CMS announced a new license agreement with Sun Pharma for the exclusive license to Sun
Pharma's seven generic products in mainland China for a minimum of 20 years. Credit Suisse
thinks it would further diversify its revenue sources to better reduce potential GPO
impact. It increased its 2019/20 net profit forecast by 2.4%/1.3% to factor in better 1H
profits. (KL)