[ET Net News Agency, 16 November 2018] HSBC Global Research lowered its target price
for China Medical System Holdings (CMS)(00867) to HK$13.3 from HK$24.7 and maintained its
"buy" rating.
The research house said none of CMS's products is on the GPO (group purchasing
organisation) trial or has passed a bio-equivalence (BE) test, so it expects the impact of
the GPO model to be limited in the short term. In the long run, HSBC expects CMS to be
active in acquiring innovative drugs to hedge GPO risks.
HSBC lowered its 2018-20 revenue and earnings estimates by 17.3%, 19.9% and 22.5% and
3.9%, 9.5% and 13.7%, respectively, to RMB5.4bn, RMB6.2bn and RMB7.1bn and RMB2.0bn,
RMB2.3bn and RMB2.6bn, respectively, due to the implementation of the two-invoice system.
To reflect rising uncertainties caused by the GPO scheme, HSBC lowered its valuation
multiple from 1.1x 2018 PEG to 0.8x 2019 PEG, implying 1.0x 2019 PEG in its base scenario
analysis. (KL)
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00867 CMS
Nominal 
7.000 -0.030 (-0.427%) Others
16/11/2018 15:12
[I-bank focus]HSBC lowers CMS (00867) to HK$13.3
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