[ET Net News Agency, 12 April 2018] Credit Suisse cut its target price for Sinopharm
Group (01099) to HK$37.9 from HK$39.5, and reiterated its "neutral" rating.
The research house thinks interest rate increase might be the main reason for
Sinopharm's profit alert. There was a significant increase in debt in 1Q 2018, to support
the company's expansion and working capital needs.
Credit Suisse said this trend is hard to turn around in the near term. The situation is
a specific case for Sinopharm due to its high leverage level. But Credit Suisse still sees
healthy industry growth. It thinks other distributors, Shanghai pharma (02607) and CR
pharma (03320) are in a better position than Sinopharm due to better cash flow and lower
debt.
Credit Suisse lowered its 2018 EPS forecast for Sinopharm by 5% on rise in financial
cost. In long term, Sinopharm should benefit from industry consolidation while the
pressure from interest rate increase should continue to the year end, the research house
added. (KL)
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01099 SINOPHARM
Nominal 
21.750 +0.150 (+0.694%) Others
12/04/2018 17:20
[I-bank focus]Credit Suisse cuts Sinopharm Group to HK$37.9
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