[ET Net News Agency, 30 October 2019] Goldman Sachs lowered its target price for
Sinopharm Group (01099) to HK$31.2 from HK$38.94 and maintained its "neutral" rating.
The research house said Sinopharm's 3Q sales of Rmb110bn (+27.2% y/y) and earnings of
Rmb1.6bn (+22.8% y/y) were above Goldman's estimates.
Given the impact from price erosion in GPO (group purchasing organization)/provincial
tenders and ramp-up of lower-margin business, e.g. DTP (direct-to-patient) pharmacy,
pressure on gross margin may last for a few more quarters, although this may be partially
offset by expense control and improving device margins.
Goldman revised up its 2019-2021 EPS forecasts by 0.1%/3.6%/5% to factor in strong sales
ramp-up of medical device distribution and retail pharmacy businesses. (KL)