[I-bank focus]HSBC lifts CR Pharma (03320) to HK$11.5.

[ET Net News Agency, 11 December 2017] HSBC Global Research lifted its target price for
China Resources Pharmaceutical (03320) to HK$11.5 from HK$9.3, and upgraded its rating to
"buy" from "hold".
The research house expects CR Pharma to take advantage of the introduction of the
two-invoice system by expanding its distribution network. Although it will cause some
disruption over the short term, in the long run the new system will increase market
consolidation.
CR Pharma, one of the leading state-owned distributors that listed in 2016, has abundant
cash on hand and a solid balance sheet, so the company is in a favourable position to
expand its distribution channels.
In 1H 2017, the company entered four provinces - Jiangxi, Hainan, Qinghai, and Xinjiang
- through M&A and acquired distributors in several county-level cities to strengthen
control over basic-level hospitals.
CR Pharma now covers 27 provincial markets and its clients include 5,085 tier II-III
hospitals, more than 30,000 basic-level medical institutions, and more than 20,000 retail
pharmacy stores.
HSBC expect the company to expand its sales network through M&A during the window period
of the two-invoice system while stepping up efforts in organic growth, maintaining overall
revenue and gross profit growth. (KL)