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Author

周霖小姐 ( Eurus Zhou)
分析師

畢業于香港理工大學,擁有金融學碩士學位。本科就讀于西南財經大學,主修財務管理。擅長從行業前景及基本面發掘公司投資價值,主要負責醫藥行業與消費行業研究。

Graduated from Hong Kong Polytechnic University, Master of Finance (Investment Management). Possess bachelor degree majoring in Financial Management from Southwestern University of Finance and Economics. Focus on industry prospect and corporate fundamentals to explore investment value and cover pharmaceutical and consumer industry.


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CSPC Pharmaceutical (1093.HK) - Several drugs attained approvals

Wednesday, May 16, 2018 Views1389
CSPC Pharmaceutical(1093)
Recommendation on  16 May 2018
Recommendation Accumulate
Price on Recommendation Date $22.000
Target Price $24.800

Investment Summary

Since April, the company has acquired two clinical trail approvals, one drug registration approval and passed consistency evaluation of Azithromycin tablets. We expect further progresses of pipeline and continuously rapid growth of innovative drugs. We maintain target price of HKD24.8, implying 18E PE 42x, with EPS estimation of HKD0.59/0.77 in 18E/19E. (Closing price at 14 May 2018)

Business Overview

Two products gained clinical trail permissions. 1) Q101-Pegylated Recombinant Human Interferon-α2a for Injection: it is used alone or in combination with other drugs for the treatment of adults with chronic hepatitis B; and used in combination with ribavirin for the treatment of adults with chronic hepatitis C with no previous treatment. 2) Vinorelbine Tartrate Liposome Injection: Vinorelbine features high anti-cancer activity. It can be used alone or in combination with other drugs clinically for the treatment of non-small cell lung cancer, breast cancer, ovarian cancer and malignant lymphoma. The product can significantly suppress the growth of various solid tumours in a dose-dependent manner, with efficacy increased by at least four times.

Azithromycin tablets has been granted consistency evaluation approval by CFDA, which means CSPC is the first one passing the consistency evaluation for this type of drug in China. Azithromycin is used for the treatment of various bacterial infections, including bronchitis, pneumonia, skin and soft tissues infections, otitis media, sinusitis, pharyngitis and tonsillitis. Azithromycin tablet is one of the key anti-infective drugs of the Group, having the largest market share of the same type of drug in domestic market. Passing consistency evaluation implies its availability as a clinical alternative for the originator drug and potential sales volume hike.

2018 growth momentum will come from: 1) NBP injection is expected to grow as being included into NDRL, due to its further expansion to county-level hospitals; 2) Strong growth of oncology portfolio. The company continues to enlarge the sales team (720 salesmen in 2017 while 1200 salesmen in 2018E). We expect oncology portfolio to report high growth given its expanding sales team and network. 3) Albumin-bound paclitaxel gained registration approval in Feb. According to CSPC management, this product will be sold at only 60% of original drug and may contribute to over HKD1bn income in 2019E. Given CSPC's intensifying channel advantage and favorable price, albumin-bound paclitaxel is competitive to win considerable market share.

Valuation Thesis & Risks

Our model derive TP of HKD24.8: with EPS estimation of HKD0.59/0.77 in 18E/19E, we maintain our target price of HKD24.8, implying 2018 PE of 42x. Risks include: rising selling and R&D expenditure; M&A or R&D fail expectations; policy risks.

Financials

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This report is produced and is being distributed in Hong Kong by Phillip Securities Group with the Securities and Futures Commission (“SFC”) licence under Phillip Securities (HK) LTD and/ or Phillip Commodities (HK) LTD (“Phillip”). Information contained herein is based on sources that Phillip believed to be accurate. Phillip does not bear responsibility for any loss occasioned by reliance placed upon the contents hereof. The information is for informative purposes only and is not intended to or create/induce the creation of any binding legal relations. The information provided do not constitute investment advice, solicitation, purchase or sell any investment product(s). Investments are subject to investment risks including possible loss of the principal amount invested. You should refer to your Financial Advisor for investment advice based on your investment experience, financial situation, any of your particular needs and risk preference. For details of different product's risks, please visit the Risk Disclosures Statement on http://www.phillip.com.hk. Phillip (or employees) may have positions/ interests in relevant investment products. Phillip (or one of its affiliates) may from time to time provide services for, or solicit services or other business from, any company mentioned in this report. The above information is owned by Phillip and protected by copyright and intellectual property Laws. It may not be reproduced, distributed or published for any purpose without prior written consent from Phillip.
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