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SINOPHARM (01099.HK) Falls 3.6% as Citi Cuts TP to HKD20.4
2026-08-25 14:22:02 SINOPHARM (01099.HK) opened 2.02% lower today and hit a trough of HKD15.67. It is now trading at HKD15.75, down 3.55%, with turnover of 6.3919 million shares involving HKD101 million. Citi said in a report that SINOPHARM's first-half results missed expectations. Revenue was RMB282.8 billion, down 1.1% YoY, 2.3% below the broker's forecast and 2.1% below market expectations. Net profit was RMB3.4 billion, down 1.8% YoY, 9.9% and 7.1% below the broker's and market forecasts, respectively. The earnings miss was mainly due to margin pressure, with gross margin shrinking 37 bps YoY to 6.74% during the period, reflecting the expansion of volume-based procurement (VBP) and continued drug price regulation. However, the group maintained strict cost controls, partly offsetting the impact from lower gross margin. During the period, selling expense ratio, administrative expense ratio and finance cost ratio declined 15 bps, 5 bps and 6 bps YoY to 2.59%, 1.23% and 0.29%, respectively. Management expects gross margin in 2H26 to improve from 1H26, with expense ratios declining further and full-year operating cash flow likely turning positive. Citi lowered its 2026-2028 revenue forecasts by 1% each to reflect the impact of anti-corruption policies on pharmaceutical sales and the continued expansion of VBP. It also cut its 2026-2028 net profit forecasts by 6%, 7% and 8%, respectively, due to greater-than-expected gross margin pressure. The broker reduced the TP from HKD22.6 to HKD20.4, equivalent to 1.0x 2027 forecast PEG. The current share price is equivalent to 5.6x 2027 forecast P/E ratio, with a dividend yield of about 5%. Valuation remains at historical trough levels and the dividend yield is attractive. Citi maintained its Buy rating.(ad/u)~ AASTOCKS Financial News Website: www.aastocks.com This article was automatically translated by AI, the Chinese version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. | |