Sino Biopharm’s Slight Miss on Interim Earnings; Reveals Ambitious Strategy at Investor Day

Narrow-moat Sino Biopharmaceutical, or SBP, reported interim earnings that were slightly below our expectation. Revenue for the six months was CNY 15 billion, or 6% higher year on year, which is a minor disappointment. Much of this was due to an 8% decline in respiratory drugs, attributed to centralized procurement of budesonide. Although net profit fell 67% year on year, this was caused by last year’s large associate income from SBP’s investment in SinoVac, which is not recurring. Operating profit margin was almost unchanged and in line with our expectation.