CR Pharma’s Interim Results Better Than Expectations

Narrow-moat CR Pharmaceutical’s interim results were better than our expectation, with 10% year-on-year revenue growth despite COVID-19 lockdowns. Core operating profit margin (calculated with cost of sales, sales and administrative expense, research and development, other income, and trade receivables impairment) improved 39 basis points to 5.8%. Although profitability for each business line was relatively stable, there was more revenue contribution from the drug manufacturing segment, which is higher-margin than distribution and retail pharmacies.