Morningstar

Sinopharm Group Co Ltd 01099

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Stock XHKG Rating as of
HK$21.95 0.00 (0.00%)
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As of Delayed Price Closed

Company Report

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Sinopharm Earnings: Lowering Fair Value on Revenue Slowdown; Shares Undervalued

Yurou Zheng

We slightly lower our fair value estimate for narrow-moat Sinopharm to HKD 23.80 per share from HKD 24.70 after interim revenue missed expectations. We think the weaker outlook will continue into 2025 but should normalize thereafter. As such, we keep our long-term assumptions unchanged as we think Sinopharm will continue to benefit from industry consolidation. We still think Sinopharm is undervalued, currently trading at 0.4 price/book and 8.0 price/earnings. We believe our projected 25% year-on-year fall in 2024 earnings is already reflected in its share price, but we think news flow will still be lackluster in the near term.

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Price vs Fair Value

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01099 is trading at a 494% premium.
Price
HK$21.95
Fair Value
HK$22.70
Uncertainty
High
1-Star Price
HK$64.87
5-Star Price
HK$84.84
Economic Moat
Clvcd
Capital Allocation
Hrzftmyyy

Bulls Say, Bears Say

Bulls

Sinopharm offers more value-added services, raising operating margin.

Bears

The current cycle of interest-rate cuts in China reverses, leading to higher short-term interest servicing costs for Sinopharm.

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News

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Trading Information

Previous Close Price
HK$21.95
Day Range
HK$20.90–22.20
52-Week Range
HK$16.02–23.00
Bid/Ask
HK$21.90 / HK$21.95
Market Cap
HK$68.50 Bil
Volume/Avg
6.2 Mil / 6.7 Mil

Key Statistics

Price/Earnings (Normalized)
7.52
Price/Sales
0.11
Dividend Yield (Trailing)
4.36%
Dividend Yield (Forward)
4.36%
Total Yield
4.36%

Company Profile

Founded in 2003, Sinopharm is the largest wholesaler and retailer of drugs and medical devices in China and listed on the Hong Kong Stock Exchange in 2009. It is a core subsidiary of China National Pharmaceutical Group. Sinopharm’s largest operating segment is pharmaceutical distribution, making up over 70% of its total revenue by the end of 2023. In 2018, Sinopharm acquired the largest Chinese medical device distributor, China National Scientific Instruments and Materials. Now, medical device distribution accounts for over 20% of Sinopharm’s total revenue. Sinopharm’s downstream customers range from hospitals and other health services institutions to end-customers.
Sector
Healthcare
Industry
Medical Distribution
Stock Style Box
Large Value
Total Number of Employees
113,635
Website
http://www.sinopharmgroup.com.cn

Competitors

Valuation

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Metric
01099
CAH
MCK
Price/Earnings (Normalized)
 7.5214.7517.44
Price/Book Value
 0.84——
Price/Sales
 0.110.120.21
Price/Cash Flow
 3.9012.0914.31
Price/Earnings
01099
CAH
MCK

Financial Strength

Metric
01099
CAH
MCK
Quick Ratio
 1.070.480.46
Current Ratio
 1.350.980.93
Interest Coverage
 7.5724.5514.09
Quick Ratio
01099
CAH
MCK

Profitability

Metric
01099
CAH
MCK
Return on Assets (Normalized)
 3.87%4.13%5.53%
Return on Equity (Normalized)
 21.65%——
Return on Invested Capital (Normalized)
 8.28%109.00%64.65%
Return on Assets
01099
CAH
MCK

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