CSPC Pharmaceutical (1093 HK) Summary
Core Content
CSPC Pharmaceutical Group Limited (1093 HK) reported its first-half 2022 (1H22) financial results, showing RMB15.61bn in revenue, a 12.9% increase year-over-year (YoY), which accounts for 51% of the full year estimate. The company's revenue growth was driven by the strong performance of nervous system disease drugs, oncology drugs, and anti-infective drugs, with finished drug sales rising 9.4% YoY to RMB12.29bn. Adjusted attributable net profit increased by 14.9% YoY to RMB3.07bn.
CSPC is also advancing its mRNA vaccine candidate, SYS6006, with encouraging preliminary clinical results. The vaccine has demonstrated superior safety and potent efficacy in early trials. It showed a low incidence of adverse events, with only 0% fever rate for the 20μg dose and 13.3% for the 30μg dose after the second dose, compared to 38.8% for the BNT162b2 vaccine. In a heterologous booster study, SYS6006 showed significantly higher neutralizing antibodies against Omicron variants, with a 5.9–8.7x increase compared to homologous boosters.
CSPC has completed the Phase I study and has finished the second dose vaccination of approximately 600 subjects in the Phase II study (NCT05439824). It is also accelerating the initiation of Phase III trials overseas and in Hong Kong. Additionally, the China CDC announced the initiation of an IIT study (ChiCTR2200062207) to assess 14 new variant-targeted vaccine candidates, including SYS6006, which could be pivotal for Emergency Use Authorization (EUA) in China.
The company has already established a production line capable of manufacturing 500 million doses per year and is constructing a second phase production line with a target total capacity of 1.5 billion doses per year.
Main Financial Highlights
Revenue and Earnings
| Year |
Revenue (RMB mn) |
YoY Growth (%) |
Net Profit (RMB mn) |
YoY Growth (%) |
| FY20A |
24,942 |
12.8 |
5,229.0 |
40.1 |
| FY21A |
27,867 |
11.7 |
5,688.1 |
8.8 |
| FY22E |
30,827 |
10.6 |
6,003.9 |
5.6 |
| FY23E |
35,032 |
13.6 |
7,003.5 |
16.6 |
| FY24E |
39,276 |
12.1 |
7,994.2 |
14.1 |
Earnings Per Share (EPS)
| Year |
EPS (RMB) |
| FY20A |
0.43 |
| FY21A |
0.47 |
| FY22E |
0.49 |
| FY23E |
0.58 |
| FY24E |
0.66 |
Price-to-Earnings (P/E) Ratio
| Year |
P/E (x) |
| FY20A |
18.4 |
| FY21A |
16.8 |
| FY22E |
13.5 |
| FY23E |
11.6 |
| FY24E |
10.1 |
Dividend Yield
| Year |
Dividend Yield (%) |
| FY20A |
1.6 |
| FY21A |
1.8 |
| FY22E |
2.2 |
| FY23E |
2.6 |
| FY24E |
3.0 |
Net Gearing
| Year |
Net Gearing (%) |
| FY20A |
(38.0) |
| FY21A |
(40.9) |
| FY22E |
(51.1) |
| FY23E |
(58.1) |
| FY24E |
(63.4) |
Key Information
- Buy Recommendation: Maintained with a target price of HK$12.88, down from HK$13.20.
- Shareholding Structure: Management holds 23.7%, UBS Group holds 7.2%.
- Market Capitalization: HK$765.0 million.
- Average 3-Month Trading Volume (HK$ mn): 8.0.
- 52-Week High/Low (HK$): 10.46/7.04.
- Total Issued Shares (mn): 100.0.
- Current Price (HK$): 7.65.
- Up/Downside: 68.4%.
Financial Summary (DCF Valuation)
| Year |
EBIT (RMB mn) |
EBIT*(1-tax rate) (RMB mn) |
D&A (RMB mn) |
Change in Working Capital (RMB mn) |
Capx (RMB mn) |
FCFF (RMB mn) |
| 2022E |
7,306 |
6,004 |
864 |
460 |
(800) |
6,528 |
| 2023E |
8,460 |
6,952 |
864 |
(79) |
(800) |
6,937 |
| 2024E |
9,662 |
7,940 |
864 |
(326) |
(800) |
7,678 |
| Terminal Value |
- |
- |
- |
- |
- |
184,304 |
| Terminal Growth Rate |
- |
- |
- |
- |
- |
3.00% |
| WACC |
- |
- |
- |
- |
- |
11.78% |
CMBIGM Valuation vs Consensus
| Metric |
CMBIGM Estimate (RMB mn) |
Consensus (RMB mn) |
Diff (%) |
| Revenue |
30,827 |
31,408 |
-1.8% |
| Gross Profit |
22,295 |
23,470 |
-5.0% |
| Operating Profit |
7,306 |
7,643 |
-4.4% |
| Net Profit |
5,901 |
6,110 |
-3.4% |
| EPS (RMB) |
0.49 |
0.52 |
-4.3% |
| Gross Margin |
72.32% |
74.73% |
-2.4 ppt |
| Operating Margin |
23.70% |
24.33% |
-0.6 ppt |
| Net Margin |
19.14% |
19.45% |
-0.3 ppt |
Key Financial Ratios
Profitability
| Metric |
2019A |
2020A |
2021A |
2022E |
2023E |
2024E |
| Gross Profit Margin |
72.0% |
74.9% |
75.8% |
72.3% |
71.0% |
71.0% |
| Operating Margin |
20.8% |
24.3% |
24.4% |
23.7% |
24.1% |
24.6% |
| EBITDA Margin |
23.9% |
27.5% |
27.5% |
26.5% |
26.6% |
26.8% |
Liquidity and Activities
| Metric |
2019A |
2020A |
2021A |
2022E |
2023E |
2024E |
| Net Debt to Equity (x) |
(0.3) |
(0.4) |
(0.4) |
(0.5) |
(0.6) |
(0.6) |
| Current Ratio (x) |
2.2 |
2.5 |
2.8 |
3.0 |
3.2 |
3.5 |
| Receivable Turnover Days |
81.9 |
73.4 |
92.9 |
91.3 |
91.3 |
91.3 |
| Inventory Turnover Days |
149.5 |
108.6 |
134.5 |
130.0 |
130.0 |
130.0 |
| Payable Turnover Days |
315.9 |
294.5 |
352.4 |
348.2 |
348.2 |
348.2 |
Valuation
| Metric |
2019A |
2020A |
2021A |
2022E |
2023E |
2024E |
| P/E |
22.2 |
18.4 |
16.8 |
13.5 |
11.6 |
10.1 |
| P/B |
4.2 |
4.1 |
3.5 |
2.6 |
2.2 |
1.9 |
Analyst Recommendation
- Analyst: Jill WU, CFA
- Contact: (852) 3900 0842, jillwu@cmbi.com.hk
- Recommendation: BUY
- Target Price: HK$12.88
- Previous Target Price: HK$13.20
- Up/Downside: 68.4%
Disclaimer
This report is for informational purposes only and is not intended as investment advice. It is subject to change and does not guarantee accuracy, completeness, or timeliness. CMBIGM does not provide individually tailored investment advice and recommends that investors consult a professional financial advisor. The information and contents are based on publicly available data and analyses, and actual results may differ materially.
