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　　查看PDF原文 公告日期：2016-03-22

　　上海医药(02607) 5-year guidance looks ambitious Shanghai Pharmaceuticals (SPH) reported 4Q15 revenue/core EPS ofRMB54.jiuyou游戏中心6bn/0.19,jiuyou官网入口 representing 11.8%/4.7% YoY growth,九游官网 vs. 15%/20% in 9M15.We attribute the growth deceleration in 4Q15 to a sector slowdown.Management guides a CAGR of 12-15% in revenue during 2015-20, projectingthat sales will arrive at RMB150bn/200bn in 2018/20. The projected higherthan-industry growth should be driven by M&A, industry consolidation andnew business opportunities in e-commerce. For 2016, the company targetsdouble-digit sales growth and profit growth in line with the industry.Management highlights that scale is its top priority. Hold on valuation. Drug manufacturing is ramping up steadily; retail is a future focus In 4Q15, drug manufacturing grew 5.2%, vs. 6.9%/3.7% in 9M15/2014.Management expects this business to ramp up steadily and to grow in linewith the industry in the next few years. The distribution business grew 14% in4Q15, vs. 16% in 9M15. Management expects higher growth than that of theindustry with potential M&A. Of the overall 15.5% growth in 2015,approximately 3% came from acquisitions, with around 12.5% from organicgrowth. Strong growth in the retail business of 18% in 2H15 was driven by theseparation of dispensed drugs and hospitals. Margin stabilized in 4Q, but pressure remains We note that GM/OPM for distribution stabilized to 6.2%/2% in 2H15 from6.2%/2.1% in 2H14. GM/OPM for the manufacturing business was51.4%/10.9% in 2H15, vs. 49.7%/8.6% in 2H14. The improvement was due to abetter product mix and operational efficiency from a sales reorganization. Inaddition, management expects R&D expenses to increase with re-applicationof withdrawn drugs and the requirement of bioequivalence studies. We expecta declining interest rate to benefit leading distributors. Profit fromJV/associates contributed 19% of PBT in 4Q15, vs. 13% in 9M15. We reduce our price target to HKD16.3 from HKD16.8; risks Our PT is based on 14x 2016E core EPS of HKD1.15. We believe 14x is justifiedas its HK-listed peers are trading at 16x with growth of 22% (vs. 11.4% for SPH).Upside risks include continuous improvement in the product mix and smallerprice cuts. Downside risks include larger price cuts and slow M&A activity.

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