Citigroup: Maintains "Buy" rating on Shanghai Pharmaceuticals Holding (02607) with a target price lowered to HK$15.3.

Citi released a research report, maintaining a "Buy" rating on Shanghai Pharmaceuticals Holding (02607), but lowering the earnings forecast for each year from 2024 to 2026 by 6%, 5% and 5% respectively to reflect the challenges facing the pharmacy sector and the narrowing profit margins in the distribution business. The target price for the H share has been revised down from 16.2 Hong Kong dollars to 15.3 Hong Kong dollars. The report states that the company's third quarter revenue increased by 8% year-on-year to 70 billion yuan, but was affected by a decrease in gross profit margin, resulting in a 6% decrease in net profit to 1.1 billion yuan. The gross profit margin for the period fell to 10%, compared to 10.6% in the same period of the previous fiscal year. The company's management expects to receive approval for a new innovative drug next year and anticipates sales of 1 billion yuan for the traditional Chinese medicine "Gastric Regeneration" next year. Additionally, four other Chinese medicine products are expected to generate 1 billion yuan in revenue each.