Bank of America Securities: Maintains "Underperform" rating on CSPC Pharma (01093), lowers target price to HKD 4.

Bank of America Securities released a research report saying that it maintains a "underperform" rating on CSPC PHARMA (01093), with a target price lowered from HK$4.1 to HK$4, based on the impact of price reductions on its main products. The bank adjusted its revenue forecasts for CSPC Pharma for 2024 to 2026, ranging from a decrease of 1% to an increase of 3%. It also raised its net profit forecast for last year and this year by 19% and 1%, but lowered its net profit forecast for next year by 12%. Bank of America pointed out that CSPC PHARMA issued a profit warning, with a estimated drop in net profit of around 26% for last year, compared to the bank's forecast of an 8% drop, excluding the impact of prepayments, which would be a 18% decline. Sales of finished drugs dropped by about 7% year-on-year, compared to the bank's estimate of a 9% drop after deducting prepayments. The company attributed the decline in revenue and net profit mainly to price reductions for products such as Jingyouli and Duomeisu in the "3+N" alliance drug collection in Beijing-Tianjin-Hebei region, as well as Xuning not being selected in the eighth batch of national drug collection, resulting in a 28% and 15% year-on-year decrease in revenue in the anti-cancer treatment and cardiovascular treatment fields. The bank noted that Duomeisu was selected in the tenth batch of national drug collection in December last year, but is facing another round of price reductions. In the negotiation of the national drug reimbursement list last year, the prices of Dibenzoyl (taie) injections and capsules dropped by 12.5% and 3.6%, putting further pressure on the internal sales growth of CSPC Pharma. It is also expected that in the fiercely competitive market for Dibenzo (taie), a non-patented version will be launched in the short term. On the other hand, the bank expects that the company will receive prepayments from licensing agreements this year.