CMSC International: Raise target price of CHINARES PHARMA (03320) to 6.3 Hong Kong dollars, rating "Buy"

CMSC International released a research report stating that CHINARES PHARMA (03320) is expected to achieve a revenue of 51 billion yuan in its pharmaceutical business in 2025, a year-on-year increase of 10.2%. Among them, the traditional Chinese medicine sector maintained double-digit growth, with a 13.0% annual increase, reaching a revenue of 27.4 billion yuan. The growth rate of traditional Chinese medicine prescription drugs was 26.8%, far exceeding the 5.6% growth of OTC drugs, benefiting from the consolidation of Tasly Pharmaceutical Group and the structural improvement in the cardiovascular and cerebrovascular product categories. This trend is expected to continue this year. CMSC International slightly raised its profit forecast for the group for the next two years, with a target price raised from 5.9 Hong Kong dollars to 6.3 Hong Kong dollars, corresponding to a forecasted valuation of less than 10 times in 2026, which still remains attractive, with a "hold" rating. The report indicated that the management did not provide specific revenue or profit guidance for the 2026 fiscal year, but qualitative signals were conveyed during the performance conference call: 1) Striving for high single-digit revenue growth and good profit growth in the 2026 fiscal year reporting period; 2) Maintaining a dividend payout ratio of 30%, considering increasing the dividend ratio if there are no major mergers and acquisitions, in line with A-share listed companies with a dividend payout ratio of over 30%; 3) Significant reduction in impairment pressure in 2025; 4) Continuation of the blood products acquisition strategy: strategically entering the blood products sector at an appropriate time, location, and price to complete industry integration.