Morgan Stanley released a research report stating that it lowered the target price of Shanghai Pharmaceuticals (02607) by 5.6%, from HK$18 to HK$17, and lowered the company's profit forecast for 2024-2030 by 2%-9%. The main reason was the decline in sales in the manufacturing sector, but the rating still “increased”, mainly due to the complete integration of the platform (manufacturing, distribution, retail) to provide a synergy effect.
Damo's basic assumptions about the company are based on stable network expansion and valuable distribution agreements. Distribution sales growth remained low in double digits, and sales diversified, shifting from generic drugs to innovative drugs and vaccines, and strong business expansion outside hospitals, providing new options for large pharmaceutical companies.