Phillip Securities Research in a Feb 14 research report says: "2Q11 revenue was down 9.6% y-o-y to HK$153.6 million while net profit came in at HK$28.7 million (-2.7% y-o-y) as suppliers are unwilling to procure more drugs due to the uncertainties surrounding the Chinese government's healthcare policies.
Phillip Securities lifts C&O Pharmaceutical (E92.SG) target price to $0.65 from $0.53, implying 13.7x FY11 P/E, after increasing FY11 earnings estimate by 8.6% to HK$175 million ($30.5 million) to assume stronger growth across all business segments, contributions from roll-out of new drugs, keeping Buy call, according to Dow Jones.
Phillip expects new drug Edaravone, used to aid neurological recovery, to be major earnings driver in coming years considering fewer than five manufacturers in China capable of producing it.
Broker notes market for this drug, which C&O expects to get regulatory approval for mass production by October, worth about RMB1 billion ($200 million) in 2009. Shares flat at $0.465.
CIMB starts C&O Pharmaceutical Technology (E92.SG) at Buy with $0.60 target price, based on 12X FY11 P/E, according to Dow Jones.
CIMB says China-based drug maker’s strong R&D capability provides springboard to launch new products, paving way for expansion in local, even international markets.
“C&O is also an attractive partner to foreign drug companies looking to enter the China market,” says CIMB, adding prospects backed by China’s increasing healthcare spending.
Forecasts FY10 dividend of $0.073/share, translating to prospective 17% yield. Shares +2.3% at $0.445.
