Goldman Sachs CSPC Pharma (1093.HK): Earnings Review
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Goldman Sachs published an earnings review for CSPC Pharmaceutical Group following its first-quarter results, noting a solid recovery in finished drug sales offset by profitability headwinds from API operations and license revenue timing. During the quarter, overall revenue grew approximately 5% year-over-year, driven by a notable 8% growth in finished drugs. This core recovery was primarily fueled by strong traction in oncology and cardiovascular portfolios, with a key oncology product surging 20% and cardiovascular lines benefiting from volume-based procurement wins.
However, net profit declined roughly 15% year-over-year. This earnings contraction was largely attributable to a 10% revenue drop in the active pharmaceutical ingredient (API) business, coupled with a 5 percentage point margin compression due to intensifying competition and rising costs. Additionally, license income recognized around RMB 100 million fell short of prior-year figures. Management maintained its full-year revenue growth guidance of 10%, although Goldman Sachs anticipates continued near-term API pressure. The firm expects second-quarter finished drug growth to accelerate.
Research and development expenditures remained steady at approximately 15% of revenue as the company advances multiple late-stage clinical programs. Goldman Sachs maintained its Buy rating with an unchanged target price of HKD 8.50, based on roughly 20 times 2026 price-to-earnings. Key downside risks include further API pricing deterioration and unexpected delays in new drug approvals.