CSPC Earnings: Finished Drug Sales Beat Our Expectations; Shares Undervalued

CSPC’s 2024 first-quarter revenue increased 11.5% year on year, exceeding our assumed 4.6% growth. The positive surprise comes from its finished drug sales, primarily its nervous system and oncology drugs. CSPC also managed to further expand sales of its flagship drug, NBP (for treating acute ischemic stroke), to more county-level hospitals and retail stores after nearly two decades of commercialization. Hence, we push back previously expected NBP sales slowdown to 2026 and 2027, two years later than our initial forecasts, while keeping margins unchanged. However, we still expect CSPC’s 2024-26 earnings to decline by an annual average of 3.8%, and we note that this may limit near-term investor interest.