Shanghai Pharmaceuticals Holding Co Ltd Class A

601607: XSHG (CHN)

Morningstar Rating for Stocks	Fair Value	Economic Moat	Capital Allocation
	¥76.78	Gtwgjg	Nzmbdnn

Shanghai Pharmaceuticals Posts Strong 1Q Growth in Distribution; H-Shares Remain Undervalued

Jay Lee

May 2, 2019

Narrow-moat Shanghai Pharmaceuticals, or SPH, posted solid first-quarter results, with its distribution segment modestly outperforming our expectations. This was partially tempered by a contraction in gross margins. Our fair value estimates are unchanged at HKD 22.5 per H-share and CNY 19.5 per A-share. While the A-shares are in line with our fair value, the H-shares trade at a 28% discount, and we believe they offer attractive long-term value for patient investors.

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