not vested
Why This Chinese Pharma Stock Is a Buy By Daniel Shane
Drug distributor China Medical System (867.HK) was just prescribed a Buy rating by analysts at Jefferies.
In its initiation report, Jefferies said that shares in the Shenzhen-based company stood to rise by 13%.
CMS makes money by
distributing third-party drugs that treat conditions ranging from hepatitis B to depression to hospitals and doctors.
Jefferies said catalysts for this stock include a recovery in sales of anti-depressant Deanxit and broader penetration of hypertension drug Plendil. It also points to new drug import rules in China that could encourage more foreign pharmaceutical companies to enter the world’ second biggest economy, which could provide new distribution opportunities for CMS.
As an aside, Barron’s Asia told readers to get a dose of the shares way back in September 2015, and they’ve returned a healthy 50% since.
Anyway, here’s a swab from the Jefferies report:
We think CMS should deliver stable growth near-to-mid term, and benefit in the long run from more licensing-in opportunities as a leader of third-party drug academic promotion in China.
We expect Deanxit to recover growth and Plendil to continue market penetration, and forecast 15%/16% sales/EPS CAGR in16-19E.
Jefferies’ price target on CMS is actually one of the more conservative of those covering the stock. Of the 15 analysts that follow the shares, the average price target is HKD15.44, or more than 15% upside.
The stock rallied as much as 1.8% this morning in Hong Kong trading.
Source: Barron's Asia
http://blogs.barrons.com/asiastocks/201 ... -is-a-buy/
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