Hong Kong, Sept 18, 2014 - (ACN Newswire) - Morgan Stanley raised price target of Jintian Pharmaceutical (2211.HK) from HK$3.9 to HK$4.5 on higher distribution sales growth outlook and margin expansion.
The analysts believe the growth of sales are attributed by 1) expanded network coverage; 2) retail pharmacy acquisitions; 3) gross margin expansion contributed by branded premium products; and 4) lower sales and marketing (S&M) expense. Jintian is expected to deliver 35% and 32% top- and bottom-line growth in 2014 on these factors.
They raised the company's distribution sales growth forecasts to 36% for 2014 and 28% YoY for 2015, from 28% and 25%; gross margin forecast increased by 50bp to 29.0% for 2014 while maintaining the estimate of 29.7% for 2015 on higher sales contribution from branded premium products. In addition, they cut the S&M expense ratio expectations by 70bp and 150bp for 2014 and 2015, respectively. With the overall operating profit margin raised by 100bp and 20bp to 14.8% and 13.9% in 2014 and 2015, respectively.
Morgan Stanley believes that stock is currently trading at 8-10x of the 2014-15 expected EPS, a 40% discount to its national distributors/ retail drugstore chain peers.
Copyright 2014 ACN Newswire. All rights reserved.
The analysts believe the growth of sales are attributed by 1) expanded network coverage; 2) retail pharmacy acquisitions; 3) gross margin expansion contributed by branded premium products; and 4) lower sales and marketing (S&M) expense. Jintian is expected to deliver 35% and 32% top- and bottom-line growth in 2014 on these factors.
They raised the company's distribution sales growth forecasts to 36% for 2014 and 28% YoY for 2015, from 28% and 25%; gross margin forecast increased by 50bp to 29.0% for 2014 while maintaining the estimate of 29.7% for 2015 on higher sales contribution from branded premium products. In addition, they cut the S&M expense ratio expectations by 70bp and 150bp for 2014 and 2015, respectively. With the overall operating profit margin raised by 100bp and 20bp to 14.8% and 13.9% in 2014 and 2015, respectively.
Morgan Stanley believes that stock is currently trading at 8-10x of the 2014-15 expected EPS, a 40% discount to its national distributors/ retail drugstore chain peers.
Copyright 2014 ACN Newswire. All rights reserved.