Goldman Sachs: Lower SINOPHARM (01099) target price to HK$19.07, expected gradual revenue recovery in the coming quarters.

Goldman Sachs released a research report stating that SINOPHARM (01099) is expected to have sales of approximately RMB 140.4 billion in the first quarter of 2026, a slight decrease of 0.6% year-on-year, slightly below the bank's expectations, mainly due to continued pressure from the industry environment. However, the income trend has stabilized since the fourth quarter of 2024, and the bank expects gradual recovery in the coming quarters, forecasting a 0.1% decrease, 0.3% increase, and 0.9% increase in sales in the second, third, and fourth quarters of this year, respectively. The gross profit margin further decreased to 6.44%, reflecting the impact of the expansion of volume-based procurement (VBP) and further price reductions in the National Reimbursement Drug List (NRDL), partially offset by strict cost controls. The target price has been lowered from HKD 19.83 to HKD 19.07, with a "Neutral" rating. Based on performance, Goldman Sachs has reduced its profit forecast for SINOPHARM for the years 2026 to 2028 by 3.8%, 4.6%, and 3.5% respectively, to reflect weaker than expected sales growth recovery and a more conservative assumption on cash flow cycle.