Citigroup: Slightly lowers SINOPHARM (01099) target price to HK$22.6, first quarter performance roughly in line with expectations.

Citi released a research report stating that the drug distribution business continues to be weak, and revised down the revenue forecast for SINOPHARM (01099) for 2026 to 2028 by 2%, 2%, and 3%, respectively. Correspondingly, the net profit forecast for the same period was reduced by 1%, 1%, and 1%. The target price was slightly lowered from HK$22.8 to HK$22.6, and the "buy" rating was maintained. Citi stated that Sinopharm's revenue in the first quarter of 2026 was RMB 140.8 billion, a slight decrease of 0.6% year-on-year, which roughly meets the bank's expectations. According to the business division, management pointed out that the drug distribution business saw a slight decline year-on-year, while the year-on-year decline in medical device distribution business narrowed, indicating a preliminary stabilization of the business. On a more positive note, retail business increased by 5% annually. Citi expects industry consolidation to continue, and Sinopharm is expected to gain market share in second and third-tier cities through continuous expansion of its urban network.