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3SBio Inc Shs Unitary 144A/Reg S - Stock Quote 01530

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Morningstar's 3SBio Inc Shs Unitary 144A/Reg S Stock Analysis

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3SBio Earnings Slightly Outperform; FVE Lowered to HKD 10.00 on Lackluster Pipeline Progress

Jay Lee Senior Equity Analyst

Analyst Note

| Jay Lee |

Narrow-moat 3SBio reported year-end results that were slightly better than our expectation, but its outlook is still challenging due to lack of significant progress in pipeline or business development. Revenue for the full year and second half were CNY 6.3 billion and CNY 3.2 billion, respectively, representing 14% and 13% growth on year. Operating profit, as calculated with cost of sales, SG&A, and research and development expenses, was CNY 4.2 billion, or 6% better than our expectation, and was due to a modest gross profit margin improvement of 1.7 percentage points. We lower our fair value estimate to HKD 10.00 per share (from HKD 11.70) due to lower pipeline and profit margin forecasts. The stock trades at a 33% discount to our new fair value.

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3SBio Inc Shs Unitary 144A/Reg S's Company Profile

Business Description

3SBio Inc, or 3SBio, is one of the largest and most established biotech drugmakers in China. In 2021, it reported revenue of CNY 6.3 billion. Approximately 90% of its revenue is derived from four core drugs: TPIAO (rhTPO), Yisaipu (biosimilar of etanercept, a TNF-alpha inhibitor), rhEPO, and Mandi (minoxidil). With the exception of minoxidil, an over-the-counter drug, the others are all older generation biologics. Most of the pipeline candidates are "me-too" drugs and in general are still at an early stage.

No. 3 A1, Road 10, Shenyang Economy and Technology Development Zone
Shenyang, 110027, China, People's Republic of
T +86 2425386000
Sector Healthcare
Industry Biotechnology
Most Recent Earnings
Fiscal Year End Dec 31, 2022
Stock Type
Employees 5,292