Simcere Pharmaceutical Group (SEHK:2096) - Share price, News & Analysis

Q: What is the Fair Price of 2096 when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

2096 (HK$8.03) is trading below our estimate of [[fair value]] (HK$22.44)

2096 fundamental analysis
Snowflake Score
Valuation	4/6
Future Growth	1/6
Past Performance	5/6
Financial Health	4/6
Dividends	1/6

2096 Stock Overview

Rewards

Trading at 64.2% below our estimate of its fair value

Revenue is forecast to grow 19.85% per year

Earnings grew by 125.1% over the past year

Risk Analysis

High level of non-cash earnings

Simcere Pharmaceutical Group Competitors

China Resources Pharmaceutical Group

SEHK:3320

HK$29.6b

China Medical System Holdings

SEHK:867

HK$30.2b

China Traditional Chinese Medicine Holdings

SEHK:570

HK$16.6b

Grand Pharmaceutical Group

SEHK:512

HK$14.8b

Price History & Performance

Summary of all time highs, changes and price drops for Simcere Pharmaceutical Group
Historical stock prices
Current Share Price	HK$8.03
52 Week High	HK$12.02
52 Week Low	HK$6.45
Beta	0
1 Month Change	-13.47%
3 Month Change	-18.31%
1 Year Change	7.50%
3 Year Change	n/a
5 Year Change	n/a
Change since IPO	-26.87%

Recent News & Updates

Aug 16

With EPS Growth And More, Simcere Pharmaceutical Group (HKG:2096) Makes An Interesting Case

It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story...

Jun 27

Simcere Pharmaceutical Group (HKG:2096) Has Announced A Dividend Of HK$0.18

The board of Simcere Pharmaceutical Group Limited ( HKG:2096 ) has announced that it will pay a dividend of HK$0.18 per...

Shareholder Returns

	2096	HK Pharmaceuticals	HK Market
7D	-6.5%	-4.2%	-0.9%
1Y	7.5%	-36.4%	-19.7%

Return vs Industry: 2096 exceeded the Hong Kong Pharmaceuticals industry which returned -36.4% over the past year.

Return vs Market: 2096 exceeded the Hong Kong Market which returned -19.7% over the past year.

Price Volatility

Is 2096's price volatile compared to industry and market?
2096 volatility
2096 Average Weekly Movement	5.8%
Pharmaceuticals Industry Average Movement	6.0%
Market Average Movement	6.5%
10% most volatile stocks in HK Market	12.9%
10% least volatile stocks in HK Market	3.2%

Stable Share Price: 2096 is not significantly more volatile than the rest of Hong Kong stocks over the past 3 months, typically moving +/- 6% a week.

Volatility Over Time: 2096's weekly volatility (6%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
1995	6,182	Jinsheng Ren	https://www.simcere.com

Simcere Pharmaceutical Group Limited engages in the research, development, manufacture, and sale of pharmaceutical products for distributors and pharmacy chains and other pharmaceutical manufacturers in China. It focusses on various therapeutic areas, including oncology, central nervous system, autoimmune, anti-infection, cardiovascular, and others. The company’s principal products include Sanbexin, an edaravone and dexborneol concentrated solution for injection; Endostar, a recombinant human endostatin injection; ENWEIDA, an envafolimab injection; Softan, a rosuvastatin calcium tablet; ZAILIN, an amoxicillin granules/dispersible tablet/capsule; Iremod, an iguratimod tablet; Antine, a diclofenac sodium sustained release capsule/gel; and Orencia, an abatacept injection.

Simcere Pharmaceutical Group Fundamentals Summary

How do Simcere Pharmaceutical Group's earnings and revenue compare to its market cap?
2096 fundamental statistics
Market Cap	HK$22.37b
Earnings (TTM)	HK$1.74b
Revenue (TTM)	HK$5.78b

12.2x

P/E Ratio

3.7x

P/S Ratio

Is 2096 overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
2096 income statement (TTM)
Revenue	CN¥5.00b
Cost of Revenue	CN¥1.08b
Gross Profit	CN¥3.92b
Other Expenses	CN¥2.41b
Earnings	CN¥1.51b

Last Reported Earnings

Dec 31, 2021

Next Earnings Date

n/a

Earnings per share (EPS)	0.57
Gross Margin	78.40%
Net Profit Margin	30.14%
Debt/Equity Ratio	23.7%

How did 2096 perform over the long term?

See historical performance and comparison

Dividends

2.2%

Current Dividend Yield

26%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is 2096 undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

4/6

Valuation Score 4/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for 2096?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for 2096. This is calculated by dividing 2096's market cap by their current preferred multiple.
What is 2096's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	CN¥19.35b

2096 key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	3.8x
Enterprise Value/EBITDA	44.5x
PEG Ratio	12.4x

Price to Earnings Ratio vs Peers

How does 2096's PE Ratio compare to its peers?

2096 PE Ratio vs Peers

The above table shows the PE ratio for 2096 vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	7.9x
3320 China Resources Pharmaceutical Group	7.7x	9.7%	HK$29.6b
867 China Medical System Holdings	8.5x	8.5%	HK$30.2b
570 China Traditional Chinese Medicine Holdings	7.5x	7.3%	HK$16.6b
512 Grand Pharmaceutical Group	7.7x	n/a	HK$14.8b
2096 Simcere Pharmaceutical Group	12.2x	1.0%	HK$22.4b

Price-To-Earnings vs Peers: 2096 is expensive based on its Price-To-Earnings Ratio (12.2x) compared to the peer average (7.9x).

Price to Earnings Ratio vs Industry

How does 2096's PE Ratio compare vs other companies in the HK Pharmaceuticals Industry?

Price-To-Earnings vs Industry: 2096 is expensive based on its Price-To-Earnings Ratio (12.2x) compared to the Hong Kong Pharmaceuticals industry average (7.9x)

Price to Earnings Ratio vs Fair Ratio

What is 2096's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

2096 PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	12.2x
Fair PE Ratio	12.8x

Price-To-Earnings vs Fair Ratio: 2096 is good value based on its Price-To-Earnings Ratio (12.2x) compared to the estimated Fair Price-To-Earnings Ratio (12.8x).

Share Price vs Fair Value

What is the Fair Price of 2096 when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: 2096 (HK$8.03) is trading below our estimate of fair value (HK$22.44)

Significantly Below Fair Value: 2096 is trading below fair value by more than 20%.

Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is more than 20% higher than the current share price and analysts are within a statistically confident range of agreement.

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Future Growth

How is Simcere Pharmaceutical Group forecast to perform in the next 1 to 3 years based on estimates from 6 analysts?

Future Growth Score

1/6

Future Growth Score 1/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

1.0%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: 2096's forecast earnings growth (1% per year) is below the savings rate (1.6%).

Earnings vs Market: 2096's earnings (1% per year) are forecast to grow slower than the Hong Kong market (17.2% per year).

High Growth Earnings: 2096's earnings are forecast to grow, but not significantly.

Revenue vs Market: 2096's revenue (19.8% per year) is forecast to grow faster than the Hong Kong market (10.1% per year).

High Growth Revenue: 2096's revenue (19.8% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: 2096's Return on Equity is forecast to be low in 3 years time (16.3%).

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Past Performance

How has Simcere Pharmaceutical Group performed over the past 5 years?

Past Performance Score

5/6

Past Performance Score 5/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

22.7%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: 2096 has a high level of non-cash earnings.

Growing Profit Margin: 2096's current net profit margins (30.1%) are higher than last year (14.8%).

Past Earnings Growth Analysis

Earnings Trend: 2096's earnings have grown significantly by 22.7% per year over the past 5 years.

Accelerating Growth: 2096's earnings growth over the past year (125.1%) exceeds its 5-year average (22.7% per year).

Earnings vs Industry: 2096 earnings growth over the past year (125.1%) exceeded the Pharmaceuticals industry 15.2%.

Return on Equity

High ROE: 2096's Return on Equity (23.2%) is considered high.

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Financial Health

How is Simcere Pharmaceutical Group's financial position?

Financial Health Score

4/6

Financial Health Score 4/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: 2096's short term assets (CN¥5.0B) exceed its short term liabilities (CN¥3.1B).

Long Term Liabilities: 2096's short term assets (CN¥5.0B) exceed its long term liabilities (CN¥634.6M).

Debt to Equity History and Analysis

Debt Level: 2096 has more cash than its total debt.

Reducing Debt: Insufficient data to determine if 2096's debt to equity ratio has reduced over the past 5 years.

Debt Coverage: 2096's operating cash flow is negative, therefore debt is not well covered.

Interest Coverage: 2096's interest payments on its debt are well covered by EBIT (91.1x coverage).

Balance Sheet

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Dividend

What is Simcere Pharmaceutical Group current dividend yield, its reliability and sustainability?

Dividend Score

1/6

Dividend Score 1/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Cash Flow Coverage

2.16%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: 2096's dividend (2.16%) isn’t notable compared to the bottom 25% of dividend payers in the Hong Kong market (2.87%).

High Dividend: 2096's dividend (2.16%) is low compared to the top 25% of dividend payers in the Hong Kong market (8.33%).

Stability and Growth of Payments

Stable Dividend: Too early to tell whether 2096's dividend payments have been stable as they only just started paying a dividend.

Growing Dividend: Too early to tell if 2096's dividend payments are increasing as they only just started paying a dividend.

Earnings Payout to Shareholders

Earnings Coverage: With its reasonably low payout ratio (26%), 2096's dividend payments are well covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: 2096 is paying a dividend but the company has no free cash flows.

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Management

How experienced are the management team and are they aligned to shareholders interests?

0.6yrs

Average management tenure

CEO

Jinsheng Ren (60 yo)

27.42yrs

Tenure

Mr. Jinsheng Ren founded Simcere Pharmaceutical Group Limited in March 1995 and has been its Chairman and Chief Executive Officer since November 19, 2019. Mr. Ren has been Executive Director of Simcere Pha...

Leadership Team

Experienced Management: 2096's management team is not considered experienced ( 0.6 years average tenure), which suggests a new team.

Board Members

Experienced Board: 2096's board of directors are not considered experienced ( 2.8 years average tenure), which suggests a new board.

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Data	Last Updated (UTC time)
Company Analysis	2022/08/19 00:00
End of Day Share Price	2022/08/19 00:00
Earnings	2021/12/31
Annual Earnings	2021/12/31