Grand Pharmaceutical Group (SEHK:512): Evaluating Valuation Following NMPA Approval for New Treprostinil Injection

Grand Pharmaceutical Group (SEHK:512) just secured approval from China’s NMPA for its new 20ML: 50MG Treprostinil Injection, adding another tool for clinicians treating pulmonary arterial hypertension. This regulatory milestone positions the company favorably in an expanding rare disease segment.

See our latest analysis for Grand Pharmaceutical Group.

Grand Pharmaceutical Group’s latest regulatory success follows a strategic string of moves, including significant licensing deals to broaden its footprint in rare diseases. While the stock’s share price has barely shifted over the past month, its one-year total shareholder return of 0.7% suggests steady, if muted, progress for long-term holders rather than a surge in short-term momentum.

If you’re keen to spot more healthcare players with breakthrough launches and growth ambitions, take the next step and check out See the full list for free.

With the stock trading at a notable discount to analyst targets even as regulatory wins and expansion plans unfold, the real question is whether Grand Pharmaceutical Group is a bargain or if future growth is already priced in.

Price-to-Earnings of 14.3x: Is it justified?

Grand Pharmaceutical Group is valued at a price-to-earnings (P/E) ratio of 14.3x based on its latest closing price of HK$8.52. This puts it below some peer averages but slightly above the overall Hong Kong pharmaceuticals sector.

The P/E ratio compares a company’s stock price to its earnings per share, offering investors a snapshot of how the market values current and prospective profitability. For a pharmaceuticals company, this gauge often reflects both steady baseline revenue from existing treatments and the potential for new product catalysts.

Compared to similar companies, Grand Pharmaceutical’s P/E is attractively discounted relative to the peer average (18.3x). This suggests the market is not fully pricing in earnings potential. However, it does sit marginally above the wider sector average (13.7x), indicating investors have factored in some premium for its growth strategy and recent regulatory milestones. Looking at the fair value P/E ratio of 22.2x, there appears to be room for the market to re-rate the stock closer to this level if optimism about future earnings strengthens.

Explore the SWS fair ratio for Grand Pharmaceutical Group

Result: Price-to-Earnings of 14.3x (UNDERVALUED)

However, slower revenue growth or setbacks in future approvals could challenge the case for the stock’s current valuation and discount to target.

Find out about the key risks to this Grand Pharmaceutical Group narrative.

Another View: Discounted Cash Flow Perspective

Taking a different angle, our DCF model estimates Grand Pharmaceutical Group’s fair value at HK$21.15 per share, which is far above its current price. This approach suggests the stock could be significantly undervalued by nearly 60%. However, does the DCF model capture the full story or are its assumptions too optimistic?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Grand Pharmaceutical Group for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Grand Pharmaceutical Group Narrative

If you think there’s more to uncover or want to dig into the numbers personally, you can shape your own view in just a few minutes. Do it your way

A great starting point for your Grand Pharmaceutical Group research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

Looking for more investment ideas?

Smart investors never rely on a single opportunity. Widen your search and let Simply Wall Street help you find powerful stocks others overlook.

• Boost your income potential by checking out these 19 dividend stocks with yields > 3% which delivers reliable yields above 3% for your portfolio.
• Catch the next wave in tech by targeting these 24 AI penny stocks for exposure to transformational artificial intelligence.
• Tap into tomorrow’s leaders with these 896 undervalued stocks based on cash flows that are currently trading below their estimated worth based on cash flows.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com