Financial Analysis and Valuation of the CSPC Pharmaceutical Group

Yao Yao, Jiacheng Luo, Jiayao Jiang, Yuetian Li, Yicheng Tang

Southwestern University of Finance and Economics, Chengdu, 611130, China

Abstract: As a leader of innovative pharmaceutical industry, CSPC pharmaceutical group will continue to in-crease capital investment and team motivation to speed up the development process of key drugs based on the original innovative drug pattern with the combination of Butylphthalide, Oxiracetam, Levoamlodipine Maleate Tablets and antineoplastic drugs. This paper is mainly aimed at financial analysis and valuation of the CSPC pharmaceutical group, by combining FCFF model, PE and EV/EBITDA, we get a target price for the target company. The target price is 24.08HKD in a year and the corresponding EPS is 0.79. The target price is still 18% higher than the current price, so the 'buy' rating is given. Main Risks reminding include: Regulatory Risks, Market Risks, Economics Risks, Operational Risks. A reduction in the Product promotion shows the growth rate tends to be lower than expectation. Meanwhile, Drug approval progress and the growth of market scale have become unpredictable which may make some difference to the profit situation of company.

Keywords: Financial Analysis; CSPC; Financial Valuation; Investment Risks