The analyst rating from HSBC Global Research is a Hold for both SH PHARMA and SINOPHARM due to several factors:
1. Lack of Short-Term Catalysts: The commercialization of the Chinese pharmaceutical industry is currently lacking immediate drivers for growth.
2. Weakening Recovery Pace: The recovery of the domestic market is slowing down, which raises concerns about future performance.
3. Policy Uncertainties: Ongoing uncertainties in policies are hindering industry growth, creating an unstable environment for companies.
4. Earnings Growth Pressure: Companies are facing pressure from slowing earnings growth, which they can only partially mitigate through improved operational efficiency.
5. Sector Challenges: Anticipated delays in domestic consumption recovery, the impact of volume-based procurement policies, and tightened medical insurance payments are expected to suppress the sector's short-term upside potential.
These factors led to a cautious outlook, resulting in the Hold rating for both companies.
