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Please read carefully the important disclosures at the end of this report

Equity Research

March 14, 2017

3SBio Inc.

Raising TP to reflect inclusion in the new NRDL

Company Update

Maintain BUY

What's new

We raise our 2018e net profit forecast and TP 12% and 30% to reflect the firm’s inclusion on the new National Reimbursement Drug List (NRDL) and improving investor confidence. We believe the financial impact from Yisaipu’s inclusion in the NRDL should be gradual and sustainable, given its significant market potential and the status of drugs for chronic diseases. Maintain BUY.

Comments

Expect Yisaipu sales to hit Rmb2.5~2.8bn in 2020. We expect TNF-α inhibitors to continue as the major therapy for RA and AS in China and to have a long-term market potential of Rmb20bn. Despite the potential challenge from Humira biosimilars over the long term, our provincial analysis shows that Yisaipu should deliver a 33% revenue CAGR for the next 3 years. We estimate the inclusion of Yisaipu in the NRDL will add 7ppt to the company’s 2018 growth.

Lifting peak sales estimate to Rmb1.5~2bn for TPIAO. Without reimbursement restriction, we expect the competitive landscape for TPIAO to improve significantly. Based on our provincial analysis, we expect 35% volume growth and an 8% price cut for TPIAO in 2018, which should add 2% growth to the company’s 2018 revenue.

Valuation and recommendation

We raise our DCF-based TP to HK$11.6 (2017/18e P/E of 29x/23x), 30% higher than our previous HK$8.9, mainly due to accelerated earnings growth from the inclusion in the new NRDL, as well as improving investor confidence. We raise our 2018 normalized EPS forecasts 12% to Rmb0.46, representing an EPS CAGR of 29% over 2016~18 (vs. 22% previously).

Risks

Larger-than-expected price cuts; slower-than-expected implementation of new NRDL.

Ticker 01530.HK

CICC investment rating BUY

Last close HK$9.20

CICC target HK$11.60

52wk price range HK$10.96~6.93

Market cap (bn) HK$23

Daily value (mn) HK$99.20

Shares outstanding (mn) 2,532

Free float (%) 100

Daily volume (mn sh) 11.17

Business sector Pharmaceuticals

(Rmb mn) 2015A 2016E 2017E 2018E

Revenue 1,673 2,801 3,603 4,467

(+/-) 48.0% 67.4% 28.6% 24.0%

Net profit 526 701 908 1,172

(+/-) 80.4% 33.1% 29.6% 29.1%

EPS 0.21 0.28 0.36 0.46

BPS 2.22 2.41 2.67 2.99

DPS 0.00 0.08 0.11 0.14

CPS 0.18 0.05 0.30 0.41

P/E 37.1 29.8 23.0 18.3

P/B 3.5 3.4 3.1 2.8

EV/EBITDA 38.9 28.6 20.3 15.9

Dividend yield 0.0% 1.0% 1.3% 1.6%

ROAA 11.8% 8.2% 8.4% 10.1%

ROAE 16.1% 11.9% 14.1% 16.4%

Source: Wind, Bloomberg, company data, CICC Research

Bo YU Ziyu HE Yanyin ZHU Jing QIANG, CFA

Analyst Associate Analyst Analyst [email protected]

SFC CE Ref: BJC515

[email protected]

SAC Reg. No.: S0080116050011

[email protected]

SAC Reg. No.: S0080116040003

SFC CE Ref: BIH554

[email protected]

SAC Reg. No.: S0080512070005

SFC CE Ref: AWU229

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01530.HK HSI

CICC Research: March 14, 2017


2

Financial summary Financial statement (Rmb mn) 2015A 2016E 2017E 2018E

Income statement

Revenue 1,673 2,801 3,603 4,467

COGS -242 -473 -600 -718

Selling expenses -586 -1,008 -1,297 -1,608

Administrative expenses -301 -364 -468 -581

Other ops income (expense) -143 -233 -205 -214

Operating profit 402 723 1,033 1,346

Finance costs -27 -65 -130 -128

Other income (expense) 212 175 175 175

Profit before income tax 588 833 1,078 1,392

Income tax -62 -125 -162 -209

Minority interest 0 -7 -8 -11

Net profit 526 701 908 1,172

EBITDA 479 850 1,189 1,535

Recurrent net income 600 701 908 1,172

Balance sheet

Cash and bank balances 1,299 377 497 768

Trade and bill receivables 550 767 1,017 1,285

Inventories 134 230 296 354

Other current assets 780 869 923 985

Total current assets 2,763 2,243 2,733 3,392

Fixed assets and CIP 450 509 605 724

Intangible assets and others 3,417 7,658 7,784 7,900

Total non-current assets 3,867 8,167 8,389 8,624

Total assets 6,630 10,410 11,122 12,016

Short-term borrowings 405 778 778 778

Trade and bill payables 34 59 74 89

Other current liabilities 333 218 270 318

Total current liabilities 773 1,055 1,122 1,186

Long-term borrowings 0 3,000 3,000 3,000

Total non-current liabilities 222 3,222 3,222 3,222

Total liabilities 995 4,277 4,345 4,408

Share capital 0 0 0 0

Retained profit 5,624 6,115 6,750 7,571

Equity 5,624 6,115 6,750 7,571

Total liabilities & equity 6,630 10,410 11,122 12,016

Cash flow statement

Pretax profit 588 833 1,078 1,392

Depreciation & amortization 77 127 156 190

Change in working capital -643 -411 -302 -325

Others 433 -412 -162 -209

Cash flow from operations 455 137 771 1,048

Capital expenditure -98 -489 -378 -425

Others -3,151 -3,733 0 0

Cash flow from investing -3,248 -4,222 -378 -425

Equity financing 4,133 0 0 0

Bank borrowings -1,035 3,373 0 0

Others 770 -210 -272 -352

Cash flow from financing 3,868 3,163 -272 -352

Foreign exchange gain (loss) 116 0 0 0

Net changes in cash 1,075 -923 120 271

Financial ratios 2015A 2016E 2017E 2018E

Growth ability

Revenue 48.0% 67.4% 28.6% 24.0%

Operating profit 17.2% 79.8% 42.9% 30.3%

EBITDA 27.3% 77.3% 39.9% 29.1%

Net profit 80.4% 33.1% 29.6% 29.1%

Profitability

Gross margin 85.5% 83.1% 83.4% 83.9%

Operating margin 24.0% 25.8% 28.7% 30.1%

EBITDA margin 28.6% 30.3% 33.0% 34.4%

Net margin 31.5% 25.0% 25.2% 26.2%

Liquidity

Current ratio 3.58 2.13 2.43 2.86

Quick ratio 3.40 1.91 2.17 2.56

Cash ratio 1.68 0.36 0.44 0.65

Liabilities / assets 15.0% 41.1% 39.1% 36.7%

Net debt / equity net cash 55.5% 48.4% 39.6%

Return

RoA 11.8% 8.2% 8.4% 10.1%

RoE 16.1% 11.9% 14.1% 16.4%

Per-share data

EPS (Rmb) 0.21 0.28 0.36 0.46

BPS (Rmb) 2.22 2.41 2.67 2.99

DPS (Rmb) 0.00 0.08 0.11 0.14

Cash flow per share (Rmb) 0.18 0.05 0.30 0.41

Valuation

P/E 37.1 29.8 23.0 18.3

P/B 3.5 3.4 3.1 2.8

EV/EBITDA 38.9 28.6 20.3 15.9

Dividend yield 0.0% 1.0% 1.3% 1.6%

Source: Company data, CICC Research

Company description 3SBio Inc. is a leading domestic biotechnology company that ranks first nationally in terms of sales from mammalian cell-based biopharmaceuticals and second in terms of 2013 sales of all biopharmaceuticals. As a pioneer of China's biotechnology industry, it has

extensive expertise in developing, manufacturing and marketing biopharmaceuticals and its two core products, TPIAO and EPIAO,

are market leaders. It has recently acquired Sciprogen, whose product rhEPO will boost its product portfolio and increase its penetration into Grade II and Grade I hospitals, where rhEPO sales have been experiencing significant growth.



3

Financial impact from inclusion in the NRDL

We highlight three 3SBio drugs that should benefit from the release of new NRDL on February 27 – namely, Yisaipu (new addition), TPIAO (restrictions removed) and Qiming granule (new addition). We expect these drugs to make meaningful contributions in 2018, with a 9ppt hike in total revenue growth (from 15% to 24%). We estimate sales growth of Yisaipu and TPIAO at achieve 36% and 24% in 2018, vs. 14% and 16% growth previously. In addition, we expect Qiming granule to bring only 1% incremental growth in Zhejiang Wansheng. We summarize our new estimates vs. old estimates in the below figure.

Figure 1: Revenue forecast change by segment (2017~18)


Rmb mn 2017 2018 2017 2018 2017 2018

EPO franchise 869 946 869 945 0% 0%

TPIAO 899 1,117 899 1,043 0% 7%

CP Guojian 1,155 1,575 1,155 1,317 0% 20%

Byetta and Bydureon 151 217 151 217 0% 0%

Zhejiang Wansheng 245 272 245 270 0% 1%

Others 284 340 284 343 0% -1%

Total 3,603 4,467 3,603 4,134 0% 8%

YoY growth (%)

EPO franchise 9% 9% 9% 9% 0ppt 0.2ppt

TPIAO 17% 24% 17% 16% 0ppt 8.2ppt

CP Guojian 53% 36% 53% 14% 0ppt 22.3ppt

Byetta and Bydureon 650% 44% 650% 44% 0ppt 0ppt

Zhejiang Wansheng 10% 11% 10% 10% 0ppt 1ppt

Others 21% 20% 21% 21% 0ppt -0.9ppt

Total 29% 24% 29% 15% 0ppt 9.2ppt

Revenue breakdown(%)

EPO franchise 24% 21% 24% 23%

TPIAO 25% 25% 25% 25%

CP Guojian 32% 35% 32% 32%

Byetta and Bydureon 4% 5% 4% 5%

Zhejiang Wansheng 7% 6% 7% 7%

Others 8% 8% 8% 8%

Total 100% 100% 100% 100%

New estimates Change (%)Old estimates



4

Yisaipu: Significant market potential with mild competitive landscape

Expecting Yisaipu to achieve sales of Rmb2.5~2.8bn in 2020

With a prevalence rate of ~0.35% for rheumatoid arthritis (RA) and ankylosing spondylitis (AS) in China, we estimate that ~8m people are suffering from these diseases. However, the treatment ratio with TNF-α

drugs is only at 1% in China, while most patients remain either untreated or only use traditional disease-modifying anti-rheumatic drugs (DMARDs) and non-steroidal anti-inflammatory drugs (NSAIDs), which are generally used in the early stage of the diseases.

We highlight the TNF-α inhibitors have better efficacy vs. traditional DMARDs, and expect the overall market potential of TNF-α inhibitors to achieve Rmb20bn over the long-term, thanks to increasing affordability and greater patient awareness. We expect Yisaipu (the Enbrel biosimilar) to continue as a major therapy for autoimmune diseases in China, even though we estimate the launch of biosimilars of Humira might pose a challenge (Figure 2).

Figure 2: RA drug market in China (2016)

Note: Data excludes NSAIDs and DMARDs Source: Company data, CICC Research,

Financial impact from Yisaipu’s inclusion in the NRDL

Despite significant market potential, we estimate 36% revenue growth for Yisaipu in 2018 (vs. or previous estimate of 14% growth), leading to a 7ppt increase in total 2018 revenue growth. We expect 40% volume growth and a 6% price cut in 2018, mainly due to a tightening of the medical insurance policy, a higher sales base, the status of chronic disease drugs and management’s intention to maintain the price integrity. According to the company, one third of Yisaipu sales have been from the seven RDL-included provinces. With the firm being included in the new NRDL, we expect an immediate sales hike first to occur in most of remaining provinces. Later, increasing patient awareness and better affordability should drive long-term growth.

Figure 3 summarizes our updated scenario analysis of Yisaipu, with different assumptions on volume growth and price cuts. Our model reflects the base-case scenario.

57%

3%

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26%

3% 2%

Yisaipu

Qiangke

Enbrel（originator）

Humira（originator）

Remicade（originator）

Actemra（originator）

Others



5

Figure 3: Scenario analysis on the NRDL inclusion of Yisaipu


Provincial analysis for Yisaipu (Shanghai, Shanxi, Hunan, Hubei)

In 2006, CP Guojian launched Yisaipu as the first TNF-α drug in China for treating RA, AS and psoriasis. Over 2010~2012, it was included in reimbursement drug lists (RDLs) in seven provinces – namely, Shanghai, Guangdong, Shanxi, Hunan, Hainan, Gansu and Tibet. We analyzed the sales data of Yisaipu in Shanghai, Shanxi, Hunan and used Hubei as a control group in figures below. Our analysis suggests that both sales and volume saw over 80% growth in Shanxi and Hunan during the year that Yisaipu was included in the RDL. However, this trend was not obvious in Shanghai and Hubei (control group). As Shanghai is the base for CP Guojian, we believe Yisaipu was largely supported by the local government and social medical insurance. In addition, we highlight that Yisaipu experienced a mild price cut of ~6% after being included in the seven provincial RDLs.

Figure 4: Revenue growth in Shanghai (Yisaipu) Figure 5: Volume growth in Shanghai (Yisaipu)

Source: PDB, CICC Research Source: PDB, CICC Research

RMB thousand 2013A 2014A 2015A 2016E 2017E 2018E

Yisaipu/CPGJ - previous

Revenue 727,837 775,851 877,346 1,008,948 1,155,245 1,316,980

YoY 6.6% 13.1% 15.0% 14.5% 14.0%

Net profit 298,329 213,421 253,588 302,684 346,574 395,094

YoY -28.5% 18.8% 19.4% 14.5% 14.0%

Net margin 41.0% 27.5% 28.9% 30.0% 30.0% 30.0%

Yisaipu/CPGJ - best (50% volume growth with 9% price cut in 2018)

Revenue 727,837 775,851 877,346 1,008,948 1,155,245 1,647,380

YoY 6.6% 13.1% 15.0% 14.5% 42.6%

Net profit 298,329 213,421 253,588 302,684 346,574 494,214

YoY -28.5% 18.8% 19.4% 14.5% 42.6%

Net margin 41.0% 27.5% 28.9% 30.0% 30.0% 30.0%

Yisaipu/CPGJ - base (40% volume growth with 6% price cut in 2018)

Revenue 727,837 775,851 877,346 1,008,948 1,155,245 1,574,599

YoY 6.6% 13.1% 15.0% 14.5% 36.3%

Net profit 298,329 213,421 253,588 302,684 346,574 472,380

YoY -28.5% 18.8% 19.4% 14.5% 36.3%

Net margin 41.0% 27.5% 28.9% 30.0% 30.0% 30.0%

Yisaipu/CPGJ - bear (30% volume growth with 3% price cut in 2018)

Revenue 727,837 775,851 877,346 1,008,948 1,155,245 1,512,794

YoY 6.6% 13.1% 15.0% 14.5% 31.0%

Net profit 298,329 213,421 253,588 302,684 346,574 453,838

YoY -28.5% 18.8% 19.4% 14.5% 31.0%

Net margin 41.0% 27.5% 28.9% 30.0% 30.0% 30.0%

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Figure 6: Revenue growth in Shanxi (Yisaipu) Figure 7: Volume growth in Shanxi (Yisaipu)


Figure 8: Revenue growth in Hunan (Yisaipu) Figure 9: Volume growth in Hunan (Yisaipu)


Figure 10: Revenue growth in Hubei as a control

group (Yisaipu)

Figure 11: Volume growth in Hubei as a control

group (Yisaipu)


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Figure 12: ASP trend in Shanghai (Yisaipu) Figure 13: ASP trend in Hunan (Yisaipu)


TPIAO: Raising peak sales estimate to Rmb1.5~2bn from Rmb1~1.5bn

previously

With the removal of reimbursement restriction, we expect the competitive advantage of TPIAO to improve significantly. In addition, we highlight the penetration rate of TPIAO in the chemo-induced thrombocytopenia (CIT) and immune thrombocytopenia (ITP) markets is now less than 10%. We expect the penetration rate to achieve 20~30% in the future.

Financial impact from TPIAO’s inclusion in the NRDL

We estimate 24% revenue growth for TPIAO (vs. 16% growth previously), contributing 2ppt TO total revenue growth. We anticipate 35% volume growth and an 8% price cut in 2018, mainly due to a higher sales base and management’s intention of maintaining the price integrity. The company says that one-third of TPIAO sales were generated in the seven provinces where restrictions were removed. With the nationwide removal of restrictions, we expect immediate sales hikes first to occur in the remaining provinces.

Below we summarize our scenario analysis on TPIAO. Our model reflects the base-case scenario.

Figure 14: Scenario analysis on the NRDL inclusion of TPIAO


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RMB thousand 2012A 2013A 2014A 2015A 2016E 2017E 2018E

TPIAO - previous

Revenue 210,391 314,159 444,676 605,100 768,477 899,118 1,042,977

YoY 49.3% 41.5% 36.1% 27.0% 17.0% 16.0%

TPIAO - best (45% volume growth with 10% price cut in 2018)

Revenue 210,391 314,159 444,676 605,100 768,477 899,118 1,173,349

YoY 49.3% 41.5% 36.1% 27.0% 17.0% 30.5%

TPIAO - base (35% volume growth with 8% price cut in 2018)

Revenue 210,391 314,159 444,676 605,100 768,477 899,118 1,116,705

YoY 49.3% 41.5% 36.1% 27.0% 17.0% 24.2%

TPIAO - bear (25% volume growth with 5% price cut in 2018)

Revenue 210,391 314,159 444,676 605,100 768,477 899,118 1,067,703

YoY 49.3% 41.5% 36.1% 27.0% 17.0% 18.8%



8

Historical growth trend and ASP trend after removing usage restriction

TPIAO was launched in 2006 and was included in 2009 version of NRDL. We highlight that seven provinces (Shanghai, Shaanxi, Liaoning, Jilin, Heilongjiang, Hainan, and Tibet) removed the reimbursement limitation over 2010~2012, when releasing their provincial RDLs. We analyzed the sales data in Shanghai, Shaanxi and Liaoning, and use Guangdong as a control group in below figures. We highlight that TPIAO has experienced obvious volume growth hike in all three provinces, vs. steady growth in Guangdong. In addition, the price cuts were mild, within 10% for all the provinces.

Figure 15: Revenue growth in Shanghai (TPIAO) Figure 16: Volume growth in Shanghai (TPIAO)


Figure 17: Revenue growth in Shaanxi (TPIAO) Figure 18: Volume growth in Shaanxi (TPIAO)


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9

Figure 19: Revenue growth in Liaoning (TPIAO) Figure 20: Volume growth in Liaoning (TPIAO)


Figure 21: Revenue growth in Guangdong as a

control group (TPIAO)

Figure 22: Volume growth in Guangdong as a

control group (TPIAO)


Figure 23: ASP trend in Shanghai (TPIAO) Figure 24: ASP trend in Shaanxi (TPIAO)


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10

Earnings preview for 2016 results

We expect an inline-to-slight-beat 2016 results to be released on March 17. Below we summarize our revenue forecasts by products as well as our estimates vs. consensus. We highlight that the high growth in 2016 was mainly due to the consolidation effect from Zhejiang Wansheng, CP Guojian and Byetta.

Figure 25: 2016 revenue forecasts


Figure 26: CICC estimates vs. consensus for 2016 results

Source: Company data, Bloomberg, CICC Research

Rmb mn 2015 2016E YoY As % of total

EPO franchise 727 798 10% 28%

TPIAO 605 768 27% 27%

CP Guojian - 757 N/A 27%

Byetta and Bydureon - 20 N/A 1%

Zhejiang Wansheng 103 223 116% 8%

Others 238 235 -1% 8%

Total 1,673 2,801 67% 100%

Rmb mn 2016E YoY

2016

consensus YoY

CICC estimates

vs. consensus

Revenue 2,801 67.4% 2,866 71.3% -2.3%

Gross profit 2,328 62.7% 2,463 72.1% -5.5%

Operating profit 723 79.8% 859 113.6% -15.8%

Core profit (excluding one-time items) 701 16.8% 726 21.1% -3.5%

Fully diluted core EPS (Rmb) 0.28 16.8% 0.29 21.1% -3.5%

Gross margin 83.1% -2.4ppt 85.9% 0.4ppt -2.8ppt

Operating margin 25.8% 1.8ppt 30.0% 5.9ppt -4.2ppt

Net margin (excluding one-time items) 25.0% -10.8ppt 25.3% -10.5ppt -0.3ppt



11

Model and forecast change

We adjust our earnings forecasts to reflect the inclusion of Yisaipu, TPIAO and Qiming granule in the new NRDL. We previously excluded these into our estimates due to the uncertainty in both timing and products that would be included in the new NRDL. We highlight that the inclusion of Yisaipu in the new NRDL has largely exceeded market expectations. We illustrate our current and previous forecasts in Figure 27.

Figure 27: Earnings forecast revisions

Source: Bloomberg, CICC Research

2016E 2017E 2018E

Revenue Before 2,801 3,603 4,134

(RMB mn) After 2,801 3,603 4,467

(+/-) 0.0% 0.0% 8.0%

Gross Profits Before 2,328 3,004 3,436

(RMB mn) After 2,328 3,004 3,749

(+/-) 0.0% 0.0% 9.1%

Operating Income Before 723 1,032 1,192

(RMB mn) After 723 1,033 1,346

(+/-) 0.0% 0.0% 12.9%

Net Income Before 701 908 1,044

(RMB mn) After 701 908 1,172

(+/-) 0.0% 0.0% 12.3%

Net Income, normalized Before 701 908 1,044

(RMB mn) After 701 908 1,172

(+/-) 0.0% 0.0% 12.3%

Number of shares Before 2,532 2,532 2,532

(mn) After 2,532 2,532 2,532

(+/-) 0.0% 0.0% 0.0%

Fully diluted EPS, normalized Before 0.31 0.39 0.45

(HKD) After 0.31 0.40 0.51

(+/-) 0.0% 2.9% 14.9%



12

Figure 28: Historical P/E and P/B bands

Source: Bloomberg, CICC Research

Figure 29: Valuation of comparable companies

Note: We use CICC estimates for covered companies (highlighted in gray), and Bloomberg estimates for non-covered companies Source: Bloomberg, CICC Research

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1530.HK 2.7X 3.3X 3.9X 4.7X

Ticker MktCap

2017/3/13 (HK$mn) 2016A/E 2017E 2018E 2016A/E 2017E 2018E 2016A/E 2017E 2018E 2016A/E 2017E 2018E 2016A/E 2017E 2018E

HK-listed conglomerate companies

Shanghai Pharmaceutical 2607.HK 19.94 61,880 1.19 1.31 1.47 14.9 14.0 12.5 1.5 1.4 1.3 11.8 10.5 9.5 10.0 10.3 10.8 n.a.

Guangzhou Pharmaceutical 874.HK 23.25 49,676 0.87 0.95 0.84 24.0 22.5 25.6 2.2 2.1 2.0 21.4 19.0 17.1 12.3 11.5 10.8 0.0

CR Pharmaceutical 3320.HK 8.55 53,733 0.43 0.56 0.63 19.9 15.1 13.5 1.2 1.2 1.1 8.9 7.8 6.8 8.9 8.3 9.1 0.0

Market cap weighted average 71,142 18.8 15.8 15.2 1.9 1.8 1.6 12.2 10.8 9.7 11.7 11.3 11.5 0.6

Median 61,880 19.0 14.6 13.0 1.8 1.7 1.6 10.7 9.5 8.5 11.2 10.9 10.8 0.0

HK-listed pharmaceutical companies

CSPC Pharmaceutical Group 1093.HK 9.87 59,738 0.36 0.45 0.54 27.6 21.9 18.4 5.8 5.0 4.2 17.9 14.9 12.3 21.8 23.3 24.2 1.1

Tongrentang Tech 1666.HK 13.88 17,777 0.51 0.60 0.71 24.4 21.2 17.9 3.1 2.8 2.5 13.3 11.5 10.1 15.2 14.4 14.5 1.2

Tongrentang Chinese Medicine 8138.HK 10.32 8,639 0.53 0.61 0.63 19.5 16.8 16.5 3.9 3.4 3.0 12.5 11.0 9.9 21.9 21.4 20.1 1.3

Livzon Pharmaceutical Group 1513.HK 46.50 23,989 1.79 2.25 2.33 23.2 19.0 18.4 2.9 2.6 2.1 15.3 12.8 11.2 14.2 14.5 13.3 1.2

Sino Biopharmaceutical 1177.HK 6.97 51,663 0.26 0.29 0.28 26.3 23.6 25.1 5.0 4.2 3.7 13.5 12.2 10.6 22.8 20.6 20.4 0.9

Shijiazhuang No.4 Pharmaceutical 2005.HK 2.85 8,094 0.15 0.16 0.18 19.5 17.8 15.5 3.1 2.8 2.5 11.4 10.3 9.4 18.3 18.4 18.5 0.9

3SBio 1530.HK 9.40 23,804 0.28 0.36 0.41 30.4 24.1 21.0 3.4 3.0 2.6 21.6 17.2 14.1 11.9 13.9 15.4 0.0

Hec Changjiang Pharma 1558.HK 16.02 7,241 0.78 0.99 1.23 18.4 14.8 12.0 2.6 2.3 1.9 11.1 8.6 6.9 14.5 16.3 17.0 1.1

Lee's Pharmaceutical 950.HK 6.54 3,859 0.42 0.45 0.50 15.6 14.5 13.2 2.3 2.0 1.8 10.5 9.7 8.9 16.7 16.6 16.3 1.6

Luye Pharma 2186.HK 4.76 15,808 0.27 0.32 0.36 16.0 13.6 12.2 2.2 1.9 1.6 11.7 9.9 8.9 14.1 14.9 14.8 0.8

Consun Pharmaceutical 1681.HK 4.40 4,287 0.30 0.45 0.56 13.1 9.0 7.2 n.a. n.a. n.a. 8.6 5.7 4.7 18.3 26.6 28.9 3.1

Dawnways Pharmaceutical 2348.HK 4.29 3,437 0.40 0.47 0.55 9.7 8.4 7.1 1.9 1.6 1.4 5.5 4.6 4.2 n.a. n.a. n.a. 3.3

Sihuan Pharmaceutical 460.HK 2.90 27,492 0.16 0.18 0.19 16.2 15.1 13.8 2.2 2.0 1.8 9.7 9.0 8.3 13.6 13.4 13.2 2.3

United Lab International 3933.HK 4.98 8,102 0.06 0.24 0.30 77.8 20.6 16.5 1.2 1.2 1.1 10.0 8.5 7.9 1.7 5.4 6.4 0.0


Median 12,224 19.5 17.3 15.9 2.9 2.6 2.2 12.1 10.7 9.7 15.2 16.27 16.3 1.1

HK-listed medical device companies

Shandong Weigao 1066.HK 4.65 20,815 0.21 0.30 0.35 19.7 14.1 12.4 1.5 1.4 1.3 9.7 7.9 7.1 9.8 12.2 11.0 1.9

LifeTech Scientific 1302.HK 1.95 8,427 0.02 0.03 0.06 75.9 56.1 29.9 15.8 11.6 7.9 65.9 27.2 20.2 36.0 37.0 35.5 0.0

PW Medtech 1358.HK 1.80 2,845 0.14 0.17 0.17 11.9 9.7 9.7 1.1 0.9 0.8 7.6 6.5 6.7 9.5 9.5 9.5 0.0

Beijing Chunlizhengda Medical 1858.HK 13.10 906 0.87 1.08 1.17 13.5 11.2 10.3 1.6 1.4 1.2 8.8 7.1 5.8 13.1 14.1 14.1 n.a.


Median 3,310 18.9 13.8 11.6 1.6 1.4 1.3 9.7 7.9 6.7 9.8 12.2 12.0 0.0

HK-listed medical services companies

Kanghua Healthcare 3689.HK 11.02 3,685 0.44 0.53 0.61 22.6 19.1 16.5 2.7 2.4 2.2 14.6 12.4 10.4 17.5 13.7 14.6 0.0

Phoenix Healthcare 1515.HK 10.00 12,967 0.27 0.33 0.42 33.0 27.8 21.9 5.5 5.2 4.4 28.5 18.2 14.0 14.1 16.0 16.6 0.0

Harmonicare Medical 1509.HK 4.30 3,261 0.15 0.17 0.22 26.5 23.3 18.2 1.9 1.8 1.6 10.0 8.1 6.8 7.7 8.5 9.9 1.4

Wenzhou Kangning Hospital 2120.HK 35.00 2,556 1.01 1.31 1.72 31.1 24.6 18.7 2.3 2.1 2.0 17.3 11.9 9.1 7.1 8.8 10.6 n.a.


Median 3,261 28.8 24.0 18.4 2.5 2.3 2.1 15.9 12.2 9.8 10.9 11.2 12.6 0.0

Div.

YieldCompany

Price

(HK$)

P/E P/B EV/ EBITDA ROEEPS(Reporting ccy)

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Beijing Jianguomenwai Avenue Branch Beijing Kexueyuan South Road Branch Shanghai Middle Huaihai Road Branch

1st Floor, Capital Tower

6A Jianguomenwai Avenue

Beijing 100022, P.R. China

Tel: (86-10) 8567-9238

Fax: (86-10) 8567-9235

6th Floor, Block A, Raycom Infotech Park

2 Kexueyuan South Road, Haidian District


Tel: (86-10) 8286-1086

Fax: (86-10) 8286 1106

398 Huaihai Road (M)

Shanghai 200020, P.R. China

Tel: (86-21) 6386-1195

Fax: (86-21) 6386-1180

Shanghai Defeng Road Branch Shenzhen Fuhuayilu Branch Hangzhou Jiaogong Road Branch

Room 1105, Building A

299-1 Defeng Road, Fengxian District


Tel: (86-21) 5879-6226

Fax: (86-21) 6887-5123

Room 201, Annex Building

Shenzhen Duty Free Commercial Tower

6 Fuhua 1st Road, Futian District

Shenzhen 518048, P.R. China

Tel: (86-755) 8832-2388

Fax: (86-755) 8254-8243

1st Floor, Euro American Center

18 Jiaogong Road

Hangzhou 310012, P.R. China

Tel: (86-571) 8849-8000

Fax: (86-571) 8735-7743

Nanjing Hanzhong Road Branch Guangzhou Tianhe Road Branch Chengdu Binjiang Road (East) Branch

Section C, 30th Floor, Asia Pacific Tower

2 Hanzhong Road, Gulou District

Nanjing 210005, P.R. China

Tel: (86-25) 8316-8988

Fax: (86-25) 8316-8397

40th Floor, Teemtower

208 Tianhe Road

Guangzhou 510620, P.R. China

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1st & 16th Floors, Shangri-La Center

Block 9B, Binjiang Road (East)

Chengdu 610021, P.R. China

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Fax: (86-28) 8444-7010

Xiamen Lianyue Road Branch Wuhan Zhongnan Road Branch Qingdao Middle Hongkong Road Branch

4th Floor, Office Building, Paragon Center

1 Lianyue Road, Siming District

Xiamen 361012, P.R. China

Tel: (86-592) 515-7000

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4301-B, Poly Plaza

99 Zhongnan Road, Wuchang District

Wuhan 430070, P.R. China

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11th Floor, Shangri-La Center

Block 9, Hongkong Road (M), South District

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Chongqing Honghu Road (West) Branch Tianjin Nanjing Road Branch Dalian Gangxing Road Branch

1st & 10th Floors, Ourui Lanjue Center

Block 9, Honghu Road (W), New North District

Chongqing 401120, P.R. China

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10th Floor, Tianjin Global Trading Center

219 Nanjing Road, Heping District

Tianjin 300051, P.R. China

Tel: (86-22) 2317-6188

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16th Floor, Wanda Center

6 Gangxing Road, Zhongshan District

Dalian 116001, P.R. China

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Fax: (86-411) 8814-2933

Foshan Jihua 5th Road Branch Yunfu Xinxing Dongdi North Road Branch Changsha Chezhan Road (North) Branch

12th Floor, Trend International Business Building

2 Jihua 5th Road, Chancheng District

Foshan 528000, P.R. China

Tel: (86-757) 8290-3588

Fax: (86-757) 8303-6299

2nd Floor, Service Building C1, Wens Science &

Technology Garden, Dongdi North Road

Xincheng Town, Xinxing County

Yunfu 527499, P.R. China

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3rd Floor, Annex Building, Securities Tower

459 Chezhan Road (North), Furong District

Changsha 410001, P.R. China

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Fax: (86-731) 8446-2455

Ningbo Yangfan Road Branch Fuzhou Wusi Road Branch

11th Floor, Building Five, 999 Yangfan Road

Hi-tech Industrial Development Zone

Ningbo 315103, P.R. China

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38th Floor, Henglicheng Office Building

No.128 Wusi Road, Gulou District

Fuzhou 350001, P.R. China

Tel: (86-591) 8625 3088

Fax: (86-591) 8625 3050

Beijing Shanghai Hong Kong China International Capital

Corporation Limited

28th Floor, China World Office 2

1 Jianguomenwai Avenue


Tel: (86-10) 6505-1166

Fax: (86-10) 6505-1156

China International Capital

Corporation Limited – Shanghai Branch

32nd Floor Azia Center

1233 Lujiazui Ring Road


Tel: (86-21) 5879-6226

Fax: (86-21) 5888-8976


Corporation (Hong Kong) Limited

29th Floor, One International Finance Centre

1 Harbour View Street

Central, Hong Kong

Tel: (852) 2872-2000

Fax: (852) 2872-2100

Shenzhen Singapore United Kingdom China International Capital

Corporation Limited – Shenzhen Branch

#2503, 25th Floor, China Merchants Bank Tower

7088 Shennan Boulevard, Futian District

Shenzhen 518040, P.R. China

Tel: (86-755) 8319-5000

Fax: (86-755) 8319-9229


Corporation (Singapore) Pte. Limited

#39-04, 6 Battery Road

Singapore 049909

Tel: (65) 6572-1999

Fax: (65) 6327-1278


Corporation (UK) Limited

Level 25, 125 Old Broad Street

London EC2N 1AR, United Kingdom

Tel: (44-20) 7367-5718

Fax: (44-20) 7367-5719

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