Consun Pharmaceutical Group Ltd. : Neutral price, but strong fundamentals

Consun Pharmaceutical Group Ltd. relative valuation is now NEUTRAL. It was previously rated UNDERVALUED, and has a fundamental analysis score of 89.

Our analysis is based on comparing Consun Pharmaceutical Group Ltd. with the following peers – Shandong Luoxin Pharmaceutical Group Stock Co., Ltd. Class H, Tong Ren Tang Technologies Co., Ltd. Class H, Shanghai Fosun Pharmaceutical (Group) Co., Ltd. Class H and Livzon Pharmaceutical Group Inc Class H (8058-HK, 1666-HK, 2196-HK and 1513-HK).

Relative Valuation

Consun Pharmaceutical Group Ltd. is currently neutrally valued, as its previous close of HKD 5.25 lies within the CapitalCube estimate range of HKD 4.83 to HKD 5.84. Over the last 52 week period, Consun Pharmaceutical Group Ltd. has fluctuated between HKD 4.95 and HKD 7.37.

Relative Valuation

Company Overview

  • Relative underperformance over the last year and the last month suggest a lagging position.
  • Consun Pharmaceutical Group Ltd. currently trades at a higher Price/Book ratio (3.09) than its peer median (1.02).
  • 1681-HK outperforms its peers with a relatively high operating performance and the market also expects faster growth relative to its peers
  • 1681-HK‘s relatively high profit margins are burdened by relative asset inefficiency.
  • Change in the company’s annual revenues seems to be coming at the expense of earnings.
  • 1681-HK‘s return on assets currently and over the past five years suggest that its relatively high operating returns are sustainable.
  • The company’s relatively high gross and pre-tax margins suggest a differentiated product portfolio and tight control on operating costs relative to peers.
  • Compared with the peers chosen, 1681-HK has had faster revenue growth in prior years and a current PE ratio that suggests faster growth in the future suggesting superior growth expectations.
  • The company’s level of capital investment seems appropriate to support the company’s growth.

Investment Outlook

Consun Pharmaceutical Group Ltd. has a fundamental score of 89 and has a relative valuation of NEUTRAL.

Consun Pharmaceutical Group Ltd.’s price is very close to its implied price, thus not allowing for a specific classification into the Value – Price Matrix.

Fundamentals Vs Relative Valuation

Drivers of Valuation

1681-HK has an Outperforming profile relative to peers.

1681-HK achieved a better operating performance than the median of its chosen peers (ROE of 20.99% compared to the peer median ROE of 13.36%) and the market still expects faster growth from it than from those peers (PE of 22.50 compared to peer median of 8.04).

The company currently trades at a higher Price/Book ratio of 3.09 compared to its peer median of 1.02.

Valuation Drivers

1681-HK did not have a traded price at the prior year-end.

ROE % (On Common Equity)
 

Peer Analysis

A complete list of valuation metrics is available on the company page.

Company Profile

Consun Pharmaceutical Group Ltd. operates as a holding company engaged in the research, manufacture, and sale of modern Chinese medicines. Its products are categorized into the following divisions: Kidney Medicines, Medical Contrast Medium, and Other Medicines. The company was founded on December 13, 2010 and is headquartered in Guangzhou, China.

Disclaimer

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