Intrinsic Value Zhejiang Hisun Pharmaceutical Co., Ltd. (600267.SS)

• Previous Close: $10.50
• Intrinsic Value: $4.78
• Upside potential: -54%

Stock Valuation Context

Business Model And Market Position

Zhejiang Hisun Pharmaceutical operates as a comprehensive pharmaceutical manufacturer specializing in both active pharmaceutical ingredients (APIs) and finished dosage form products. The company serves diverse therapeutic areas including anti-tumor, cardiovascular, anti-infective, and liver care medications, positioning itself as a versatile supplier in China's pharmaceutical landscape. Hisun has expanded its service offerings to include contract manufacturing and research services (CMO/CRO), enhancing its revenue streams beyond traditional drug manufacturing. With decades of industry experience since its 1956 founding, the company maintains a solid market position through its broad product portfolio and integrated manufacturing capabilities. Hisun competes in the specialized and generic drug sector, leveraging its expertise in complex pharmaceutical compounds and regulatory compliance to serve both domestic and international markets. The company's diversified therapeutic focus and contract service offerings provide resilience against market fluctuations in specific drug categories.

Revenue Profitability And Efficiency

The company generated CNY 9.79 billion in revenue with net income of CNY 601 million, reflecting a net margin of approximately 6.1%. Operating cash flow of CNY 2.11 billion significantly exceeded net income, indicating strong cash conversion efficiency. Capital expenditures of CNY 238 million represent a moderate investment level relative to operating cash generation.

Earnings Power And Capital Efficiency

Hisun demonstrated solid earnings power with diluted EPS of CNY 0.52. The substantial operating cash flow of CNY 2.11 billion provides strong internal funding capacity for operations and strategic investments. The company maintains adequate capital allocation between maintaining existing operations and pursuing growth opportunities.

Balance Sheet And Financial Health

The balance sheet shows CNY 1.50 billion in cash against total debt of CNY 3.23 billion, indicating moderate leverage. The company maintains sufficient liquidity with cash covering nearly half of total debt obligations. The debt structure appears manageable given the stable cash flow generation from pharmaceutical operations.

Growth Trends And Dividend Policy

Hisun maintains a shareholder-friendly approach with a dividend per share of CNY 0.21, representing a payout ratio of approximately 40% based on current EPS. The company balances returning capital to shareholders with retaining earnings for operational needs and potential expansion in the competitive pharmaceutical market.

Valuation And Market Expectations

With a market capitalization of CNY 12.29 billion, the company trades at a P/E ratio of approximately 20.4 based on current earnings. The beta of 0.455 suggests lower volatility compared to the broader market, reflecting the defensive nature of pharmaceutical investments and stable cash flows.

Strategic Advantages And Outlook

Hisun benefits from its diversified product portfolio across multiple therapeutic areas and integrated API manufacturing capabilities. The company's long industry experience and CMO/CRO services provide additional revenue diversification. Challenges include intense competition and regulatory pressures in the pharmaceutical sector, though the company's established position provides stability.

Sources

Company financial reportsStock exchange disclosuresMarket data providers