Intrinsic Value Aurisco Pharmaceutical Co.,Ltd. (605116.SS)

• Previous Close: $28.69
• Intrinsic Value: $13.00
• Upside potential: -55%

Stock Valuation Context

Business Model And Market Position

Aurisco Pharmaceutical operates as a specialized pharmaceutical company engaged in the research, development, and manufacturing of high-value intermediates, specialty active pharmaceutical ingredients (APIs), and formulations for global markets. The company maintains a diversified product portfolio spanning steroids, oncology drugs, antiretroviral therapies, and other specialized APIs, serving pharmaceutical manufacturers worldwide. Its business model integrates both proprietary product development and contract manufacturing services, providing comprehensive chemical synthesis and API development capabilities. This dual revenue approach positions Aurisco within the competitive pharmaceutical outsourcing sector while maintaining proprietary product margins. The company leverages its established manufacturing infrastructure in China to deliver cost-effective solutions while maintaining quality standards required for global pharmaceutical supply chains. Aurisco's market position reflects its specialization in complex chemical synthesis and regulatory compliance capabilities, serving both domestic Chinese and international pharmaceutical markets with technically demanding products.

Revenue Profitability And Efficiency

Aurisco generated CNY 1.48 billion in revenue with net income of CNY 354.8 million, demonstrating a healthy net margin of approximately 24%. The company maintained strong profitability metrics despite significant capital investments, reflecting efficient operations within the specialized pharmaceutical ingredients sector. Operating cash flow of CNY 332.4 million supports ongoing business operations and strategic initiatives.

Earnings Power And Capital Efficiency

The company delivered diluted EPS of CNY 0.89, indicating solid earnings generation relative to its market capitalization. Substantial capital expenditures of CNY 540.3 million suggest significant investment in production capacity and research capabilities, positioning for future growth. These investments reflect management's confidence in expanding its API and contract manufacturing businesses.

Balance Sheet And Financial Health

Aurisco maintains a conservative financial position with CNY 769.4 million in cash against total debt of CNY 942.2 million, indicating manageable leverage. The balance sheet supports ongoing operations while providing flexibility for strategic investments. The company's financial structure appears appropriate for its growth stage within the capital-intensive pharmaceutical sector.

Growth Trends And Dividend Policy

The company demonstrates commitment to shareholder returns with a dividend per share of CNY 0.29, representing a payout ratio of approximately 33% based on current EPS. This balanced approach supports both investor returns and reinvestment in business growth. The substantial capital expenditure program indicates focus on capacity expansion and technological advancement.

Valuation And Market Expectations

With a market capitalization of CNY 9.19 billion, the company trades at approximately 26 times earnings, reflecting market expectations for growth in the specialized pharmaceutical ingredients sector. The negative beta of -0.152 suggests low correlation with broader market movements, typical for specialized healthcare companies with unique business drivers.

Strategic Advantages And Outlook

Aurisco's strategic position in high-value API manufacturing and contract services provides competitive advantages through technical expertise and regulatory compliance capabilities. The company's focus on complex molecules and established manufacturing infrastructure supports sustainable growth in global pharmaceutical supply chains. Ongoing investments in capacity and research should strengthen its market position.

Sources

Company financial statementsStock exchange disclosuresCompany description documentation