Sinopharm's Interim Results in Line; Sinopharm Remains Our Top Pick Among Distributors

Narrow-moat Sinopharm’s interim earnings were in line with our expectations. Revenue for the six months was CNY 261 billion, or 5% year-on-year growth, which is slower than our forecast. However, gross profit margin was stable at 8.28%, which is better than our expectation and surprisingly resilient despite a challenging second quarter. Management was confident that growth would be higher in the second half, noting that near-term performance couldn’t possibly be worse than the second quarter during China’s COVID-19 restrictions. We agree with this assessment, and expect a rebound in the second half. We maintain our full-year growth projection of 8%-9%.