Sino Biopharmaceutical profit up 15% to HK$221mn

The group sees more M&A opportunities to arise expediting consolidation of the pharmaceutical industry, and further intensifying competition.

Leading modernised Chinese medicine producer Sino Biopharmaceutical Limited (“Sino Biopharmaceutical”) on Monday announced its unaudited interim results for the six months ended 30 June 2011 (“1H/FY2011”).

For the six months ended 30 June 2011, the Group recorded a turnover of approximately HK$2,707,371,000, representing a 40.8% increase from the corresponding period last year. Profit attributable to the Group grew by about 15% to approximately HK$221,181,000 from the same period last year. Basic earnings per share rose by around 7.5% to 4.46 HK cents. The Group maintained a strong financial position with cash and bank balances reaching approximately HK$2,189,620,000 (As at 30 June 2010: approximately HK$2,689,975,000).

The Board of Directors declared a second quarter dividend payment of 2 HK cents per share, which together with the dividend of 2 HK cents already paid for the first quarter, brings the total dividends per share to 4 HK cents for the 1H/FY2011. (2010: 4 HK cents).

Mr Tse Ping, Chairman of Sino Biopharmaceutical, said, “This year is the first implementation year of the Twelfth Five-Year Plan. Benefiting from favourable medical reform policies and increased resources from the government, the local pharmaceutical manufacturing industry maintained a rapid growth for the tenth consecutive year. Although the Group was subject to constant and intense inflationary pressures in the PRC during the period, as well as other external factors, but it continued to be adhered to stringent quality control measures to ensure its products were safe and reliable. Also, it focused on the development of its core operations, while establishing a new sales model and entering into the new markets, which generated promising returns for us. With an enhanced investment in research and development (“R&D”) and further emphasis on new product development, the sales of new products increased noticeably in the first half of 2011”.

Mr Tse concluded, “The Group believes that the domestic economy in the PRC should remain strong. Sales income for the pharmaceutical manufacturing industry should continue to increase in the second half of the year. However, following the formal implementation of the revised “Good Manufacturing Practice”, the price-consciousness of pharmaceutical tenders carried out at various provinces, and with the government lowering the prices of pharmaceutical products on numerous occasions. Thus, a market trend of ‘high growth in sales, lower growth in profits and decline in margins’ has prevailed. The Group expects that the industry’s ability to generate profitability would be further constricted. More merger and acquisition opportunities may arise, expediting consolidation of the pharmaceutical industry, and further intensifying competition. Therefore, the management will continue to seek appropriate acquisition opportunities that enable the Group to achieve sustainable business growth while generating satisfactory returns for shareholders”.