China Healthcare:Stable growth in April

11.2% YoY growth in YTD4m17, vs. FY16growth of 12.0%

    Growth of retail drug consumption continued to strengthen, recording 12.6%YoY in April, compared with 10.7% in 1Q17. On a quarterly basis, growth in1Q17was 10.7%, compared with 10.7%, 11.1%, 11.6%, 15.1%, and 14.4% in4Q16, 3Q16, 2Q16, 1Q16and 4Q15respectively. We remind investors thatdrug consumption data have high correlation with hospital drug sales.

    We remain constructive on the sector

    We remain constructive on the healthcare sector in 2017on the back ofimproved regulatory environment, increased reimbursement coverage anddecreasing pricing pressure from drug tenders. We advise investors to focuson companies with new product launches and existing products with limitedpricing pressure such as CBPO (CBPO.OQ) and Hengrui (600276.SS).