中国生物制药(01177) 　　3Q16 revenue and earnings up 12.8%/25.1% YoY excludingthe impact from forex 　　New product launches and NRDL revisions should help thecompany to deliver in 2018e 　　Maintain Buy rating and TP of HKD6.00 　　Good results. Revenue and net profit were up 7.2%/18.9% YoY (RMB base12.8%/25.1%), slightly lower than the consensus of 7.6%/22.3% in 3Q16. The firstnine months of net profits reached RMB1.6bn which represented 76% of our annualtarget. We think Sino Biopharm will reach our full year forecast easily due to theexpected patient rebound in 4Q16 and lower base of 4Q15. Runzhong reached18.6% YoY growth in 9M16 vs. 17.4% in 1H16 on an RMB base, mainly as a result ofgaining share from Bristol-Myers Squibb in the entecavir market. Tender progress isaccelerating in 2H16, especially in Beijing and Jiangsu. We expect another 18%reduction in weighted average price for Runzhong from the current level with theupcoming drug tenders in c15 provinces. At the same time, Runzhong may exitGuangdong in 4Q16, which will affect volume growth in 2017e. In our worst-casescenario, we expect Sino Biopharm to maintain single-digit revenue growth in 2017e,assuming the rest of the tenders adopt the lowest national price policy. 　　Positive catalysts in 2H17 and 2018. Two key pipelines, Anlotinib and Tenofovir,are estimated to be launched in 2H2017. The company’s BE study of previouslywithdrawn Tenofovir, indication for NSCLC (non-small cell lung cancer), has beencompleted recently and it expects to receive final approval by end-2017. Another newproduct, Sino Biopharm’s patented drug Anlotinib, a global blockbuster and first-linetreatment for metastatic renal cell carcinoma, just finished its Phase III clinical trial.We expect Anlotinib to receive its production approval in 2H17. Finally, we expectNRDL (National Reimbursement Drug List) revisions will likely be finished in 1H17and, depending on the outcome, should help the company’s P&L in 2018 and beyond. 　　Maintain Buy. We maintain our Buy rating and TP of HKD6.00. Our TP is based on a2016e PE of 22x (unchanged), with a 1.2x PEG (unchanged) (2016e PE/2016-18eCAGR), in line with the historical average and at a 5% premium to its peers’ 2016ePE of 21x due to Sinopharm’s strong R&D and sales capacity. Our TP implies 13%upside and a 2017e PE of 19%; we maintain our Buy rating on the company’ssuperior R&D capability and promising pipeline. Catalysts: better-than-expected newproduct launches of Anlotinib and Tenofovir. Downside risks include higher-thanexpectedprice cuts during drug tenders and slower-than-expected launch of newproducts.