Despite the impact from the novel coronavirus (Covid-19) lockdown measures, UOB KayHian is still bullish on Tianjin Zhong Xin Pharmaceutical Group Corp.

“We expect a strong rebound in 2H20 as China’s economy recovers and reopens,” UOBKH analysts Llelleythan Tan and John Cheong write in a note dated Aug 19.

According to UOBKH, Tianjin Zhong Xin’s 1H FY20 revenue and earnings were slightly below expectations, forming 44.5% and 46.1% of its full-year forecasts, respectively.

This has led the brokerage to reduce its FY20-22 revenue and earnings estimates.

Nevertheless, UOBKH believes the ongoing government policies would help boost demand and sales in China’s traditional Chinese medicine (TCM) industry going forward.

These policies include the Healthy China 2030 and the Strategic Plan On The Development of Traditional Chinese Medicine (2016-30).

The brokerage has maintained its “buy” call for the traditional Chinese medicine seller albeit with a lower target price of US$1.25 from US$1.35 previously.

As at 1.04 pm, Tianjin Zhong Xin was up 2 cents or 2.4% at 85.5 US cents with 17,100 shares changed hands.