Shanghai Pharma (2607.HK): Updating for 3Q26 financials

3Q26 results broadly in line; distribution improving while manufacturing remains under pressure. 3Q26 revenue of Rmb75.5bn (+2.7% yoy; GSe: Rmb75.8bn) was broadly in line with our estimate, with the distribution business improving sequentially (+5.5% qoq) alongside a gradual normalization of industry conditions. Manufacturing remained under pressure (-3.3% yoy) amid continued price erosion. Attributable net profit of Rmb1.08bn (+57% yoy) was also broadly in line, while recurring net profit increased 50% yoy to Rmb897mn, supported by tighter SG&A control (-6% yoy) and significantly lower asset-impairment losses. Post results, we adjust our net profit estimates by -0.6%/3.6%/3.6% for 2026E/27E/28E; our 12m TP changed to HK$10.17 from HK$9.97. We are Sell-rated with a 12-month SOTP-based TP of HK$10.17, consisting of a Rmb20.9bn valuation for manufacturing and Rmb13.0bn for distribution and other businesses.