Investment advice
Recently, the overall performance of the medical sector is weaker than the market. Since the second half of 2021, the medical sector has been facing a contradiction, which is that the profits contributed by the epidemic are worried by the market and are not sustainable, while the sectors such as hospital diagnosis and treatment and medical consumption are affected by the local rebound of the epidemic and epidemic prevention and control measures. Under this thinking framework, the epidemic prevention and control sector with better profit performance cannot enjoy a better valuation level, and the short-term performance of conventional medical treatment cannot be recognized by the market. In addition, the market may still overreact to fee control policy events, and some sectors and racetracks also face adjustment after a long period of high prosperity in the early stage, resulting in the weak overall performance of the medical sector in the near future.
The inflection point of the medical sector is expected to come in 2022, and the layout value appears. Looking forward to the future, we believe that the turning point of investment in the medical sector is coming, and there will be a reversal opportunity in 2022. The main judgment is based on the following aspects:
The valuation of the core targets of a large number of subdivided tracks has been significantly corrected, which is now at an all-time low;
The impact of the epidemic on hospital diagnosis and treatment is gradually eliminated, and the sector is expected to usher in a new era;
The high incidence of overseas outbreaks may continue, and the profits of epidemic prevention and control are expected to usher in a revaluation opportunity;
The 14th five year plan for the development of pharmaceutical industry was officially issued, and the growth value brought by pharmaceutical innovation is expected to be valued by the market again;
The performance growth of the company’s annual report and first quarter report will inject confidence into the market.
The 14th five year plan for the development of pharmaceutical industry was issued, and the innovation of devices and drugs is a long-term theme. On January 30, the Ministry of industry and information technology and other nine departments jointly issued the “14th five year plan” for the development of pharmaceutical industry and the corresponding policy interpretation, which made a very thorough analysis of the changes currently taking place in the pharmaceutical industry, including detailed prospects for the planning and development of chemical drugs, biological drugs, traditional Chinese medicine and medical devices in the next five years, It is proposed that during the “14th five year plan” period, the R & D investment of the whole industry will increase by more than 10% annually, and the proportion of new sales of innovative products in the increment of operating revenue of the whole industry will further increase by 2025. In the future, the industry will enter an important stage of high-quality development under the guidance of policies. Medical device and drug innovation is still the long-term direction supported and encouraged by national policies.
We are optimistic about China’s routine diagnosis and treatment recovery and overseas epidemic prevention and control. Under the current performance base, market environment and valuation level, we believe that the opportunities of the medical sector far outweigh the risks. It is recommended to actively carry out the layout in the first half of 2022, focusing on the following directions: 1) in hospital sector: medical services, medical devices, in vitro diagnosis, pharmacy, etc; 2) Covid-19 epidemic prevention and control section: covid-19 detection, vaccine, medical protection, etc; 3) R & D of drugs and devices: Innovation Medical Management Co.Ltd(002173) .
Key companies
Shenzhen Mindray Bio-Medical Electronics Co.Ltd(300760) , China Resources Sanjiu Medical & Pharmaceutical Co.Ltd(000999) , Changchun High And New Technology Industries (Group) Inc(000661) , Aier Eye Hospital Group Co.Ltd(300015) , Zhejiang Orient Gene Biotech Co.Ltd(688298) etc
Risk tips
The rebound of epidemic situation in China affects the recovery of hospital diagnosis and treatment flow; The intensity of centralized purchase, negotiation and price negotiation of drugs and devices exceeded expectations; The supply of anti epidemic materials increased and the quantity and Price Bureau deteriorated; The growth rate of medical insurance expenditure and health finance fell, and the increment of the industry decreased; R & D and new product launch are not as expected; The first quarterly report of the annual report is less than expected; Exchange risk of export enterprises; Medical malpractice risk; The increase of enterprise incentive investment affects the apparent profit; The investment in new medical infrastructure is less than expected.
