Key investment points:
Market review:
The A-share index rose by 93.0% last week, and the Shenzhen stock index rebounded by 78.0% last week, representing the growth trend of the Shenzhen Stock Exchange. Among the primary sub industries, power equipment, non-ferrous metals, medicine and biology increased significantly, while non bank finance, utilities, banking and other industries led the decline. During the reporting period, the pharmaceutical and biological sector rose 4.85%, outperforming the CSI 300 index by 3.77% and the gem index by 1.92%. All industries in the pharmaceutical industry sector performed well. In particular, the medical service sector, which fell sharply last week, rebounded sharply by 12.59% this week, recovering the decline last week, stimulated by the approval of covid-19 specific drugs, the large orders of China cdmo company and the release of performance express by leading Wuxi Apptec Co.Ltd(603259) .
Industry highlights of the week:
1) on February 17, the seventh batch of national centralized drug procurement drug information filling was carried out;
2) on February 19, the National Health Commission announced the deployment of sequential immunization.
Industry Week view:
The pharmaceutical sector rebounded greatly this week, mainly because the CXO sector was affected by the following two positive events:
1) Pfizer covid-19 specific drug was approved, and China small molecule cdmo company obtained large production orders.
2) Wuxi Apptec Co.Ltd(603259) released the performance express, which is close to the upper limit of the performance forecast. The performance of CXO leading companies exceeded expectations.
For CXO, our view is that the fundamentals of the sector have always been relatively strong. Whether it is performance or future orders, CXO is significantly more prosperous than other subdivided industries in the pharmaceutical sector. The core issue of the sector is valuation. In the early stage, the valuation of track stocks has been high. In 2022, the growth rate of the whole industry on the basis of high base will undoubtedly decline marginally. At present, the valuation of CXO leader corresponding to 22 years is in a relatively reasonable position. It is recommended to select the stocks whose layout and valuation are adjusted in place. Secondly, it should be considered that the industry will be divided within two or three years after the full expansion of production capacity, and some smaller companies may face greater competitive pressure. The investment of CXO sector may shift from the original investment logic of track stocks to looking for companies α The logic of. For the upcoming seventh centralized purchase, we believe that after the first six centralized purchases, the market should have passivated the centralized purchase and is expected to have a limited impact on the stock prices of relevant companies. The policy of centralized purchase will continue to be further promoted, and the scope of centralized purchase will be further expanded. It is suggested to avoid such sectors with high policy risks. The impact of centralized mining on the industry may take several years to fully digest. When some small excess capacity exits and the industry is cleared, the leading companies may have investment value.
Risk tips:
Risk factors: repeated risks in some areas of China’s epidemic situation, the risk of exceeding expectations in the implementation of policies such as cost control and volume procurement, and the risk of failure of innovative drug R & D Application for listing.
