I. review and theme of this week:
This week, Shenwan pharmaceutical index rose 1.71%, ranking sixth in the whole industry, outperforming Shanghai and Shenzhen 300 index and gem index. This week, we analyzed the latest investment direction after the recovery of medical heat, and recently recommended three directions: high growth in the first quarter, traditional Chinese medicine and oversold scientific innovation.
II. Recent resumption:
Performance this week: the pharmaceutical index continued its bright performance last week. CXO, traditional Chinese medicine, medical services and some core assets have rebounded significantly, and the overall recovery is obvious. Covid-19 drug related stocks still have a strong performance. Covid-19 household detection kit is also increasing in popularity. Traditional Chinese medicine also tried to attack, but it has not yet stepped out of the trend. Cause analysis: first, from the perspective of event driven, CXO rebounded after Pfizer covid-19 drug was approved in China, and boten and Asymchem Laboratories (Tianjin) Co.Ltd(002821) got super large orders, which later extended to other non covid-19 related cost-effective CXO targets, further driving the participation mood of medicine. After the introduction of the US supply chain security document, it is actually commonplace, and market concerns have eased. The continuous outbreak of the epidemic in Hong Kong is also an additive impact on the pharmaceutical sector. In addition, the outbreak of the conflict between Russia and Ukraine has increased geopolitical risks, and medicine has improved its advantage as a defense sector. Second, from the perspective of market transactions, the double high problem of high pharmaceutical valuation and high position concentration has been greatly released, the energy of oversold rebound has been fully accumulated, and the willingness of market participation has been strengthened. Third, from the perspective of fundamental cognition, in fact, the current situation of medicine is the real situation of the industry and the cognitive expectation after superimposing policy disturbance. Now it should be in the stage of relatively sufficient excessive negative cognitive concern. Current outlook: the core reason for the decline of medicine is the double high digestion of “high valuation” and “high chip concentration” after the bull market. In fact, after the decline in the first half of 2021 and the sharp decline in January 2022, the problem of “high valuation” has been greatly alleviated and “high chip concentration” has also been benign solved. In the current special national environment, based on the judgment that the double high problem has been solved, we can be optimistic about the medical index and actively participate. We suggest that we should pay attention to the high growth of the first quarter report in the short term, the cognitive oversold target of common sense valuation and the new direction of traditional Chinese medicine.
III. sector view:
1. Thinking from the perspective of several years: the past 4-5 years have been a pharmaceutical bull market, and investment has paid more attention to “selecting the head company of the main track and enjoying valuation expansion”. The process of leaving the pharmaceutical bull market from the second half of 2021 to 2022 is to pay more attention to “individual stock cost performance under valuation digestion”. Facing the short-term weakness of medicine, we have stretched our vision. What is the essence of the long-term growth of the pharmaceutical industry? It is the long-term pull of the rigid demand of medicine and the long-term pull of the upgrading of health consumption, and the current demand satisfaction and penetration rate are very low. However, because we are worried about the reform policy of the payment end, we ignore this essence. The payment end policy will not be the long-term logical restriction of a rigid industry, which is at most a medium-term and short-term interference item. In the medium and long term, we are optimistic. GDP growth is in the downward stage, the economic structure continues to adjust, while China Meheco Group Co.Ltd(600056) industry is in the early stage of growth, there is a reverse scissors gap, and the comparative advantage is strengthened. With the release of the population data of Qipu, China’s population structure is undergoing great changes. In the future, the development logic of many industries driven by the huge demographic dividend will face great changes. The market will pay more and more attention to and look for industries with comparative advantages of incremental attributes, The industry with long logical cycle and strong certainty ranks at the top of the list is medicine (the aging is intensifying, the expansion of just needed medicine, the upgrading of health consumption is intensifying, and the penetration rate of consumption medicine is increasing). It is optimistic for a long time. The long-term 4 + X strategic thinking remains unchanged: the upgrading of pharmaceutical science and technology, pharmaceutical consumption, pharmaceutical manufacturing and pharmaceutical mode.
2. Medium and short term: medicine has entered the layout range, which can be moderately optimistic, and the medium and short term is still bottom-up. Up to now, the “double high problem” has been obviously solved, and the conditions for bottom rebound have been met. In the short and medium term, the market has not yet found a clear main line, and the oversold rebound may become the most phased direction. Our idea is to select individual stocks from bottom to top. There are three points to sum up: 1) select individual stocks with “Fundamentals common sense valuation oversold discount”, in other words, they fall to the second-order guide of the irrational valuation range, Here you can take a look at the pharmaceutical science and technology innovation with obvious overall decline, as well as the stocks with high recognition & clean chip structure. 2) Excavate stocks with high growth or may exceed expectations in the first quarter, which can be combined with the previous oversold situation. 3) The sub areas of “domestic demand policy immunity” and “foreign demand is relatively rigid” are selected to take into account the comprehensive and sudden impact of the current geopolitical environment and medical policy environment, especially the emotional impact. Such as self-control, China covid-19 therapeutic drug industry chain, traditional Chinese medicine, adult class II vaccine, rehabilitation, cdmo, etc.
3. Configuration idea:
consumption upgrading: (1) vaccines: Chongqing Zhifei Biological Products Co.Ltd(300122) , Beijing Wantai Biological Pharmacy Enterprise Co.Ltd(603392) , Chengdu Kanghua Biological Products Co.Ltd(300841) ; (2) Selected Chinese herbal medicines include the following featured traditional Chinese medicines: ‘ Chongqing Taiji Industry (Group) Co.Ltd(600129) \\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\ Shandong Buchang Pharmaceuticals Co.Ltd(603858) , Beijing Tongrentang Co.Ltd(600085) ; (3) Rehabilitation: Ningbo Sanxing Medical Electric Co.Ltd(601567) etc; （4 Hunan Nucien Pharmaceutical Co.Ltd(688189)
Manufacturing Upgrading: (1) upstream of biomedicine ( Tofflon Science And Technology Group Co.Ltd(300171) , Truking Technology Limited(300358) , Focused Photonics (Hangzhou) Inc(300203) etc.); (2) Differentiated cdmo ( Porton Pharma Solutions Ltd(300363) , Asymchem Laboratories (Tianjin) Co.Ltd(002821) , Zhejiang Jiuzhou Pharmaceutical Co.Ltd(603456) , Wuxi Apptec Co.Ltd(603259) , Pharmaron Beijing Co.Ltd(300759) ); (3) API systematic upgrade ( Zhejiang Starry Pharmaceutical Co.Ltd(603520) ); (4) Injection outlet ( Nanjing King-Friend Biochemical Pharmaceutical Co.Ltd(603707) , Hainan Poly Pharm.Co.Ltd(300630) ).
Innovation Upgrading: (1) covid-19 small molecule & innovation internationalization ( Shanghai Junshi Biosciences Co.Ltd(688180) ); (2) CGT ( Porton Pharma Solutions Ltd(300363) , Northland, Zhejiangtailin Bioengineering Co.Ltd(300813) );.
Other long-term tracking and promising targets: Shenzhen Mindray Bio-Medical Electronics Co.Ltd(300760) \\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\, Pharmablock Sciences (Nanjing) Inc(300725) , Changchun High And New Technology Industries (Group) Inc(000661) \\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\, Shenzhen Salubris Pharmaceuticals Co.Ltd(002294) , Jiangsu Nhwa Pharmaceutical Co.Ltd(002262) , China biopharmaceutical, Zhejiang Wolwo Bio-Pharmaceutical Co.Ltd(300357) Lepu Medical Technology (Beijing) Co.Ltd(300003) , Jointown Pharmaceutical Group Co.Ltd(600998) , Yifeng Pharmacy Chain Co.Ltd(603939) , Lbx Pharmacy Chain Joint Stock Company(603883) , Dashenlin Pharmaceutical Group Co.Ltd(603233) , Yixintang Pharmaceutical Group Co.Ltd(002727) , Joincare Pharmaceutical Group Industry Co.Ltd(600380) , Guangzhou Jet Bio-Filtration Co.Ltd(688026) , Shanghai Kindly Enterprises Development Group Co.Ltd(603987) , etc.
Risk tips: 1) negative policies continue to exceed expectations; 2) The growth rate of the industry is lower than expected; 3) There may be errors in assumptions or calculations.
