This week’s market (2021.12.13-2021.12.17)
The Shenwan pharmaceutical index fell 2.34% this week, The increase was lower than that of Shanghai Composite Index (- 0.93%) and Shanghai and Shenzhen 300 (- 1.99%), of which the decline reached 2.31% on the 15th under the influence of the news of the U.S. Department of Commerce. This week, the traditional Chinese medicine sector performed well, it was at a historical low valuation, and the consumption attribute of the industry was strong. Equity incentive guaranteed the growth of the industry, which is expected to usher in the investment opportunity of double rise of performance and valuation. Therefore, this week, we discuss the traditional Chinese medicine sector.
The undervalued traditional Chinese medicine sector is expected to usher in a strategic opportunity for value remodeling
At present, traditional Chinese medicine has the lowest valuation and stock price in the pharmaceutical sector except for pharmaceutical circulation. In recent years, the state has successively issued documents to support the development of traditional Chinese medicine and the development of traditional Chinese medicine industry. The consumption attribute of brand traditional Chinese medicine is strong. Most of them have the right to raise prices independently, and the profit base and elasticity of products are guaranteed. In recent years, we have seen that most brand traditional Chinese medicine such as Angong Niuhuang Pill and Zhangzhou Pientzehuang Pharmaceutical Co.Ltd(600436) continue to raise prices. Secondly, most traditional Chinese medicine consumer goods are sold on the OTC side, which is relatively less affected by the medical insurance policy. It is expected to move closer to the valuation of daily consumer goods and usher in the strategic development opportunity of valuation remodeling.
Many exclusive varieties are superimposed with equity incentives, and the upward space of the industry is fully opened
Traditional Chinese medicine varieties, brands and patent barriers are high, and exclusive products are scarce. In recent years, the internal operation and management of many traditional Chinese medicine enterprises have been improved, and the retail marketing reform and channel improvement have increased product sales performance. In 2020, many listed traditional Chinese medicine companies have issued equity incentive and employee stock ownership plans. The annual growth rate of performance is required to be concentrated at 10-20%. The development speed of the industry has been guaranteed, the upward space has been fully opened, and the valuation is expected to continue to improve.
Strategic view:
National policies strongly support the development of traditional Chinese medicine, and the exclusive varieties of traditional Chinese medicine are scarce. At present, the traditional Chinese medicine sector is undervalued and is expected to usher in a good opportunity for allocation. Under the impact of multiple rounds of favorable policies such as national policy support, industrial marketing reform and improvement, equity incentive guarantee and so on, it is expected to see some traditional Chinese medicine consumer goods continue to develop the OTC market and bring double increases in valuation and performance to enterprises. It is suggested to pay attention to Beijing Tongrentang Co.Ltd(600085) , Zhangzhou Pientzehuang Pharmaceutical Co.Ltd(600436) , Jianmin Pharmaceutical Group Co.Ltd(600976) , Hubei Jumpcan Pharmaceutical Co.Ltd(600566) Henan Lingrui Pharmaceutical Co.Ltd(600285) etc.
This week’s stock recommendations focus on the portfolio
Growth Portfolio: Pharmablock Sciences (Nanjing) Inc(300725) , Beijing Balance Medical Technology Co.Ltd(688198) , Eyebright Medical Technology(Beijing) Co.Ltd(688050)
Robust combination: Zhejiang Jiuzhou Pharmaceutical Co.Ltd(603456) , Zhangzhou Pientzehuang Pharmaceutical Co.Ltd(600436) , Porton Pharma Solutions Ltd(300363)
Elastic combination: Jianmin Pharmaceutical Group Co.Ltd(600976) , Hubei Jumpcan Pharmaceutical Co.Ltd(600566) , Beijing Tongrentang Co.Ltd(600085)
Risk statement
Risk of policy changes in the pharmaceutical industry; Medical consumption demand decline risk, other systemic risks.
