On December 24, the A-share traditional Chinese medicine sector staged a trading tide again. As of the closing of the day, Gansu Longshenrongfa Pharmaceutical Industry Co.Ltd(300534) and Tianjin Chase Sun Pharmaceutical Co.Ltd(300026) both “20cm” limit, Jinghua Pharmaceutical Group Co.Ltd(002349) , Guizhou Yibai Pharmaceutical Co.Ltd(600594) , Dali Pharmaceutical Co.Ltd(603963) , Guangxi Wuzhou Zhongheng Group Co.Ltd(600252) , Kunming Longjin Pharmaceutical Co.Ltd(002750) limit.
Among them, Kunming Longjin Pharmaceutical Co.Ltd(002750) increased the limit for three consecutive days, with a cumulative increase of 33.07%; Gansu Longshenrongfa Pharmaceutical Industry Co.Ltd(300534) 5 days 4 board, with a cumulative increase of 91.53%, ranking the first in the two cities this week.
Brokers believe that the traditional Chinese medicine sector itself is at a low historical valuation and has strong consumption attributes. Equity incentive ensures the growth of the industry, which is expected to usher in an investment opportunity of double rise in performance valuation.
the price reduction of centralized purchase is moderate
On December 24, Guangdong Pharmaceutical Trading Center issued the notice on the centralized procurement document of Guangdong alliance Qingkailing and other proprietary Chinese medicines. The procurement involves 132 varieties, covering clinical varieties such as Qingkailing, Xingnaojing, compound salvia miltiorrhiza, Xuesaitong and Ginkgo biloba, star products such as Lianhua Qingwen and antiviral oral liquid, and well-known traditional Chinese medicine enterprises such as Shijiazhuang Yiling Pharmaceutical Co.Ltd(002603) , Shenwei pharmaceutical, Guangzhou Baiyunshan Pharmaceutical Holdings Company Limited(600332) , Xiangxue Pharmaceutical Co.Ltd(300147) , Zhejiang Conba Pharmaceutical Co.Ltd(600572) , Yunnan Baiyao Group Co.Ltd(000538) .
Source: Official Website of Guangdong Pharmaceutical Trading Center
The results of the proposed successful centralized procurement of Chinese patent medicines in 19 provinces and cities led by Hubei were announced a few days ago, and the publicity time is up to December 24. From the list of proposed winners, 97 enterprises including Shenwei pharmaceutical, Kpc Pharmaceuticals Inc(600422) , Jiangsu Kanion Pharmaceutical Co.Ltd(600557) , Heilongjiang Zbd Pharmaceutical Co.Ltd(603567) pharmaceutical, Beijing Tongrentang Co.Ltd(600085) and 111 products were selected, with a winning rate of 62%, an average decrease of 42.27% and a maximum decrease of 82.63%.
Dongguan Securities believes that the price reduction rate of this centralized purchase is relatively moderate. Group A of this centralized purchase has not experienced an extreme decrease of up to 90%. The price of most drugs has decreased by 30% – 50%, and some drugs have only decreased by 10% – 30%. In addition, the policy side of the traditional Chinese medicine industry is relatively friendly, and the valuation of most targets in the industry is low.
After the announcement of the results of the proposed centralized procurement of traditional Chinese medicine, Kunming Longjin Pharmaceutical Co.Ltd(002750) , Guangxi Wuzhou Zhongheng Group Co.Ltd(600252) , Huadong Medicine Co.Ltd(000963) , Beijing Tongrentang Co.Ltd(600085) , Zhejiang Jingxin Pharmaceutical Co.Ltd(002020) many listed companies quickly announced that relevant products were shortlisted. On December 22, the traditional Chinese medicine sector rose strongly, Kunming Longjin Pharmaceutical Co.Ltd(002750) , Guizhou Bailing Group Pharmaceutical Co.Ltd(002424) and other stocks rose by the limit, Beijing Tongrentang Co.Ltd(600085) , Shanxi Panlong Pharmaceutical Group Limited By Share Ltd(002864) , Chongqing Taiji Industry (Group) Co.Ltd(600129) , Renhe Pharmacy Co.Ltd(000650) , Tianjin Zhongxin Pharmaceutical Group Corporation Limited(600329) rose by more than 6%.
policy support
Since this year, the heavy support policies of the traditional Chinese medicine sector have continued.
In February 2021, the State Council issued several policies and measures on accelerating the development of characteristics of traditional Chinese medicine; On June 30, the National Health Commission and others jointly formulated the opinions on Further Strengthening the work of traditional Chinese medicine in general hospitals and promoting the coordinated development of traditional Chinese and Western medicine; On July 7, the five departments jointly formulated the implementation plan for the dissemination of traditional Chinese medicine culture (2021-2025).
According to incomplete statistics, since 2021, 11 innovative traditional Chinese medicines have been approved, and the approved new drugs are widely distributed in the field of disease treatment, covering many fields such as respiration, nerves, digestion and so on. The state has vigorously promoted the inheritance and innovation of traditional Chinese medicine. The number of innovative traditional Chinese medicine, whether applied for registration or approved, has reached a new high this year.
Source: China Securities Co.Ltd(601066) Research Report
In addition, traditional Chinese medicine plays an important role in epidemic prevention and control, which helps to improve the market’s understanding of its effectiveness and safety.
the industry has broad upward space
Analysts said that 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, many brands of traditional Chinese medicine, such as Angong Niuhuang Pill and Zhangzhou Pientzehuang Pharmaceutical Co.Ltd(600436) continue to raise prices.
China Resources Sanjiu Medical & Pharmaceutical Co.Ltd(000999) on December 13, when responding to “whether the company’s Angong Bezoar Pill has increased in price” on the investor interaction platform, it said that the ex factory price of Angong Bezoar Pill of the company has increased this year. Previously, Beijing Tongrentang Co.Ltd(600085) issued a price adjustment notice to raise the sales price of Angong Niuhuang Pill (3G * pill / box) from 780 yuan to 860 yuan, an increase of about 10%.
In June this year, Zhangzhou Pientzehuang Pharmaceutical Co.Ltd(600436) online price once rose from 590 yuan / tablet to 1500 yuan / tablet, and then returned to normal price. From 2004 to 2020, Zhangzhou Pientzehuang Pharmaceutical Co.Ltd(600436) products raised prices 19 times.
Since this year, the price of traditional Chinese medicine has been rising. Affected by the epidemic and climate change, the prices of precious traditional Chinese medicine raw materials such as natural musk, natural bezoar and Cordyceps sinensis continued to rise, and the prices of Panax notoginseng increased slightly.
Huaan Securities Co.Ltd(600909) believes that the cost of proprietary Chinese medicine is greatly affected by the price of raw materials, and the price of raw materials can often be transmitted to the consumer through terminal price increase. With the increase of equity incentive, the operation of traditional Chinese medicine company is expected to usher in an inflection point.
Minsheng Securities believes that 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.
(China Securities Journal)
