In the report “one of the special studies on the traditional Chinese medicine industry – grasping the OTC investment opportunities of traditional Chinese medicine at the current time point” released last Sunday, based on the three aspects of national policy support for OTC of traditional Chinese medicine, strong ability to raise prices and undervalued valuation, we clearly suggest that investors should actively grasp the OTC investment opportunities of traditional Chinese medicine at the current time point. In this report, we try to further sort out the stock selection ideas of traditional Chinese medicine OTC.
From the perspective of product essence, we believe that OTC of traditional Chinese medicine can be roughly divided into two types of products with different attributes: 1. OTC of precious Chinese patent medicine; 2. OTC of common brand Chinese patent medicine. OTC of precious Chinese patent medicine has certain attributes of health care products. At the same time, the product brand strength is very strong, and its sales dependence is relatively low; OTC of common brand traditional Chinese medicine also has a certain brand awareness, but the product treatment attribute is more obvious and depends more on the enterprise’s own sales promotion ability to achieve growth.
OTC of precious Chinese patent medicine – both quantity and price can rise rapidly. In terms of sales, The overall sales volume of traditional Chinese medicine (including OTC and prescription drugs of traditional Chinese Medicine) has not increased significantly, but in recent years, the sales volume of major precious Chinese patent medicine OTC varieties has achieved rapid growth (for example, the sales volume of Angong Niuhuang Pill has increased by 20% in recent years, Zhangzhou Pientzehuang Pharmaceutical Co.Ltd(600436) In recent years, the sales volume has increased by 15-20% (etc.). In terms of price, OTC of precious Chinese patent medicine has a strong right to raise the price. Whether to implement the price increase depends more on the will of the enterprise & public opinion, and does not need to consider too much market competition factors.
Precious Chinese patent medicine OTC — a brief analysis of the texture of the four major investment targets. We believe that there are four investment targets of A-share precious Chinese patent medicine OTC: Beijing Tongrentang Co.Ltd(600085) , Zhangzhou Pientzehuang Pharmaceutical Co.Ltd(600436) , Guangyuyuan Chinese Herbal Medicine Co.Ltd(600771) Jianmin Pharmaceutical Group Co.Ltd(600976) (the exclusive supplier of precious Chinese patent medicine core raw materials for in vitro cultivation of bezoar). 1, Zhangzhou Pientzehuang Pharmaceutical Co.Ltd(600436) continued to perform well; 2, Beijing Tongrentang Co.Ltd(600085) , Guangyuyuan Chinese Herbal Medicine Co.Ltd(600771) had corporate governance problems in the early stage. After changing the controlling shareholder or chairman, the corporate governance is expected to improve, which deserves close attention; 3, Jianmin Pharmaceutical Group Co.Ltd(600976) The core products of the participating subsidiaries are cultivated in vitro and bezoar has strong pricing power. In the early stage, the market has ignored this business, and it is expected to usher in value revaluation in the future.
OTC of common brand traditional Chinese Medicine – with steady growth in sales and certain right to raise prices, we should pay more attention to enterprises with strong competitiveness and high market share in the same category. From the perspective of price increase right, the higher the market share in the same category, the stronger the price increase right. At the same time, the stronger the enterprise’s own marketing ability, the more it can maintain the smoothness of the terminal price system, so as to further ensure that the channel interests will not be damaged after the price increase and continue to maintain its own market share.
OTC of common brand Chinese patent medicine – there are many factors affecting the long-term growth sustainability of enterprises, and the subject matter needs to be strictly selected. There are relatively many OTC targets of ordinary brand Chinese patent medicine. For large market value companies such as Yunnan Baiyao Group Co.Ltd(000538) , China Resources Sanjiu Medical & Pharmaceutical Co.Ltd(000999) and small market value companies such as Henan Lingrui Pharmaceutical Co.Ltd(600285) , Mayinglong Pharmaceutical Group Co.Ltd(600993) , stock selection shall be strictly combined with the market share of enterprise products in the same category and the enterprise’s own marketing ability. Considering the simplicity, clarity and researchability of enterprise business, we suggest to focus on Henan Lingrui Pharmaceutical Co.Ltd(600285) and Mayinglong Pharmaceutical Group Co.Ltd(600993) . 1. Henan Lingrui Pharmaceutical Co.Ltd(600285) the medium and high-end plaster Tongluo Qutong plaster achieved a stable growth of about 15%. The low-end plaster series had a high market share and had the ability to raise prices. At the same time, the company implemented equity incentive to ensure its performance in June this year; 2. Mayinglong Pharmaceutical Group Co.Ltd(600993) hemorrhoid treatment drugstores have a high market share and have the right to raise prices. The company is expected to continue to achieve stable growth of about 15% in the long term.
It is suggested to focus on individual stocks: Jianmin Pharmaceutical Group Co.Ltd(600976) , Henan Lingrui Pharmaceutical Co.Ltd(600285) ; You can also pay attention to: Hubei Jumpcan Pharmaceutical Co.Ltd(600566) , Mayinglong Pharmaceutical Group Co.Ltd(600993) , Beijing Tongrentang Co.Ltd(600085) , Guangyuyuan Chinese Herbal Medicine Co.Ltd(600771) , Zhangzhou Pientzehuang Pharmaceutical Co.Ltd(600436) , Yunnan Baiyao Group Co.Ltd(000538) , China Resources Sanjiu Medical & Pharmaceutical Co.Ltd(000999) .
The traditional Chinese medicine industry is supported by national policies, the valuation level of the sector is low, the main products have a certain right to raise prices, the growth of relevant companies is determined stably, and the recommended rating is maintained.
Risk warning: the risk that the price rise of some products is less than expected; The risk that the improvement of corporate governance structure is lower than expected; The risk that the implementation of the state’s policy of encouraging the development of traditional Chinese medicine is lower than expected; Risk of efficacy difference between cultured bezoar and natural bezoar in vitro.
