Actively grasp the undervalued value, repair the market, bargain hunting layout high boom track. This week, CSI 300 fell by 0.67%, the pharmaceutical and biological industry rose by 0.53%, ranking 10th among 28 primary sub industries. The sub sectors of traditional Chinese medicine, chemical pharmacy, medical devices and pharmaceutical business rose by 9.41%, 2.38%, 1.48% and 0.16% respectively. Medical services and biological products fell by 5.7% and 2.3%. This week, the pharmaceutical sector has warmed up, especially the traditional Chinese medicine sector has ushered in valuation repair stimulated by the accelerated approval of policies and innovative varieties, and the innovative drug sector has also performed under the catalysis of covid-19 oral drugs; The cro and cdmo of high boom track have been corrected recently, but the industry boom continues and the performance is expected to maintain rapid growth. It is suggested to grasp the bargain hunting layout of the market in the first quarter. Since the second half of the year, the overall correction of the pharmaceutical sector has been volatile, and now it has entered the appropriate allocation range. We continue to suggest to grasp two directions: high prosperity track with sustained and rapid performance growth, such as cro / cdmo, upstream of life sciences, medical services, etc; The dilemma of undervalued sectors is reversed, such as API, chain pharmacies, traditional Chinese medicine, etc.
Under the policy catalysis, the industry ushered in new changes and paid attention to the valuation and repair market of traditional Chinese medicine. The policy continues to actively encourage the development of traditional Chinese medicine. At the beginning of the year, the State Council issued several policies and measures on accelerating the characteristic development of traditional Chinese medicine, which defined the state's determination to encourage the development of traditional Chinese medicine at multiple levels and in multiple directions. Since this year, the acceleration of the approval and listing of new traditional Chinese medicine has also confirmed the strength of policy support. At present, traditional Chinese medicine enterprises are generally at a low historical valuation. The valuation of most companies corresponds to only 10-20 times PE in 22 years, with prominent configuration value. At the current time point, we are optimistic about two types of traditional Chinese medicine enterprises: 1) product resource-based enterprises, such as Zhangzhou Pientzehuang Pharmaceutical Co.Ltd(600436) , Yunnan Baiyao Group Co.Ltd(000538) , Dong-E-E-Jiao Co.Ltd(000423) , are optimistic that such companies will continue to benefit from the limited supply of upstream resources + the stable growth of downstream demand in the future and enjoy the simultaneous rise of volume and price; 2) For companies with marginal improvement at the operating level and some poor expectations, some companies have successively issued equity incentives and management changes this year. Corporate governance is expected to improve, and they are optimistic about the valuation and repair market of such companies.
Omicron became the mainstream strain, and enhanced vaccination was still effective. According to ourworldindata, Omicron has become an epidemic strain in most countries. In less than four weeks since the who announced that the new variant b.1.1.529 was named "Omicron" and listed as VOC (variant of concern), the proportion of Omicron infection in the new covid-19 infection in the United States has soared from about 13% a week ago to about 73%; the number of Omicron infection in the UK is doubling every 48 hours. According to the national infectious diseases Medical Center (Huashan Hospital Affiliated to Fudan University) according to the research published on emerging microbes & infections, the virus may still maintain a certain level of transmission after the third injection, but it will improve the protection of the population against Omicron and still have the potential to significantly reduce the proportion of severe cases. Considering that the influenza trend of covid-19 epidemic is becoming more and more obvious, it is suggested to pay attention to the development of covid-19 vaccine Enterprises, including Chongqing Zhifei Biological Products Co.Ltd(300122) , Shenzhen Kangtai Biological Products Co.Ltd(300601) , Cansino Biologics Inc(688185) - u, Walvax Biotechnology Co.Ltd(300142) , etc. In the long run, each vaccine head enterprise has a large amount of heavy varieties or is about to go on the market. With the increase of vaccination awareness under the covid-19 epidemic, we expect that the vaccination rate of large varieties is expected to continue to increase and gradually approach the level of developed countries. The class II vaccine industry is expected to achieve a compound growth of 20% - 30% in recent 3-5 years. It is recommended that Chongqing Zhifei Biological Products Co.Ltd(300122) , Shenzhen Kangtai Biological Products Co.Ltd(300601) , Beijing Wantai Biological Pharmacy Enterprise Co.Ltd(603392) , Chengdu Kanghua Biological Products Co.Ltd(300841) , Hualan Biological Engineering Inc(002007) Changchun Bcht Biotechnology Co(688276) 。
Performance of key recommended stocks: key recommended stocks in December: Yaoming biology, Wuxi Apptec Co.Ltd(603259) , Aier Eye Hospital Group Co.Ltd(300015) , Chongqing Zhifei Biological Products Co.Ltd(300122) , Pharmaron Beijing Co.Ltd(300759) , Asymchem Laboratories (Tianjin) Co.Ltd(002821) , Shenzhen Kangtai Biological Products Co.Ltd(300601) , Nanjing King-Friend Biochemical Pharmaceutical Co.Ltd(603707) , Nanjing Vazyme Biotech Co.Ltd(688105) , Changchun Bcht Biotechnology Co(688276) , Haisco Pharmaceutical Group Co.Ltd(002653) , Zhejiang Starry Pharmaceutical Co.Ltd(603520) , Zhejiang Tianyu Pharmaceutical Co.Ltd(300702) , Zhejiang Gongdong Medical Technology Co.Ltd(605369) , Jiangsu Sinopep-Allsino Biopharmaceutical Co.Ltd(688076) ; This week, the average decline was 2.79%, outperforming the pharmaceutical industry by 3.32%.
One week market dynamics: Based on the analysis of the pharmaceutical sector from the beginning of 2021 to the present, the yield of the pharmaceutical sector is - 8.6%, the yield of CSI 300 in the same period is - 5.6%, and the yield of the pharmaceutical sector is 3.1% lower than that of CSI 300. This week, CSI 300 fell by 0.67%, the pharmaceutical and biological industry rose by 0.53%, ranking 10th among 28 primary sub industries. The sub sectors of traditional Chinese medicine, chemical pharmacy, medical devices and pharmaceutical business rose by 9.41%, 2.38%, 1.48% and 0.16% respectively. Medical services and biological products fell by 5.7% and 2.3%. Based on the 2021 profit forecast valuation, the current valuation of the pharmaceutical sector is 32.69 times PE, The P / E ratio of all A-Shares (excluding the financial sector) is about 20.54 times PE, and the premium rate of the pharmaceutical sector relative to all A-Shares (excluding the financial sector) is 59.16%. Calculated by TTM valuation method, the current valuation of the pharmaceutical sector is 33 times PE, lower than the historical average level (37.3 times PE), and the premium rate relative to all A-Shares (excluding the financial sector) is 41%.
Risk warning: the risk of policy disturbance, drug quality problems, and the risk of delayed information or untimely update of the public data used in the research report.
