Core view
At present, ttm-pe31 is used in medicine and biology 3 times, 29.9% higher than 24.1 times of the most underestimated value in history (20190131); The valuation premium relative to the CSI 300 index is 140%, 15.7% higher than that of 20190131, but this round of decline to 20211 has reached a new low of 119% relative valuation premium, highlighting the value of industry allocation.
On the road of value return, dig stocks from bottom to top, and API continues to rise
Our medium-term view remains unchanged, and we dig deep into value, traditional Chinese medicine and consumption growth. The deep value sectors include API (including intermediates in this paper), blood products, generic drugs, pharmacies and circulation, among which the API sector is still the high boom sector this year. There are four logical changes in the API industry: 1. API and cdmo belong to advanced manufacturing industry, and the valuation is close to cdmo. The former emphasizes scale effect and cost control, while the latter emphasizes service capability and R & D efficiency. However, when the raw material procurement cost is an important consideration after the new drug is listed, the API enterprises have the ability to compete with cdmo enterprises. 2. Covid-19 oral drug raw material industry chain drives the industry boom upward. 3. The supply side reform of API will be similar to that of chemical industry, and the industry concentration is expected to be greatly improved. The notice on the implementation plan for promoting the high-quality development of API Industry issued in November 2011 is a long-term and deep-seated logic. The upgrading of the export structure of the API industry is slow, and the international competitive advantage of high value-added products is not strong. The API should be developed under the background of the national dual carbon policy, strictly implement the access standards of environmental protection, safety and energy conservation, benchmark the international leading level, and carry out cleaner production audit, evaluation and certification. 4. With the cyclical reversal, the profits of API enterprises returned to growth. In 2021, affected by the epidemic situation abroad, the demand for non covid-19 pharmaceutical products was insufficient; At the same time, the price of upstream chemical raw materials rose sharply, and the profit of long-term association orders fell sharply due to factors such as transportation and exchange rate. Since November 2021, the order price of API long-term association has increased one after another. In 2022, the demand for foreign non covid-19 pharmaceutical products recovered, and other factors are also changing in the opposite direction.
The Growth Logic of traditional Chinese medicine and medical consumer goods goes through cattle and bears
In 2022, the government work report is increasing its support for the development of the traditional Chinese medicine industry. The expression sentence has changed from "promoting the revitalization and development of traditional Chinese medicine and strengthening the integration of traditional Chinese and Western medicine" in 2021 to "adhering to the equal emphasis of traditional Chinese and Western medicine and implementing the major project for the revitalization and development of traditional Chinese medicine". We believe that the advantages of traditional Chinese medicine are chronic diseases prevention and treatment, and so on. Cardiovascular and coronary heart disease, angina, colds and other treatment fields are basically Chinese medicine have a brilliant future in the field of chronic diseases, such as degenerative neuropathy (such as Blzheimer's disease) and microangiopathy (such as diabetic retinopathy). We emphasize that there are four investment logics of traditional Chinese medicine: 1. Looking for resource consumer goods such as "Maotai, Zhangzhou Pientzehuang Pharmaceutical Co.Ltd(600436) ", which has the longest duration; 2. (category) OTC consumer goods began to enter the performance verification stage in the first half of this year, which is easy to differentiate after rising; 3. The logic of long-term growth in the field of formula granules is good. We need to observe the changes in the implementation policies such as medical insurance and pricing in various places. We think the marginal change is good. Refer to the mild price reduction of Chinese patent medicine; 4. Traditional Chinese medicine bigpharma has a strong product line, with predictable performance growth and upward long-term valuation.
Focus on the company
API and covid-19 industrial chain: Shandong Jincheng Pharmaceutical Group Co.Ltd(300233) , Shanghai Junshi Biosciences Co.Ltd(688180) , Zhe Jiang Hua Hai Pharmaceuticalco.Ltd(600521) , Porton Pharma Solutions Ltd(300363) , Asymchem Laboratories (Tianjin) Co.Ltd(002821) , Zhejiang Nhu Company Ltd(002001) etc; Traditional Chinese medicine: resource-based, Jianmin Pharmaceutical Group Co.Ltd(600976) , Tianjin Zhongxin Pharmaceutical Group Corporation Limited(600329) ; Traditional Chinese medicine bigpharma, Shijiazhuang Yiling Pharmaceutical Co.Ltd(002603) , Hubei Jumpcan Pharmaceutical Co.Ltd(600566) , Shandong Buchang Pharmaceuticals Co.Ltd(603858) , Jiangsu Kanion Pharmaceutical Co.Ltd(600557) ; Formula granules, Tianjin Chase Sun Pharmaceutical Co.Ltd(300026) , Chinese traditional medicine, Zhejiang Jolly Pharmaceutical Co.Ltd(300181) , Guiyang Xintian Pharmaceutical Co.Ltd(002873) and Guangxi Liuzhou Pharmaceutical Co.Ltd(603368) etc; (category) OTC, Inner Mongolia Furui Medical Science Co.Ltd(300049) , Beijing Tongrentang Co.Ltd(600085) , China Resources Sanjiu Medical & Pharmaceutical Co.Ltd(000999) , etc; Consumer medical care: Huadong Medicine Co.Ltd(000963) , Yantai Zhenghai Bio-Tech Co.Ltd(300653) , Chengdu Kanghua Biological Products Co.Ltd(300841) , Jiangsu Yuyue Medical Equipment And Supply Co.Ltd(002223) , Meinian Onehealth Healthcare Holdings Co.Ltd(002044) and Zhejiang Shouxiangu Pharmaceutical Co.Ltd(603896) etc; Innovation, independent control and going to sea: Truking Technology Limited(300358) , Shenzhen New Industries Biomedical Engineering Co.Ltd(300832) , Yifan Pharmaceutical Co.Ltd(002019) , Youcare Pharmaceutical Group Co.Ltd(688658) , Chengdu Easton Bio Pharmaceuticals Co.Ltd(688513) , etc.
Risk tip: uncertainty risk of China's epidemic control policy, systemic risk caused by the Fed's interest rate hike, etc
