Since this year, A-Shares have fallen continuously, and the market has fallen sharply in the past week, but the market has stabilized in the second half of the week. Looking back on the sharp decline of the market in the past, there are different reasons behind each time, but afterwards, it is a good layout opportunity.
Peter Lynch, an investment master, once said: “whenever the stock market plummeted and I was worried about the future, I would recall the fact that there had been 40 stock market plummets in the past to calm my fear. I told myself that the stock market plummeted is actually a good thing, giving us another good opportunity to buy stocks of excellent companies at a very low price.”
Admittedly, no one knows when the market will bottom out, but it is an indisputable fact that the current market valuation has been significantly compressed and the valuation of many high-quality stocks is more attractive. Especially for individual sectors, there are good layout opportunities. Take the “bull sector” medicine as an example. At present, the P / E ratio of CSI 800 medicine index is at a low point in recent three years, with a valuation percentage of 0.65%, which has returned to the start of the bull market in early 2019.
When the market is at a low point, the layout valuation is at a low level and is expected to grow for a long time, which is undoubtedly a rational choice. Investors who are optimistic about the layout opportunities of the pharmaceutical sector can pay attention to the Tianhong Zhenxuan health hybrid fund (class a code: 014708, class C code: 014709), which is being issued on Agricultural Bank Of China Limited(601288) and the deadline for raising is March 14 (Monday).
the valuation quantile in recent three years is less than 1%, falling back to the early stage of bull market
Since 2019, the pharmaceutical sector has been in a bull market for two consecutive years, but since 2021, the performance of the pharmaceutical sector has been divided, and the overall decline since the second half of the year. In fact, every quarter in 2021, policy factors have an impact on the pharmaceutical sub sector or individual stocks, including the fifth centralized purchase of generic drugs in the first quarter, the second round of centralized purchase of devices in the second quarter, the negotiation of innovative drugs in the third quarter, and the implementation of medical service fee control in the fourth quarter.
After the adjustment in the second half of the past year and the overall decline of the market since this year, the valuation of the pharmaceutical sector has fallen back to the initial stage of the bull market. From the perspective of sector valuation, as of March 11, 2021, the P / E ratio of CSI 800 pharmaceutical index was 28.78, which was at a low point in recent three years, with a valuation percentage of 0.65%, which has returned to the start of the bull market in early 2019.
CSI 800 pharmaceutical index price earnings ratio quantile in recent three years
At the same time, the proportion of pharmaceutical stocks held by public offering continued to decline, and the position ratio was also at a historical low. According to the data, in the fourth quarter of 2021, the proportion of heavy positions in pharmaceutical stocks of all public funds was 10.8%, and the proportion of heavy positions after excluding pharmaceutical funds was 6% – 7%, which was at the low level in recent three years, while the overall market value of medicine accounted for about 10% of a shares. It is expected that there will be obvious allocation demand in the future, and the capital is expected to be good.
past medical bull stocks came out in large numbers to lay the foundation of long bull
The pharmaceutical sector is a sector with a large number of bull stocks, and it also does not need to consider the demand, because human demand for health and longevity is endless. This is also where investors dare to layout the pharmaceutical sector at a low level.
Data show that in the past ten years, in the pharmaceutical industry, 4% of the shares are 10 times that of 10 years, 5.4% of the shares are 5 times that of 10 years, and 6.14% of the shares are 3 times that of 10 years. Starting from 998 points of Shanghai stock index in June 2005, 16 of the top 100 A shares were only contributed by the pharmaceutical industry, accounting for the highest proportion in all industries.
From the medium-term trend, in addition to the current low valuation, policy and other disturbing factors tend to weaken, which also increases the attraction of the pharmaceutical sector. For a long time, the pharmaceutical industry has been a policy sensitive industry, and the policy affects the trend of stock price. However, in the view of professional fund people, the possibility of exceeding the expected disturbance of the policy in 2022 is very low.
Guo Xiangbo, the proposed fund manager of Tianhong Zhenxuan health, said: “at present, the policies on drugs, devices and services have tended to be normalized and regular, and the issues such as centralized purchase and innovative drug negotiation are highly sustainable and cyclical (centralized purchase of generic drugs twice a year, innovative drug negotiation once in June every year, purchase of devices – high-value consumables, etc.) 。 In other words, the relevant policies have been improved, and the probability of exceeding the expected price reduction policy is very low. It is expected that there will be no more bad than expected. At the same time, judging from the negotiations on innovative drugs last year, the policy orientation of the national medical insurance administration is shifting from protecting people’s livelihood to supporting Chuang Shenzhen New Industries Biomedical Engineering Co.Ltd(300832) , the price decline of key drugs has been alleviated, and the policy pressure is expected to be relatively small in 2022. “
“We are not pessimistic about the later trend of the pharmaceutical sector,” Guo Xiangbo further said. “However, it is expected that the Income Differentiation of pharmaceutical funds will be equally large in 2022, even more than 2021, but there are more structural opportunities.”
In the future, we can focus on the business model with pricing power. Guo Xiangbo pointed out that there are four specific promising directions: first, the differentiated competition brought by innovative products, including gene therapy, such as m-RNA vaccine, etc. the above innovative products will have more advantages in pricing than the original generic drugs and old products. Second, with the rapid development of the biopharmaceutical industry, we are optimistic about the opportunities of the industrial chain in the biopharmaceutical field. Including cdmo or CRO and other industries serving innovative drugs with good performance in 2021, as well as some upstream enterprises of biological drugs. The third is the high-end manufacturing field, including consumables, excipients and packaging materials of drugs. These products have been partially replaced to the global market in the past two years. The fourth is the medical service sector. In 2021, the medical service sector was suppressed, and the price of some medical services was adjusted, including the DRGs policy. It is expected to correct the deviation this year, and there will be differentiated competition between the medical service sector and public hospitals.
investment medicine pays attention to the “expert” vision
When the market is low, the mood is often low. Some investors are worried that the market will fall in the future and want to copy to the lowest. But in fact, the so-called “bottom” of “bottom reading” never refers to a certain point, but to a certain interval. Even professional investors cannot accurately predict the “bottom” of the market. For investors, they should pay more attention to the choice of sectors and fund managers.
It is reported that Tianhong Zhenxuan health Guo Xiangbo has a master’s degree in bioengineering from New York University and was once the department head of Beijing Beijing Tongrentang Co.Ltd(600085) science and Technology Development Co., Ltd. It is worth mentioning that during his work in Beijing Tongrentang Co.Ltd(600085) Research Institute, he promoted the antidepressant “Morinda oligosaccharide capsule” from clinical phase III to approval, had a comprehensive and in-depth understanding of the pharmaceutical industry, and was one of the few pharmaceutical fund managers with industrial experience in the industry. Years of industrial experience makes Guo Xiangbo have a unique vision when studying enterprises. He is good at grasping the main contradictions in the research and tracking of enterprise fundamentals. The research can go deep into the front line of the industry and predict the prosperity of various sub industries of medicine more accurately.
As a “medicine expert”, Guo Xiangbo’s stock selection neither follows the popular track nor is limited to the market style, and has found many “unique stocks”. According to the regular report, Nanjing King-Friend Biochemical Pharmaceutical Co.Ltd(603707) was heavily held by Tianhong medical health at the end of the second quarter of 2019, and remained among the top ten heavyweight stocks by the end of the second quarter of 2020, with an increase of 138.45% during the period. In addition, Shenzhen Mindray Bio-Medical Electronics Co.Ltd(300760) ranked among the top ten heavyweight stocks of Tianhong medical health in the fourth quarter of 2019, and remained among the top ten heavyweight stocks in the fourth quarter of 2021, with an increase of 108.66% during the period.
Tianhong medical and health fund managed by Guo Xiangbo has achieved a return of 197.75% in recent three years by the end of 2021, and the benchmark return on performance in the same period is only 61%. At present, investors who are optimistic about the layout opportunities of the pharmaceutical sector can pay attention to the Tianhong Zhenxuan health mixed fund (class a code: 014708, class C code: 014709) being issued in Agricultural Bank Of China Limited(601288) issue, and the deadline for raising is March 14 (Monday).
risk tips : opinions are for reference only and do not constitute investment opinions. Please read the fund contract, prospectus and other legal documents before purchase. There are risks in the market and investment needs to be cautious. Past performance does not represent future performance.
