1、 This week’s review and topic:
This week, Shenwan pharmaceutical index rose 3.16%, ranking 10th in the whole industry, outperforming Shanghai and Shenzhen 300 index and gem index. This week, we conducted an in-depth resumption of the pharmaceutical sector in 2021. We believe that 2021 is a year of shock digestion and valuation after many years of bull market. At the same time, we discussed why the past pharmaceutical bull will continue to be a bull in the future? (Note: this week refers to 2021.12.27-2022.1.2)
2、 Recent resumption:
This week’s pharmaceutical performance was excellent, the volume rose, and the trading volume accounted for more than 10% on average in five days. The heat was very high, and the trend of simultaneous rise in volume and price was very clear. The reasons behind it were consistent with what we had always emphasized. However, the starting time was a little unprepared for the market that had experienced the pharmaceutical downturn for half a year, and the expression form was extremely inconsistent with the playing method we were familiar with in the past five years. Specifically, it is still the ultimate structure, and the three bright lines “traditional Chinese medicine”, “covid-19”, “Beijing stock exchange” and two dark lines “underestimate value” and “good small market value chip structure” perform better. After the adjustment on Tuesday and Wednesday, “traditional Chinese medicine” continued to be strong on Thursday and Friday, superimposed with the large incentive policies of traditional Chinese medicine, and the strong performance continued. “Covid-19” benefits from the re outbreak of overseas epidemic, but the performance of each covid-19 hype is reflected in different targets. This time, it is mostly reflected in the covid-19 small molecule marginal supply chain. The “Beijing stock exchange” was fully launched, with some expressions of “covid-19” and some expressions of “traditional Chinese medicine”, but most of them benefited from the dark line logic, that is, “the structure of small market value chips is good”. We continue to analyze that under the condition of high heat in the pharmaceutical sector and simultaneous rise in volume and price, different from the expression of values in the past five years, the “undervalued value” and “good chips” under the condition of small and medium market value driven by dark line logic have been well expressed. We have seen many recent targets (such as pharmacies, some circulation and other stocks), According to this logic, it has been fully expressed. The current market environment is extremely different from that in the past five years. It has a high tolerance for defects and logic, and a very low tolerance for hidden high position concentration of unanimously agreed core assets. Major events of this week: there are macro policies to encourage traditional Chinese medicine and policies to encourage the accelerated listing of valuable innovative drugs. In fact, the “logic line of traditional Chinese medicine” has indeed been well expressed. If it is deduced according to the current market style, it is estimated that the subsequent “logic line of innovative drug pipeline” will also be expressed to some extent, such as Northland, which we have always been optimistic about. In the same sentence, the grand view has not changed, and the market has gradually become clear. Medicine has entered the long-term configuration range, and the bottom is patient and upward. In the first half of 2022, the bottom-up stock selection strategy relying on the track rather than the track should be the main tone.
3、 Plate view:
1. Thinking from the dimension of several years: if pharmaceutical investment in the past 3-4 years paid more attention to “selecting the head company of the main track to enjoy valuation expansion”, and paid more attention to “individual stock cost performance under valuation digestion” in the second half of 2021, then more attention should be paid to “the first small and the later large structural Festival” in 2022. Although they are structural opportunities, their expressions are different. Facing the short-term weakness of medicine, we have stretched our eyes. What is the essence of the long-term growth of the pharmaceutical industry? It is the long-term pull of just demand for medicine and the long-term pull of health consumption upgrading, and the current demand satisfaction and penetration rate are very low, which is the most long-term logic of medicine. However, because of people’s concerns about the reform policy of the payment end, people seem to ignore this essence. The payment end policy will not be the long-term logic restriction of a rigid industry, which is at most a medium-term and short-term interference item. In the medium and long term, we are optimistic. GDP growth is in the downward stage, the economic structure continues to adjust, and China Meheco Group Co.Ltd(600056) industry is in the early stage of growth, there is a reverse scissors gap, and the comparative advantage is strengthened. With the release of the population data of Qipu, China’s population structure is undergoing great changes. In the future, the development logic of many industries driven by the huge demographic dividend will face great changes. The market will pay more and more attention to and look for industries with comparative advantages of incremental attributes, The industry with long logical cycle and strong certainty ranks at the forefront of non medicine (the aging intensifies the expansion of just needed medicine, the upgrading of health consumption intensifies the increase of consumption medicine penetration). In the future, the allocation funds of consumption medicine will strengthen the allocation of medicine from the medium and long-term dimension, resulting in the improvement of the overall water level of medicine, which is optimistic for the long term. The long-term 4 + X strategic thinking remains unchanged: Pharmaceutical Science and technology upgrading, pharmaceutical consumption upgrading, pharmaceutical manufacturing upgrading, pharmaceutical model upgrading, etc.
2. In the short and medium term: we experienced valuation digestion in 2021. For a period of time at the end of 2021, a round of market of traditional Chinese medicine and small and medium market value seems to be declaring war on our values in the past five years. What is good? What is right? In fact, good or good, right or right, but the market expression is different at different stages. In fact, the industrial trend and industrial logic have not changed, but there will be periodic changes in the expression of valuation and position concentration. In this periodic change, the stock price will change with stages. At the present stage, if we follow the trend, we really need to grasp the rhythm. In 2022, we judge it as “small in the front and big in the back”.
3. Configuration idea:
*Consumption upgrading: (1) brand traditional Chinese medicine: Jianmin Pharmaceutical Group Co.Ltd(600976) , Zhangzhou Pientzehuang Pharmaceutical Co.Ltd(600436) , Beijing Tongrentang Co.Ltd(600085) , Chongqing Taiji Industry (Group) Co.Ltd(600129) , Henan Lingrui Pharmaceutical Co.Ltd(600285) , Hubei Jumpcan Pharmaceutical Co.Ltd(600566) . (2) Vaccine: Chongqing Zhifei Biological Products Co.Ltd(300122) , Beijing Wantai Biological Pharmacy Enterprise Co.Ltd(603392) , Chengdu Olymvax Biopharmaceuticals Inc(688319) , Chengdu Kanghua Biological Products Co.Ltd(300841) ; (3) Medical services: Ningbo Sanxing Medical Electric Co.Ltd(601567) , Xi’An International Medical Investment Company Limited(000516) , Inkon Life Technology Co.Ltd(300143) , Guizhou Xinbang Pharmaceutical Co.Ltd(002390) ; (4) Ophthalmology: Shenyang Xingqi Pharmaceutical Co.Ltd(300573) , Shanghai Haohai Biological Technology Co.Ltd(688366) ;
*Manufacturing upgrade: (1) biomedical upstream ( Tofflon Science And Technology Group Co.Ltd(300171) , Truking Technology Limited(300358) , Zhejiangtailin Bioengineering Co.Ltd(300813) , Focused Photonics (Hangzhou) Inc(300203) ) (2) differentiated cdmo ( Asymchem Laboratories (Tianjin) Co.Ltd(002821) , Porton Pharma Solutions Ltd(300363) , Zhejiang Jiuzhou Pharmaceutical Co.Ltd(603456) , Shanghai Medicilon Inc(688202) , Wuxi Apptec Co.Ltd(603259) , Pharmaron Beijing Co.Ltd(300759) , Pharmablock Sciences (Nanjing) Inc(300725) ) (3) API systematic upgrade ( Zhejiang Starry Pharmaceutical Co.Ltd(603520) ) (4) injection outlet ( Nanjing King-Friend Biochemical Pharmaceutical Co.Ltd(603707) , Hainan Poly Pharm.Co.Ltd(300630) )
*Innovation Upgrading: (1) CGT ( Zhejiangtailin Bioengineering Co.Ltd(300813) , Porton Pharma Solutions Ltd(300363) , Northland) (2) platform innovation recovery ( Jiangsu Hengrui Medicine Co.Ltd(600276) ) (3) innovation internationalization ( Shanghai Junshi Biosciences Co.Ltd(688180) ) (4) nuclear medicine ( Yantai Dongcheng Biochemicals Co.Ltd(002675) ).
*Core repair: Chongqing Zhifei Biological Products Co.Ltd(300122) , Jiangsu Hengrui Medicine Co.Ltd(600276) , Zhangzhou Pientzehuang Pharmaceutical Co.Ltd(600436) , Shenzhen Mindray Bio-Medical Electronics Co.Ltd(300760) , Changchun High And New Technology Industries (Group) Inc(000661) , Aier Eye Hospital Group Co.Ltd(300015) , Wuxi Apptec Co.Ltd(603259) .
*Other long-term tracking and promising targets are: Novogene Co.Ltd(688315) {{ Novogene Co.Ltd(688315) { Novogene Co.Ltd(688315) {{{605186186} Pacific Shuanglin Bio-Pharmacy Co.Ltd(000403) Yunnan Baiyao Group Co.Ltd(000538) {000538 8} {{{{{{{{{{{{{{{{{{{{{{{{0008166} {{{{{{605186186186186186} {{{{{605186186186186} {{605186186186186} {{605186186186186} {{{{{{000403403403403403}} { Pacific Shuanglin Bio-Pharmacy Co.Ltd(000403) {{{00003030303403403403}} {{{{0000300003030303030303030303038}}} {{{{{{{{0000024242422}}}}}, Lepu Medical Technology (Beijing) Co.Ltd(300003) Jointown Pharmaceutical Group Co.Ltd(600998) , Yifeng Pharmacy Chain Co.Ltd(603939) , Lbx Pharmacy Chain Joint Stock Company(603883) , Dashenlin Pharmaceutical Group Co.Ltd(603233) , Yixintang Pharmaceutical Group Co.Ltd(002727) , Joincare Pharmaceutical Group Industry Co.Ltd(600380) , Guangzhou Jet Bio-Filtration Co.Ltd(688026) , Shanghai Kindly Enterprises Development Group Co.Ltd(603987) , etc.
Risk tips: 1) negative policies continue to exceed expectations; 2) The growth rate of the industry is lower than expected; 3) There may be errors in assumptions or calculations.
