Review in 2021: the performance of traditional Chinese medicine sector is bright, but the valuation is still cost-effective
2021 is the year of outbreak of traditional Chinese medicine industry. From the annual growth and decline data, Shenwan traditional Chinese medicine sector rose 28.84% in the whole year, which is the only positive income sector among the biomedical sectors, and the valuation PE has also been repaired. However, from several dimensions, the traditional Chinese medicine sector is not overestimated. On the one hand, the expected valuation of some traditional Chinese medicine companies is not high, and most peg is less than 1; On the other hand, there has always been a gap in the horizontal comparison of the food and beverage sector.
Restated logic: Valuation repair under policy catalysis may be only the first step
Valuation remodeling is a dynamic process, a correction process from valuation performance logic. The traditional Chinese medicine sector experienced the process of downward revision of valuation from 2013 to 2014, which led to the destruction of traditional logic and the suppression of valuation.
However, by 2021, there will be an obvious marginal improvement at the policy end. A series of heavy policies such as the lifting of restrictions on some traditional Chinese medicine in the medical insurance catalogue, the end of the pilot of traditional Chinese medicine formula granules, the moderate price reduction of centralized purchase of traditional Chinese patent medicine in Hubei, and the guidance on medical insurance supporting the inheritance, innovation and development of traditional Chinese medicine have landed one after another, It can be seen that the national support policy for traditional Chinese medicine has gradually transitioned from the top-level design to the implementation stage, which has strong consistency and releases a strong positive signal.
Outlook 2022: Logic remodeling after waiting for continuous performance fulfillment
The policy drive in the second half of 2021 may only be the first step and has not completely ended. 2022 is the key year for real performance and logical realization. Standing at the time node at the beginning of 2022, there are two clear directions that can lead to performance realization.
The price rise is the result of upstream and downstream resonance, and the release of performance is only a matter of time. The continuous rise of raw materials leads to the increase of cost + strong downstream demand, and the double superposition leads to the increase of price, so as to further thicken the profit.
The reform of state-owned enterprises has become the main theme, and equity incentive reflects the confidence of enterprises. In 2021, 15 listed companies of traditional Chinese medicine implemented or announced equity incentive schemes, and the future compound growth rate required by the profit side or income side in terms of unlocking conditions was basically increased compared with the compound growth rate in the past three years.
Investment suggestion: focus on 3 main lines + 3 themes
Three main lines: Traditional Chinese medicine brands with time-honored brands, characteristic varieties with the ability to raise prices, and undervalued targets with incentives and guarantees.
Time honored brands: Zhangzhou Pientzehuang Pharmaceutical Co.Ltd(600436) , Beijing Tongrentang Co.Ltd(600085) , Yunnan Baiyao Group Co.Ltd(000538) , Guangyuyuan Chinese Herbal Medicine Co.Ltd(600771) etc;
Price increase: Jianmin Pharmaceutical Group Co.Ltd(600976) , Dong-E-E-Jiao Co.Ltd(000423) , Chongqing Taiji Industry (Group) Co.Ltd(600129) , Mayinglong Pharmaceutical Group Co.Ltd(600993) , Jiuzhitang Co.Ltd(000989) ;
There are incentives: China Resources Sanjiu Medical & Pharmaceutical Co.Ltd(000999) , Henan Lingrui Pharmaceutical Co.Ltd(600285) , Kpc Pharmaceuticals Inc(600422) , Jiangzhong Pharmaceutical Co.Ltd(600750) , etc.
Three themes: innovation, region and industrial chain.
Innovative traditional Chinese medicine: Shijiazhuang Yiling Pharmaceutical Co.Ltd(002603) , Jiangsu Kanion Pharmaceutical Co.Ltd(600557) , Tasly Pharmaceutical Group Co.Ltd(600535) , Guiyang Xintian Pharmaceutical Co.Ltd(002873) , Hunan Fangsheng Pharmaceutical Co.Ltd(603998) etc.
Regional traditional Chinese medicine brands: Guizhou Sanli Pharmaceutical Co.Ltd(603439) , Guilin Sanjin Pharmaceutical Co.Ltd(002275) , Teyi Pharmaceutical Group Co.Ltd(002728) , Inner Mongolia Furui Medical Science Co.Ltd(300049) , etc.
Traditional Chinese medicine industry chain: upstream planting and breeding industry chain + traditional Chinese medicine material inspection ( Guizhou Xinbang Pharmaceutical Co.Ltd(002390) , Shanxi Zhendong Pharmaceutical Co.Ltd(300158) , Guizhou Bailing Group Pharmaceutical Co.Ltd(002424) , Focused Photonics (Hangzhou) Inc(300203) , Beijing Labtech Instruments Co.Ltd(688056) , Shanghai Runda Medical Technology Co.Ltd(603108) , Tofflon Science And Technology Group Co.Ltd(300171) , Maider Medical Industry Equipment Co.Ltd(688310) , Truking Technology Limited(300358) ); Midstream dealers (Chinese traditional medicine, Heilongjiang Zbd Pharmaceutical Co.Ltd(603567) ); Downstream pharmacies ( Dashenlin Pharmaceutical Group Co.Ltd(603233) , Yixintang Pharmaceutical Group Co.Ltd(002727) , Yifeng Pharmacy Chain Co.Ltd(603939) , Lbx Pharmacy Chain Joint Stock Company(603883) , Yunnan Jianzhijia Health-Chain Co.Ltd(605266) , Shuyu Civilian Pharmacy Corp.Ltd(301017) ); Layout of the whole industrial chain of traditional Chinese medicine (Chinese traditional medicine, Jointown Pharmaceutical Group Co.Ltd(600998) etc.).
Risk statement
Policy adjustment exceeds expectations; The price increase did not meet expectations; Performance does not meet expectations, etc.
