At the end of 2021, the differentiation of the pharmaceutical sector intensifies. In 2021, Shenwan pharmaceutical index increased by – 5.73%, ranking 23rd among 28 primary sub industries. Among them, 23 target stocks increased by more than 100%, and 66 stocks increased by more than 50%. In terms of the weighted return on the market value of the pharmaceutical sector, the performance of the medium-sized market value target is bright: the performance of individual stocks in the range of 20-50 billion is the most prominent, up to 20%; The returns of individual stocks in the range of 10-20 billion and 50-100 billion are 16% and 16% respectively.; The weighted yield of 0-10 billion is 7%, and that of more than 100 billion stocks is only 1%. In 2021, the pharmaceutical index was relatively flat, with multiple blossoms in subdivided fields, and the trend of plate differentiation further intensified. With the trend of normalization of epidemic prevention and control, good news of covid-19 therapeutic drugs has been reported frequently. Cro / cdmo of covid-19 therapeutic drug related enterprises and industrial chain has performed well, Xinxiang Tuoxin Pharmaceutical Co.Ltd(301089) 178.97%, Jinghua Pharmaceutical Group Co.Ltd(002349) 132.12%, Staidson(Beijing) Biopharmaceuticals Co.Ltd(300204) 94.35%, Hybio Pharmaceutical Co.Ltd(300199) 89.62%, and Shanghai Medicilon Inc(688202) 209.30%, Porton Pharma Solutions Ltd(300363) 145.49%. The undervalued traditional Chinese medicine sector benefited from the rise in the price of traditional Chinese medicine, the accelerated approval of innovative traditional Chinese medicine and favorable policies, and was favored in the last quarter, such as Jianmin Pharmaceutical Group Co.Ltd(600976) 213.54%, Gansu Longshenrongfa Pharmaceutical Industry Co.Ltd(300534) 154.23%, Zhejiang Jolly Pharmaceutical Co.Ltd(300181) 100.19%, Henan Lingrui Pharmaceutical Co.Ltd(600285) 94.04%, Kunming Longjin Pharmaceutical Co.Ltd(002750) 92.48%, Beijing Tongrentang Co.Ltd(600085) 89.68%, Yabao Pharmaceutical Group Co.Ltd(600351) 83.99%, Tianjin Zhongxin Pharmaceutical Group Corporation Limited(600329) 81.66%. With the market’s continuous exploration and investment enthusiasm for emerging boom tracks, the upstream industrial chain has also achieved good performance, such as Zhejiang Gongdong Medical Technology Co.Ltd(605369) 255.14%, Jenkem Technology Co.Ltd(688356) 207.68%, Iray Technology Company Limited(688301) 190.32%, Truking Technology Limited(300358) 136.97%.
In the short term, actively layout the restless market in spring in the first quarter and grasp the “undervalued value + high boom”. In December 2021, the pharmaceutical and biological industry rose by 0.47%, ranking 20th in 28 sub industries. This month, the pharmaceutical sub sector, chemical pharmacy, medical devices, pharmaceutical commerce and traditional Chinese medicine all increased, of which traditional Chinese medicine increased the most, 15.41%, and pharmaceutical commerce increased by 10.17%; Biological products and medical services decreased by 5.97% and 9.31% respectively. This month, due to the influence of rumors about the list of U.S. entities, cro / cdmo, medical services and other sectors showed a relatively callback, and undervalued sectors such as traditional Chinese medicine, API, chain pharmacies, circulation and other sectors came out of the independent market. Standing at the current time point, how to layout the restless market in spring in the first quarter? We think we can start from the following angles:
Fundamentals: January is expected to usher in the annual report forecast disclosure. It is recommended to pay attention to the high growth segments, especially the cro / cdmo segment with large valuation adjustment in the fourth quarter, which is expected to be catalyzed by the forecast. At the same time, pay attention to other stocks whose performance is expected to grow rapidly.
Capital: medicine is an industry with obvious correction in the fourth quarter, especially the core asset with large market value; And since the beginning of the year, the index has also fallen, and the adjusted medicine is attractive to funds. In terms of specific investment suggestions, we still maintain the following views: actively grasp the dilemma reversal of undervalued sectors, such as API, chain pharmacies, traditional Chinese medicine, etc; Bargain hunting layout is expected to be a high boom track with rapid growth and no risk of fundamentals, such as cro / cdmo, upstream of life sciences, medical services, etc.
In the long run, looking forward to 2022, we are optimistic about “innovation frontier, made in China and consumption upgrading”, Pay close attention to the “leading white horse + specialization and innovation”. In December, we released the investment strategy for 2022: under the basic construction of review, approval and centralized purchase negotiation policies, the reform of payment system is accelerated and the policy closed loop is expected to be formed. Industrial upgrading is deepened, industrial chain thinking is strengthened, we are optimistic about the upgrading of innovation Shenzhen New Industries Biomedical Engineering Co.Ltd(300832) chain and manufacturing industry, and pay attention to the technological iteration and expansion of consumption.
[innovation frontier]: innovation is still the most important direction. In 2022, more attention will be paid to innovation and industrial chain layout. 1) Upstream industrial chain services: optimistic about the upstream demand explosion brought by new technologies and new therapies, including scientific research reagents Nanjing Vazyme Biotech Co.Ltd(688105) , Jenkem Technology Co.Ltd(688356) , Shanghai Aladdin Biochemical Technology Co.Ltd(688179) , Shanghai Titan Scientific Co.Ltd(688133) ; Cro enterprises Joinn Laboratories (China) Co.Ltd(603127) , Hangzhou Tigermed Consulting Co.Ltd(300347) , Pharmaron Beijing Co.Ltd(300759) , Shanghai Medicilon Inc(688202) ; Model animals: Nanmo biology, jijiyaokang, baiaosaitu, etc. 2) Terminal products and technological innovation: we are optimistic about the leader of innovative drugs and biotech, Jiangsu Hengrui Medicine Co.Ltd(600276) , Xinda biology, Baiji Shenzhou, Shanghai Junshi Biosciences Co.Ltd(688180) , Betta Pharmaceuticals Co.Ltd(300558) , Haisco Pharmaceutical Group Co.Ltd(002653) ; Innovative instruments include xianruida medical, Micro-Tech (Nanjing) Co.Ltd(688029) , Aohua endoscopy, Xianjian technology, minimally invasive Siasun Robot&Automation Co.Ltd(300024) , etc.
[made in China]: as a traditional manufacturing power, with the deepening of medical reform, China has continuously strengthened the logic of high-end pharmaceutical manufacturing, and is optimistic about global advantages and industrial upgrading. 1) Cdmo / CMO: a double strong track combining innovative service and manufacturing advantages, which is still in the upswing of the economy. In 2022, we will focus on performance acceleration and event catalysis. We are optimistic about leading Yaoming biology, Wuxi Apptec Co.Ltd(603259) , Asymchem Laboratories (Tianjin) Co.Ltd(002821) , and rapidly expanding Porton Pharma Solutions Ltd(300363) , Zhejiang Jiuzhou Pharmaceutical Co.Ltd(603456) , Apeloa Pharmaceutical Co.Ltd(000739) . 2) Characteristic API: the inflection point is established and the global competitive advantage is clear. In 2022, we are optimistic about Zhejiang Starry Pharmaceutical Co.Ltd(603520) , Zhejiang Tianyu Pharmaceutical Co.Ltd(300702) , Nanjing King-Friend Biochemical Pharmaceutical Co.Ltd(603707) , Zhejiang Ausun Pharmaceutical Co.Ltd(603229) , etc. 3) Equipment and consumables: the acceleration of domestic substitution driven by innovation provides a good opportunity for the epidemic. We are optimistic about the leader Shenzhen Mindray Bio-Medical Electronics Co.Ltd(300760) , and pay attention to consumables service providers Zhejiang Gongdong Medical Technology Co.Ltd(605369) , Shenzhen Changhong Technology Co.Ltd(300151) , Guangzhou Jet Bio-Filtration Co.Ltd(688026) ; Optimistic about production equipment enterprises Tofflon Science And Technology Group Co.Ltd(300171) , Truking Technology Limited(300358) , Sensong international, Maider Medical Industry Equipment Co.Ltd(688310) .
[consumption upgrading]: the expansion of medical services is optimistic about Aier Eye Hospital Group Co.Ltd(300015) , Topchoice Medical Co.Inc(600763) , haijiya medical and Jinxin reproduction; The technological innovation and demand growth of domestic vaccines are optimistic about Chongqing Zhifei Biological Products Co.Ltd(300122) , Beijing Wantai Biological Pharmacy Enterprise Co.Ltd(603392) ; And chain pharmacies, brand traditional Chinese medicine, etc.
Omicron became the mainstream strain, and enhanced vaccination was still effective. According to ourworldindata, Omicron has become an epidemic strain in most countries. Since the who announced that the new variant b.1.1.529 was named “Omicron” and listed as VOC (concerned variant), 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 infections in the UK is doubling every 48 hours. According to the research published by the national infectious diseases Medical Center (Huashan Hospital Affiliated to Fudan University) 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 recommended to pay attention to covid-19 vaccine related development 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) 。
Key recommendations in January: Yaoming biology, Wuxi Apptec Co.Ltd(603259) , Aier Eye Hospital Group Co.Ltd(300015) , Chongqing Zhifei Biological Products Co.Ltd(300122) , Asymchem Laboratories (Tianjin) Co.Ltd(002821) , Pharmaron Beijing Co.Ltd(300759) , Hangzhou Tigermed Consulting Co.Ltd(300347) , Shanghai Junshi Biosciences Co.Ltd(688180) , Nanjing King-Friend Biochemical Pharmaceutical Co.Ltd(603707) , Nanjing Vazyme Biotech Co.Ltd(688105) , Haisco Pharmaceutical Group Co.Ltd(002653) , Zhejiang Tianyu Pharmaceutical Co.Ltd(300702) , Zhejiang Gongdong Medical Technology Co.Ltd(605369) , Zhejiang Starry Pharmaceutical Co.Ltd(603520) , Aurisco Pharmaceutical Co.Ltd(605116) .
The average decline of key recommendations of Sino Thai medicine in December was 4.53%, running 5% lower than that of the pharmaceutical industry. Among them, Yaoming Biology – 12.85%, Wuxi Apptec Co.Ltd(603259) – 17.65%, Pharmaron Beijing Co.Ltd(300759) – 22.21%, Asymchem Laboratories (Tianjin) Co.Ltd(002821) – 15.23%, Jiangsu Sinopep-Allsino Biopharmaceutical Co.Ltd(688076) – 20.38%, Nanjing Vazyme Biotech Co.Ltd(688105) – 9.01%, Zhejiang Gongdong Medical Technology Co.Ltd(605369) 36.62%, Shenzhen Kangtai Biological Products Co.Ltd(300601) – 14.25%, Changchun Bcht Biotechnology Co(688276) – 10.07%, Aier Eye Hospital Group Co.Ltd(300015) – 0.94%, Chongqing Zhifei Biological Products Co.Ltd(300122) – 3.32%, Haisco Pharmaceutical Group Co.Ltd(002653) 8.11%, Zhejiang Tianyu Pharmaceutical Co.Ltd(300702) 12.70%, Zhejiang Starry Pharmaceutical Co.Ltd(603520) 5.03%, Nanjing King-Friend Biochemical Pharmaceutical Co.Ltd(603707) 0.79%.
Industry focus: (1) the guidance of the state medical security administration and the State Administration of traditional Chinese medicine on medical insurance supporting the inheritance, innovation and development of traditional Chinese medicine was published; (2) There are no listed biomedical enterprises on the list of entities of the U.S. Department of Commerce; (3) The first domestic covid-19 specific drug was approved for emergency use; (4) Announcement of the adjustment results of the national medical insurance drug catalogue in 2021
Market dynamics: in December 2021, the pharmaceutical and biological industry increased by 0.47%, the yield of CSI 300 increased by 2.24% in the same period, and the pharmaceutical sector lost about 1.77% to CSI 300, ranking 20th in 28 sub industries. This month, the pharmaceutical sub sector, chemical pharmacy, medical devices, pharmaceutical commerce and traditional Chinese medicine all increased, of which traditional Chinese medicine increased the most, 15.41%, and pharmaceutical commerce increased by 10.17%; Biological products and medical services decreased by 5.97% and 9.31% respectively. Based on the 2021 profit forecast valuation, the current valuation of the pharmaceutical sector is 33.43 times PE, the P / E ratio of all A-Shares (excluding the financial sector) is about 20.70 times, and the premium rate of the pharmaceutical sector relative to all A-Shares (excluding the financial sector) is 61%. Based on the TTM valuation method, the current valuation of the pharmaceutical sector is 34 times PE, which is lower than the historical average (37 times PE), and the premium rate relative to all A-Shares (excluding the financial sector) is 42%.
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.
