Core view
At present, ttm-pe29 is used in medicine and biology 2 times, 21.2% higher than the 24.1 times of the most underestimated value in history (20190131); Compared with the CSI 300 index, the valuation premium is 135%, 15.2% 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.
Industry Valuation differentiation is serious, and cdmo, covid-19 industrial chain and consumer healthcare are still the main rebound line
The undervalued segments are mainly the segments under the high pressure of medical insurance policy, and the valuation elasticity is small. The market focus is still on cdmo sector, pharmaceutical consumer goods (including traditional Chinese Medicine), covid-19 oral drug industry chain and vaccine, which have been adjusted more in the early stage. The overseas revenue of head cdmo enterprises accounted for 70-80%, which was greatly affected by pessimistic expectations in the early stage. Pessimistic expectations include: the expectation of order return after the impact of covid-19 pandemic in the United States and Europe, the expectation of industrial chain decoupling caused by China US relations, the expectation of monetary tightening in the United States and Europe (tightening expectation will affect various expenditures of overseas pharmaceutical enterprises), market self adjustment caused by overvalued value, etc. At present, from the contract liabilities and new capacity of the head company, the performance growth expectation in 2022 has not been lowered, the logic of the long-term transfer of the industrial chain to China has not changed, and the industry is still dominated by shock repair and digestion of overvalued values. For the consumer medical industry, we believe that this round of declining valuation has reached the bottom of history. The reason for the decline is still the impact of the Chinese epidemic on short-term consumption power. We firmly believe that this impact is short-lived. Similarly, consumption is the sector least affected by foreign austerity policies. It is the undervalued sector of deterministic growth and has the ability to cross the bull and bear. In China’s innovative drugs and cro industry, with the significant adjustment of Hong Kong stock biotech, high-quality companies in the industry have gradually shown their configuration value, but they may stay at the bottom for a long time. The main reason is that they are greatly affected by China’s new drug review policy and medical insurance negotiation policy, and the impact of the significant adjustment of the secondary market on the investment and financing of the primary market is still being transmitted.
Consumer medicine based on traditional Chinese medicine will go out of the trend of growing cattle
Traditional Chinese medicine has a high position in the field of prevention of disease, chronic disease conditioning and rehabilitation. In this round of epidemic, traditional Chinese medicine has played an important role and improved national self-confidence. The 14th five year plan also proposed that traditional Chinese medicine go to sea. Similarly, who believes that. “Traditional Chinese medicine can effectively treat covid-19 pneumonia, reduce the conversion of mild and common cases to severe cases, shorten the virus clearance time and improve the clinical prognosis of mild and common patients; encourage Member States to consider the integrated medical model (Integrated Traditional Chinese and Western medicine model) formed and applied in China, effectively manage the current epidemic situation and prepare for a possible pandemic in the future.” Four changes in the traditional Chinese medicine industry will continue to be fulfilled: first, the dependence on consumer goods and medical insurance is weakening; Second, there will be no large-scale centralized purchase and price reduction. Because the upstream involves agricultural planting, if the middle reaches pharmaceutical enterprises are greatly reduced, it will affect the enthusiasm of upstream agricultural planting, which is not desirable. From the centralized purchase of traditional Chinese medicine decoction pieces in Shandong, it can be seen that policy makers are cautious; Third, accelerate the industrialization of classic hospital preparations (innovative traditional Chinese Medicine); Fourth, medical insurance should be properly tilted (not included in DRG and traditional Chinese medicine formula particles into medical insurance for the time being).
Focus on the company
Cdmo and covid-19 oral drug industry chain: Shijiazhuang Yiling Pharmaceutical Co.Ltd(002603) , Shandong Jincheng Pharmaceutical Group Co.Ltd(300233) , Shanghai Junshi Biosciences Co.Ltd(688180) , Wuxi Apptec Co.Ltd(603259) , Porton Pharma Solutions Ltd(300363) , Asymchem Laboratories (Tianjin) Co.Ltd(002821) , etc; Sequential vaccination: Shanghai Fosun Pharmaceutical (Group) Co.Ltd(600196) , Chongqing Zhifei Biological Products Co.Ltd(300122) , Walvax Biotechnology Co.Ltd(300142) and Cansino Biologics Inc(688185) etc; Consumer medical care: Huadong Medicine Co.Ltd(000963) , Eyebright Medical Technology(Beijing) Co.Ltd(688050) , Yantai Zhenghai Bio-Tech Co.Ltd(300653) , Chengdu Kanghua Biological Products Co.Ltd(300841) , Jiangsu Yuyue Medical Equipment And Supply Co.Ltd(002223) and Meinian Onehealth Healthcare Holdings Co.Ltd(002044) ; Traditional Chinese medicine consumer goods: Beijing Tongrentang Co.Ltd(600085) , Tianjin Zhongxin Pharmaceutical Group Corporation Limited(600329) , China Resources Sanjiu Medical & Pharmaceutical Co.Ltd(000999) , Inner Mongolia Furui Medical Science Co.Ltd(300049) , Mayinglong Pharmaceutical Group Co.Ltd(600993) , Jianmin Pharmaceutical Group Co.Ltd(600976) , Zhejiang Shouxiangu Pharmaceutical Co.Ltd(603896) , Zhejiang Jolly Pharmaceutical Co.Ltd(300181) , etc; Traditional Chinese medicine innovation and formula granules: Shijiazhuang Yiling Pharmaceutical Co.Ltd(002603) , Hubei Jumpcan Pharmaceutical Co.Ltd(600566) , Tianjin Chase Sun Pharmaceutical Co.Ltd(300026) , Guiyang Xintian Pharmaceutical Co.Ltd(002873) , etc; Innovation, independent control and going to sea: Shenzhen Mindray Bio-Medical Electronics Co.Ltd(300760) , Jiangsu Hengrui Medicine Co.Ltd(600276) , Shenzhen Salubris Pharmaceuticals Co.Ltd(002294) , Truking Technology Limited(300358) , Shenzhen New Industries Biomedical Engineering Co.Ltd(300832) , Yifan Pharmaceutical Co.Ltd(002019) and Chengdu Easton Bio Pharmaceuticals Co.Ltd(688513) , etc. (in no order)
Risk tips: the risk of uncertainty in China’s epidemic process, the risk of drastic changes in the international environment, etc
