Industry trends:
1) on January 6, 2022, the first joint procurement of national inter provincial traditional Chinese medicine (materials) Procurement Alliance was launched in Shandong. The alliance was initiated and established by Shandong Medical Insurance Bureau and 11 provinces (districts and cities) across the country. The first batch of participating areas covered more than 9500 medical institutions in 86 cities. The first batch of joint mining will focus on traditional Chinese medicine decoction pieces (including formula particles), with a cumulative reported amount of more than 10 billion yuan.
2) on January 6, 2022, Shanghai Sunshine pharmaceutical procurement network announced the notice on the first year’s agreed procurement volume of national centralized drug procurement (insulin special), each pharmaceutical institution has completed the confirmation of the agreed procurement volume of selected products in insulin special, and the national organized centralized drug procurement (insulin special) national first year’s agreed procurement volume and regional first year’s agreed procurement volume have been determined. The results of this insulin special centralized purchase will be implemented in May 2022, and the specific implementation date shall be subject to the notice issued by all localities.
Market observation:
Last week, the pharmaceutical and biological sector fell by 2.94% (ranking 13 / 28), and the sector has fallen by 3.94% (ranking 13 / 28) since the beginning of the year. Recently, the overall market is dominated by shock, and the main line is relatively vague.
Strategic view:
In our strategy report Tianfeng Securities Co.Ltd(601162) : medicine and Biology – individual stock opportunities under policy disturbance released in December 2021, we proposed that “in the past three years, the pharmaceutical sector index has shown stronger growth than A-Shares as a whole, especially the leading companies in the subdivided fields such as medical services and CXO have shown rapid growth in performance and continuous expansion in valuation. It is expected that the main strategy in 2022 will start from the track (boom) towards decentralization, from absolute leader to subdivided leader, from long-term space calculation to catalytic drive. “, Put forward the idea of individual stock selection of “cost performance strategy”, and screen it based on the matching of valuation, performance trend and stock price catalysis. And prospectively put forward the opportunity to pay attention to individual stocks of traditional Chinese medicine.
Recently, the overall fluctuation range of the plate is large and presents a strong seesaw effect (high prosperity and high valuation plate vs. undervalued cost performance plate). We believe that with the further interpretation of the market, medicine may gradually present a balanced state, and the plate effect will gradually reduce (such as the recent differentiation of individual stock trend in the traditional Chinese medicine plate), whether it is CXO with a high proportion of market allocation, Or the more active traditional Chinese medicine in the near future, will gradually show strong individual stock driven characteristics. Our three selection criteria for individual stocks are:
① Valuation: compared with similar companies (not limited to medicine), or compared with their own historical valuation, or compared with other companies in the same industry.
② target space: combined with the current market value and transaction structure, the target market value space has good attraction.
③ catalyst: there are potential catalysts that have an important impact on the company’s operation in the foreseeable future (such as a quarter to half a year).
In addition, at present, medicine is a technology innovation driven industry, and research investment in new technologies is still an important direction, such as synthetic biology and substitution of domestic medical equipment. We expect that it will be an important investment theme direction in medicine for a long time in the future, and we recommend paying attention to it.
Recently, the Tianfeng Securities Co.Ltd(601162) pharmaceutical team suggested stock selection ideas (in order):
Recent stock selection ideas (in order):
Selected stocks: Ningbo Sanxing Medical Electric Co.Ltd(601567) , Hubei Jumpcan Pharmaceutical Co.Ltd(600566) , Huadong Medicine Co.Ltd(000963) , Beijing Tongrentang Co.Ltd(600085) , Shenzhen Mindray Bio-Medical Electronics Co.Ltd(300760) , Yixintang Pharmaceutical Group Co.Ltd(002727)
Traditional Chinese medicine: Beijing Tongrentang Co.Ltd(600085) , Shijiazhuang Yiling Pharmaceutical Co.Ltd(002603) (attention recommended), Jianmin Pharmaceutical Group Co.Ltd(600976) , Henan Lingrui Pharmaceutical Co.Ltd(600285) , Hubei Jumpcan Pharmaceutical Co.Ltd(600566) ;
3) CXO: Wuxi Apptec Co.Ltd(603259) , Hangzhou Tigermed Consulting Co.Ltd(300347) , Pharmaron Beijing Co.Ltd(300759) (attention recommended), Asymchem Laboratories (Tianjin) Co.Ltd(002821) , Porton Pharma Solutions Ltd(300363) ;
4) medical devices: Shenzhen Mindray Bio-Medical Electronics Co.Ltd(300760) , minimally invasive Siasun Robot&Automation Co.Ltd(300024) (H shares, attention recommended) Eyebright Medical Technology(Beijing) Co.Ltd(688050) , Micro-Tech (Nanjing) Co.Ltd(688029) , Autek China Inc(300595) (attention recommended);
5) innovative drugs: Cinda Biology (H), Yifan Pharmaceutical Co.Ltd(002019) , Shanghai Junshi Biosciences Co.Ltd(688180) ;
6) medical services: Xi’An International Medical Investment Company Limited(000516) , Topchoice Medical Co.Inc(600763) , Aier Eye Hospital Group Co.Ltd(300015) , haijiya medical (H)
Risk tip: market shock risk, R & D progress is less than expected, and the extension integration of individual companies is less than expected, resulting in epidemic risk.
