Review this week: the Shenwan pharmaceutical index fell by 6.8%, underperforming the Shanghai Composite Index (- 3.9%) and Shanghai and Shenzhen 300 (- 4.1%) in the same period. We believe that it is mainly due to the intensive disclosure of financial reports this week, and the performance of some pharmaceutical stocks affected by the epidemic is lower than expected, resulting in the decline of overall investment confidence. After the disclosure of the first quarterly report of public funds this week, we conducted an in-depth resumption of the pharmaceutical sector in combination with the fund position in the first quarterly report and the market review since the beginning of the year.
The valuation of the sector further fell, and the proportion of positions hovered at the bottom. At present, the PE of Shenwan pharmaceutical and biological sector is about 26 times, far lower than the historical average. At present, the overall premium rate relative to A-Shares is about 85%, far lower than the historical average premium rate in recent ten years (121%). The proportion of pharmaceutical stocks held by public offering has increased month on month, but the position is still at a historical low in recent three years. In 2022q1, the proportion of heavily held pharmaceutical stocks of all public funds was 11.2%, up 0.8pp month on month; After excluding medical funds, the proportion of heavy positions was 6.2%, up 0.9pp month on month; Over the same period, pharmaceutical stocks accounted for 8.7% of the total market value of a shares, up 0.2pp month on month. In terms of the number of holding funds, the top three public funds held in 2022q1 are Wuxi Apptec Co.Ltd(603259) , Shenzhen Mindray Bio-Medical Electronics Co.Ltd(300760) , Chongqing Zhifei Biological Products Co.Ltd(300122) ; From the perspective of changes in the market value of fund holdings, the top three public funds with the largest increase in market value in 2022q1: Chongqing Zhifei Biological Products Co.Ltd(300122) , Wuxi Apptec Co.Ltd(603259) , Beijing Tongrentang Co.Ltd(600085) ; The top three with the largest decrease in market value: Shenzhen Mindray Bio-Medical Electronics Co.Ltd(300760) , Changchun High And New Technology Industries (Group) Inc(000661) , Jiangsu Hengrui Medicine Co.Ltd(600276) .
At present, the medical trade is hot and the allocation is light. The first quarterly report disturbed by the epidemic situation provides a good opportunity for adding medicine. Since the beginning of the year, the hot spots in the pharmaceutical sector have been continuous, and the theme market has repeatedly appeared in the sub fields of traditional Chinese medicine, testing, vaccine and covid-19 medicine. However, since the beginning of the year, the overall situation is still generally declining, especially in the fields with great impact of the epidemic. Combined with the proportion of fund positions and trading volume, the current pharmaceutical game trading is hot and the allocation is light. The recent quarterly financial report intensively disclosed that the pharmaceutical sector was greatly disturbed by the epidemic, and there was a significant correction in valuation and performance, which actually provided a good opportunity for additional medicine. After the epidemic improved in the second quarter, the sector is expected to usher in a double-click of performance + valuation.
Focus on portfolio this week
Growth Portfolio: Pharmablock Sciences (Nanjing) Inc(300725) , Kingsley biotechnology, Focused Photonics (Hangzhou) Inc(300203)
Robust combination: China Resources Sanjiu Medical & Pharmaceutical Co.Ltd(000999) , Baicheng pharmaceutical, Zhejiang Jiuzhou Pharmaceutical Co.Ltd(603456)
Elastic combination: Tofflon Science And Technology Group Co.Ltd(300171) , Zhejiang Starry Pharmaceutical Co.Ltd(603520) , Pacific Shuanglin Bio-Pharmacy Co.Ltd(000403)
Investment suggestion: at present, the valuation of Shenwan pharmaceutical industry is about 26 times. Due to the impact of the epidemic disturbance superimposed on the performance of the first quarter report, the pharmaceutical index has been significantly reduced. However, we believe that the Growth Logic of the main pharmaceutical tracks has not been substantially damaged, and the short-term impact of the epidemic provides a good opportunity for pharmaceutical configuration and maintains the “recommended” rating of the industry.
Risk warning: the risk of further deterioration of the epidemic situation; Low industry performance and expected risk; Other systemic risks.
