Events
Since December 2021, pharmaceutical biology (Shenwan) has fallen by 2.08%. In terms of segments, the segments with low valuation have gained better: Traditional Chinese medicine (+ 15%), pharmaceutical business (+ 11.4%), medical devices (+ 0.1%), and CXO (- 24.7%), medical services (- 17.4%) and biological products (- 6.6%) with high valuation have been adjusted more. On the whole, the pharmaceutical sector is in the process of valuation equilibrium recently, that is, due to the positive release of policies, the trend of traditional Chinese medicine and medical devices in the undervalued sector is better, while the CXO and medical service sectors with more institutional positions and more early gains are callback due to the uncertain factors derived from the event. Looking back, it is estimated that this market will still deduce in the short term, that is, the undervalued repair is expected to continue. With the release of the risk under the correction of overestimated sectors, the performance forecast of the superimposed 2021 annual report will usher in the disclosure period from January to February, and the relevant sectors may enter a reasonable range in 2022 with the release of performance.
Key investment points
Policy side: intensive release of subdivided industries and catalytic undervaluation of plate market. Recently, the medical policy has been relatively warm, and some subdivision policies have determined the development direction of relevant sub industries in the next 2-3 years. The main policies are as follows: ① medical device field: on December 28, 2021, China’s “14th five year plan” for the development of medical equipment industry was officially released (hereinafter referred to as the “plan”), which proposed that by 2025, The upgrading of the medical equipment industry foundation and the modernization of the industrial chain should be significantly improved, the effective supply of mainstream medical equipment should be basically realized, the performance of high-end medical equipment products should be significantly improved, and a comprehensive support capacity for public health and medical health needs should be initially formed. The press conference of the plan accelerates the domestic substitution speed of the medical device industry, especially the seven key development areas emphasized in the plan: diagnostic and testing equipment, treatment equipment, monitoring and life support equipment, traditional Chinese medicine diagnosis and treatment equipment, maternal and child health equipment, health care and rehabilitation equipment and active implant intervention equipment. ② In the field of traditional Chinese medicine: on December 30, 2021, the state medical insurance administration and the State Administration of traditional Chinese Medicine issued the guiding opinions on medical insurance supporting the inheritance, innovation and development of traditional Chinese medicine (hereinafter referred to as the Guiding Opinions). The guiding opinions can summarize two points: first, medical insurance supports the development of traditional Chinese medicine with clear curative effect. DRGs will not be considered or given priority to be included in Chinese patent medicine for the time being, which is beneficial to the exclusive varieties of traditional Chinese medicine, including innovative traditional Chinese medicine; Second, improve the accessibility of reimbursement of traditional Chinese medicine. The scope of traditional Chinese medicine institutions included in medical insurance was expanded, and support was provided to the industries of traditional Chinese medicine diagnosis and rehabilitation. The guidance is beneficial to the whole TCM industry chain, and it is precisely because the policy exceeds expectations at the payment end that traditional Chinese medicine has become a hot spot of investment in the near future. ③ In the field of rehabilitation medicine: on January 5, 2022, the general office of the State Council issued the national disability prevention action plan (2021-2025), which fully implemented the three-level prevention and control strategy of disability prevention covering the whole life cycle of the whole population. The action plan includes the promotion of rehabilitation services into one of the “five actions” of the disability prevention plan, and the importance of rehabilitation medical treatment has been raised to a higher level, which is also good for rehabilitation medical equipment enterprises and chain rehabilitation hospitals.
Performance side: in the follow-up, we should pay attention to the main line of high growth in the 2021 annual report and observe that the valuation of CXO plate with good performance is stable. Near the end of January, the market will enter the window period of annual report forecast disclosure. Combined with the third quarterly report of the enterprise and the high growth business of the company that has disclosed the forecast, such as the recent performance forecast issued by testing enterprises Wuhan Easy Diagnosis Biomedicine Co.Ltd(002932) and Beijing Hotgen Biotech Co.Ltd(688068) , the net profit attributable to the parent company is expected to increase by 198.56% and 1840.8% respectively in 2021. From this analysis, it is found that enterprises with high performance growth in 2021 may have the following main lines: ① epidemic beneficiary stocks: such as covid-19 test kit, covid-19 vaccine, ICL, epidemic prevention materials and other targets; ② High prosperity stocks in the industry: CXO enterprises (many enterprises have sufficient orders in hand, new production capacity has been completed, and the marginal increase of covid-19 small molecule drug outsourcing orders), upstream of biomedicine (imported products are limited during the epidemic, and some domestic products are replaced), which are also catalyzed and promoted by the epidemic; ③ After the 2020 epidemic, the rapid recovery unit in 2021: such as routine IVD testing, chemical drugs, blood products enterprises, etc., rebounded with the recovery performance of in-hospital diagnosis and treatment.
Investment suggestions: To sum up, in combination with policy guidance, enterprise performance prospects and current valuation, we believe that we can focus on the following areas in 2022: ① medical equipment: the bottleneck of domestic high-end equipment continues to break through, and the products are expected to build equipment enterprises with rapid and large volume with the help of policies and China’s medical infrastructure, such as: Shenzhen Mindray Bio-Medical Electronics Co.Ltd(300760) , Sonoscape Medical Corp(300633) , Qingdao Novelbeam Technology Co.Ltd(688677) Aohua endoscopy. ② OTC of traditional Chinese medicine: with favorable policies, and against the background of price increase and low inventory, brand traditional Chinese medicine enterprises with good performance and enterprises with more clinical projects of innovative traditional Chinese medicine in 2022 will still receive medium and long-term attention in the market. Such as: Shijiazhuang Yiling Pharmaceutical Co.Ltd(002603) , China Resources Sanjiu Medical & Pharmaceutical Co.Ltd(000999) , Beijing Tongrentang Co.Ltd(600085) , Henan Lingrui Pharmaceutical Co.Ltd(600285) , Jianmin Pharmaceutical Group Co.Ltd(600976) . ③ Chain pharmacies: in 2021, the performance of chain pharmacies was poor due to multiple factors such as high base / epidemic prevention policy flow restriction / new lease criteria / delayed profits of new stores. In 2022, under the background of stricter internet medical supervision, leading pharmacies had marginal improvement in the above factors, such as: Yifeng Pharmacy Chain Co.Ltd(603939) , Lbx Pharmacy Chain Joint Stock Company(603883) , Yixintang Pharmaceutical Group Co.Ltd(002727) , Dashenlin Pharmaceutical Group Co.Ltd(603233) , Guangxi Liuzhou Pharmaceutical Co.Ltd(603368) . ④ Elderly care and rehabilitation: after the implementation of dip / DRGs policy, the hospital has the power to improve the turnover efficiency of beds. With the continuous catalysis of the national elderly care policy, the rehabilitation medical equipment industry is expected to enter an intensive procurement period in the next two years. We can pay attention to: Xiangyumedicalco.Ltd(688626) , Nanjing Vishee Medical Technology Co.Ltd(688580) , Ningbo Sanxing Medical Electric Co.Ltd(601567) .
Risk factors: the industry competition intensifies, the performance is less than expected, the cost of raw materials rises too fast, and the R & D Progress of innovative traditional Chinese medicine is less than expected
