[pioneer pharmaceutical industry weekly] pay attention to the investment opportunities of chain pharmacies and medical equipment

Core view

View of Medicine Week: focus on investment opportunities of chain pharmacies and medical equipment

In the medium and long term, with the increase of covid-19 vaccination rate and the continuous breakthrough of covid-19 therapeutic drugs, the impact of covid-19 will gradually weaken. The desensitization of the epidemic continues, and the "correction" of medical demand is the general direction. It is suggested to pay attention to the investment opportunities of chain pharmacies and medical equipment sectors with high cost performance and encouraged by policies.

Chain drugstores: the certainty of performance growth is high, and the valuation repair is in progress. Due to the high sales base of epidemic related products in 2020, the revenue growth slowed down in 2021, and the valuation has been at the bottom of history. The leading stores of retail pharmacies have maintained rapid expansion. The number of stores has increased by more than 1000 in the first three quarters of 2021. It is expected that the number of new stores in the whole year will account for 15-25%, which will support the growth of future performance. At the same time, the policy encourages the retail pharmacy industry to accelerate the integration, which is conducive to the accelerated development of the leading chain pharmacies. It is suggested to pay attention to Yifeng Pharmacy Chain Co.Ltd(603939) , Yixintang Pharmaceutical Group Co.Ltd(002727) , Lbx Pharmacy Chain Joint Stock Company(603883) , Dashenlin Pharmaceutical Group Co.Ltd(603233) , etc.

Medical equipment: the new medical infrastructure provides a new opportunity for domestic substitution. Since the outbreak, the state has continued to increase investment in medical infrastructure construction, requiring grass-roots medical institutions to supplement the missing medical equipment and improve the comprehensive medical service capacity. At present, the purchase of medical equipment by grass-roots medical and health institutions in many provinces clearly requires the purchase of domestic equipment with higher cost performance, adding new impetus to domestic substitution. With the gradual maturity of core technology and the continuous improvement of domestic product quality, China's leading medical equipment is expected to increase market share. It is suggested to pay attention to Shenzhen Mindray Bio-Medical Electronics Co.Ltd(300760) , Sonoscape Medical Corp(300633) , Qingdao Novelbeam Technology Co.Ltd(688677) .

Market review: the biomedical sector fell 7.19% last week, ranking 28th in weekly rise and fall. Since the beginning of this year, the pharmaceutical and biological industry has fallen by 8.70%, 5.44 percentage points lower than the CSI 300 index, ranking 26th in all SW primary industries.

In terms of subdivided industries, the pharmaceutical and biological subdivided sectors fell last week, with chemical raw materials falling the least, down 3.33%. Biological products were greatly affected by Guangdong centralized purchase documents, down 10.64%. Since the beginning of this year, the performance of chemical raw materials and pharmaceutical business has been the best, down 3.50% and 5.10% respectively since the beginning of the year; Medical services was the weakest performing sub sector, down 13.64%. Medical services (- 13.64%) and biological products (- 11.89%) underperformed the pharmaceutical and biological (SW) industry index.

In terms of the performance of individual stocks, the top five stocks that rose last week were: Jinghua Pharmaceutical Group Co.Ltd(002349) (36.71%), Thalys Medical Technology Group Corporation(603716) (23.32%), Xinxiang Tuoxin Pharmaceutical Co.Ltd(301089) (23.13%), Wuhan Hiteck Biological Pharma Co.Ltd(300683) (13.74%) and Brightgene Bio-Medical Technology Co.Ltd(688166) (13.59%). The top five stocks with declines are: Hangzhou Biotest Biotech Co.Ltd(688767) (- 46.84%), Zhejiang Orient Gene Biotech Co.Ltd(688298) (- 41.71%), Beijing Hotgen Biotech Co.Ltd(688068) (- 40.09%), Hangzhou Alltest Biotech Co.Ltd(688606) (- 40.04%) and Shanghai Zj Bio-Tech Co.Ltd(688317) (- 35.42%).

Valuation: the valuation showed a slight upward trend. As of Friday (January 21), PE (TTM) and Pb (LF) of the whole pharmaceutical and biological (SW) industry were 31.98 times and 3.92 times respectively.

Risk warning: medical policy risk; Lower prices than expected; Systemic risk.

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