The recent correction of various sub industries in the medical sector due to different factors (such as the expected change of performance, the event of centralized purchase with volume, the expected change of market demand for anti epidemic materials, the change of industry allocation proportion, etc.) is in line with our early overall strategic judgment (the growth of the industry may slow down, while the value attribute continues to strengthen).
However, we believe that with the rapid correction of valuation and market expectations, the time when the pressure on the medical sector is the greatest has passed, and the follow-up investment is expected to turn into an offensive posture. This judgment is based on many reasons:
The rapid adjustment of the valuation level of enterprises in the industry highlights the value attribute;
The flow of diagnosis and treatment in medical institutions across the country has gradually recovered, and the demand has returned to growth;
The policy expectation is gradually clear and the valuation is fully digested;
The performance window of the first quarterly report of the annual report catalyzes the stock price;
Incentives for listed companies in the industry are issued intensively, reflecting enterprise confidence.
Recently, the market expectations of covid-19 testing product enterprises, especially antigen testing product export enterprises, have changed sharply, and there have been large fluctuations in general. Considering that Omicron mutant is still pandemic overseas, we believe that the demand for covid-19 antigen rapid detection products in overseas markets, especially in the United States and Europe, is still expected to last for a long time, and the performance sustainability brought by prevention and control demand is expected to exceed market expectations.
On January 19, Guangdong Provincial Drug Trading Center issued the document on centralized procurement of diclofenac and other drugs by Guangdong alliance, which collected 276 drug varieties, including biological products, including blood products and growth hormone. Growth hormone, blood products and other sectors have experienced a certain correction, but we believe that if we consider the supply scarcity, good competition pattern and excellent profitability of these varieties, as well as the long-term accumulated sales and promotion barriers, the long-term profitability and cash flow growth capacity are still very considerable. We believe that excessive pessimism may be a golden opportunity for long-term layout.
We believe that the investment layout of the follow-up medical sector is still closely focused on the theme of “value growth”, focusing on the high-quality targets that can match the valuation level and performance growth. It is recommended to actively layout high-quality medical devices, high-quality targets of traditional Chinese medicine, covid-19 antigenic testing, routine in vitro diagnosis, medical informatization, new medical infrastructure, chain pharmacies, etc.
Key companies
Shenzhen Mindray Bio-Medical Electronics Co.Ltd(300760) , China Resources Sanjiu Medical & Pharmaceutical Co.Ltd(000999) , Shenzhen New Industries Biomedical Engineering Co.Ltd(300832) , Zhejiang Orient Gene Biotech Co.Ltd(688298) , Jiangsu Yuyue Medical Equipment And Supply Co.Ltd(002223) etc.
Risk tips
The rebound of epidemic situation in China affects the recovery of hospital diagnosis and treatment flow; The intensity of centralized purchase, negotiation and price negotiation of drugs and devices exceeded expectations; The supply of anti epidemic materials increased and the quantity and Price Bureau deteriorated; The growth rate of medical insurance expenditure and health finance fell, and the increment of the industry decreased; R & D and new product launch are not as expected; The first quarterly report of the annual report is less than expected; Exchange risk of export enterprises; Medical malpractice risk; The increase of enterprise incentive investment affects the apparent profit; The investment in new medical infrastructure is less than expected.
