Logic 1: Pay deep attention to the reform dynamics of traditional Chinese medicine state-owned enterprises. Looking back at the last round of market** stage (October 12, 2022 to May 5, 2023) with the valuation system with Chinese characteristics as the background, the performance of state-owned enterprises in the traditional Chinese medicine industry was particularly eye-catching, among which the share prices of Taiji Group, Kunming Pharmaceutical Group, Jiangzhong Pharmaceutical, Kangenbei, China Resources Sanjiu and Dong'e Ejiao all rose by more than 50%, showing strong growth momentum. On January 24, the relevant person in charge of the State-owned Assets Supervision and Administration Commission revealed that it will further study the inclusion of market value management in the performance appraisal system of the person in charge of the enterprise, which indicates that a new round of state-owned enterprise reform process is expected to accelerate and may become an important main line of future investment. Therefore, we are highly optimistic about the development direction of the reform of Chinese medicine state-owned enterprises, and recommend investors to focus on China Resources.
Three. 9. Dong'e Ejiao, Taiji Group, Kangenbei and Kunming Pharmaceutical Group and other enterprises with reform potential.
Logic 2: The relative advantages of the Chinese medicine sector under low valuation are becoming increasingly prominent. Since entering June 2023, the traditional Chinese medicine sector has gone through a round of full and reasonable **, and the current price-earnings ratio (PEG) of some companies is less than 1. Especially in the investment environment of seeking risk aversion and value return in economic fluctuations, the traditional Chinese medicine sector has a cost-effective advantage, and it is recommended that investors pay attention to Jichuan Pharmaceutical, Zuoli Pharmaceutical, Sunflower Pharmaceutical and Jiangzhong Pharmaceutical and other targets with reasonable valuation and stable performance.
Logic 3: The traditional Chinese medicine industry continues to receive significant support at the policy level. All innovative TCM drugs approved in 2022 have been included in the medical insurance negotiation catalogue, which not only reflects the country's great importance to TCM innovation, but also indicates that the approval of new TCM drugs in the future may be accelerated. In addition, the restrictions on the use of traditional Chinese medicine injections are expected to be lifted in batches, which will greatly improve the market expectations of related products and promote the gradual recovery of this segment from the bottom. At the same time, the list of essential medicines is expected to be further tilted towards traditional Chinese medicine, and a variety of favorable policies will work together to inject strong impetus into the development of the traditional Chinese medicine industry. In this context, it is recommended that investors pay attention to Fangsheng Pharmaceutical, Kangyuan Pharmaceutical, Tasly, Yiling Pharmaceutical and Guizhou Sanli and other traditional Chinese medicine companies that benefit from favorable policies.
In addition, there are also some distinctive Chinese medicine companies that are also worth paying attention to, such as Poinsettia, Jiuzhitang, Panlong Pharmaceutical, Yunnan Baiyao, Lingrui Pharmaceutical, Renhe Pharmaceutical and Teyi Pharmaceutical, etc., each of which occupies an important position in the industry with its unique business model and brand influence.
Risk Warning:1The progress or effect of policy implementation may be lower than expected;
2.The overall growth rate of the Chinese medicine industry may be lower than expected.
Note: The data and opinions in this article are provided by GS Pharma team and are for reference only.
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