On December 15, a number of innovative pharmaceutical stocks in the end of A-shares fell sharply, WuXi AppTec directly fell to a halt, and Hong Kong stock WuXi Biologics fell by more than 19%.
The collective panic of funds fled because of news that some Chinese biotech companies could be blacklisted by the US Department of Commerce. However, the authenticity of this information has yet to be verified.
E company reporter interviewed a number of industry insiders, all said that the possibility of Chinese biotechnology companies being blacklisted is unlikely. If a company is really blacklisted, it is also necessary to specifically analyze the company's proportion of U.S. business and look at it rationally.
Funds stampede and fled
On the afternoon of December 15, the A-share innovative drug sector fell sharply, the WindCRO index closed down 5.81%, and 15 constituent stocks closed down across the board.
WuXi AppTec directly fell to a stop, which is the first stop stop for the stock since its listing in May 2018. At the same time, Hong Kong stock WuXi Biologics also fell sharply in the afternoon, falling nearly 25% intraday and finally closing down 19.24%.
In the sector, Haoyuan Pharmaceutical, Tigermed, Kyushu Pharmaceutical, Kanglong Chemical, Zhaoyan New Drug, Medici, Yaoshi Technology and other stocks have followed suit. The market value of 15 stocks evaporated by nearly 70 billion yuan throughout the day.
WuXi AppTec's turnover exceeded 6.4 billion yuan throughout the day, and the net outflow of main funds exceeded 1.4 billion yuan. Tigermed, Kanglong Chemical, Boteng shares, Zhaoyan New Drug and other stock main funds also sold more than 100 million yuan, and 15 stocks in the entire sector were sold for more than 2.6 billion yuan.
WuXi AppTec's after-hours Dragon and Tiger list data shows that today's Shanghai Stock Connect special seats bought 395 million yuan and sold 1.092 billion yuan, institutional special seats bought 148 million yuan, and some institutions also sold 335 million yuan.
The top five seats of the seller sold a total of more than 2 billion yuan of WuXi AppTec, and the sales department of CITIC Securities Shanghai Branch and Zhejiang Branch and Huatai Securities Shanghai Branch all had large amounts of funds fled.
Industry: Rational analysis is required
The industry believes that there are two main reasons for the obvious stampede selling of funds, one is that the current valuation of the CRO plate is relatively high after a period of rise, and the willingness to sell funds is strong; the other is that the US Department of Commerce may sanction Chinese biotechnology companies.
Wind data shows that the latest average price-earnings ratio of 15 stocks in the A-share CRO sector is 126 times, and the median is 129 times.
A senior pharmaceutical industry analyst told the e company reporter that the stock can not only rise and fall, the overall valuation of these companies is higher, there is a demand for "killing valuation", the plate is currently relatively risky, since the end of October, the leading stocks have had several sharp adjustments, and it is not surprising that today's big fall. It is only today that the B&E listing break and the negative news of US sanctions are superimposed, accelerating the adjustment of the sector.
On the news side, it is reported that the US Department of Commerce will add eight Chinese companies such as DJI to the blacklist, including Mining Vision, Shuguang Information Industry, Yuncong Technology, Meiya Berke, Yitu Technology, Leon Technology, Oriental Net Power and other companies. It will also add more than two dozen Chinese companies to its entity list, including some biotechs.
The so-called entity list refers to the export control regulations established by the United States, and enterprises that are included in the "blacklist" are deprived of trade opportunities in the United States.
The message is yet to be verified. As of press time, no relevant listed companies have announced this matter. Many people in the industry have expressed doubts about the authenticity of the news.
Jiang Long, a partner at Hanxin Asset, told reporters that CXO companies are unlikely to be really included in the entity list, and there is no need for the United States to suppress the Chinese market, because China's CXO industry innovation is not leading the global market. On the whole, domestic related enterprises only provide supporting services for overseas innovative pharmaceutical companies, and the role is to reduce the research and development costs of overseas pharmaceutical companies, similar to the role of "hit workers". If China's CXO companies are suppressed, it will undoubtedly increase the cost of overseas pharmaceutical companies.
A number of brokerage analysts also expressed the same view:
Dai Wen, a pharmaceutical analyst at Huatai Securities, believes that as long as the relevant enterprises do not have close ties with the military or threaten the national security of the United States, they should not be sanctioned, and the affected companies, especially listed companies, will not be too many. The likelihood of CXO being included in the list in principle is very small.
Chen Zhu, an analyst at CITIC Securities, said that for this matter, "we should not over-speculate", and there have been many rumors in the past two years that CXOs will be sanctioned, but in retrospect, they have not landed. CXO's business model is a formal market economy model, and there is no involvement of the government or even the military, so it is completely worrying about inclusion in the entity list.
"If the relevant enterprises are really blacklisted, the impact will certainly be very large", Jiang Long told reporters, most CXO companies are facing a global market, and the proportion of overseas business is not small.
Taking last year's financial report data as an example, the overseas revenue of many leading CRO companies in A-share is not low: WuXi AppTec 75%, Tigermed 40%, Kanglong Chemical 86%, Boteng 84%, and Yaoshi Technology 69%. Of course, some of this overseas income does not come from the United States.
The above-mentioned pharmaceutical industry analysts believe that even if sanctions are imposed, they need to be rationally analyzed to see the proportion of U.S. revenue of enterprises. Taking WuXi AppTec as an example, the 2020 annual report shows that in its main revenue composition, the revenue from laboratory services in the United States accounted for 9.17%, and the revenue from laboratory services in China accounted for more than half. If it is really included in the entity list by the United States, the actual impact is limited.