Rose! Medicine finally exhaled and raised its eyebrows, Gülen "reduced burden" to prepare for the bottom opportunity?

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Family, has your medical fund gone up?

Today, CROs, diet drugs and other concept stocks broke out, driving the entire pharmaceutical sector to rise, and Shenwan Pharmaceutical Biological Index rose first.

In fact, the pharmaceutical sector has quietly started a month ago.

Source: Wind

Wind data shows that against the background of the decline of most industries in September, pharmaceutical biology became one of the few industries in the market to rise, ranking second in all Shenwan primary industry indexes.

And we also shared a data with you in a previous article:

Since the "bottom of the 827 policy", some pharmaceutical biological funds have taken the lead in coming out of the bottom, and the stage increase is second only to the energy funds represented by coal, and even, many pharmaceutical funds have risen by more than 10%.

Seeing these data, I believe that many partners who hold pharmaceutical industry funds are quietly igniting a trace of expectation:

Is the day dawning in the pharmaceutical industry?

01

Why has the pharmaceutical industry risen?

For ordinary investors, medicine is still a very professional track, if you do not pay much attention to the trend of the industry on a daily basis, you may be a little confused about the rise of the pharmaceutical industry in the past month. In fact, behind this wave of pharmaceutical rise, there is a joint effect of several forces.

(1) Marginal improvement of policies

Since the beginning of this year, the pharmaceutical anti-corruption has caused a relatively large impact on the entire pharmaceutical industry, but since September, the policy margin has gradually improved.

On August 15, the Medical Emergency Department of the Health Commission issued the "Questions and Answers on the Centralized Rectification of Corruption in the National Pharmaceutical Field", which clearly stated that "standardized academic conferences and normal medical activities should be strongly supported and actively encouraged", and "this anti-corruption in the medical industry focuses on key minorities and key positions".

Since September, medical academic conferences have resumed one after another, and the impact of pharmaceutical anti-corruption on the industry has gradually weakened, it can be said that the biggest negative in the entire pharmaceutical industry has been digested, and market sentiment has begun to recover.

(2) The valuation bottom needs to be repaired urgently

On the other hand, after a three-year adjustment, the pharmaceutical industry as a whole has entered the bottom of long-term valuation.

Zheshang Securities shared a very interesting chart in "2023 Pharmaceutical Industry Investment Strategy", reviewing the performance of the entire pharmaceutical sector from a ten-year dimension, and pointed out: "It has never experienced such a long period of adjustment. ”

After this long 3-year adjustment, taking the 800 pharmaceutical index as an example, the price-to-earnings ratio (TTM) is 26.99 times, and the historical quantile of the past ten years is 5.66%, that is, the valuation is already lower than the historical 90% moment.

Source: Wind, as of 20231010

(3) The relay of the "catalyst"

Market sentiment is improving and valuations are at historical bottoms, but for the market to rise, it needs good news or "fuse" catalysis.

In September, the pharmaceutical industry had several fierce "catalysts".

One is that significant progress has been made in the development of new drugs for Alzheimer's disease to treat Alzheimer's disease.

The other is that Elon Musk personally brought weight loss pills on the field, causing a sensation, and weight loss concept stocks immediately set off a wave of hype.

At the same time, the results of the adjustment of the national medical insurance catalogue in 2023 were announced, and the new version of the basic drug catalogue is expected to be released in the fourth quarter of 2023, and the expansion of proprietary Chinese medicines has become the main tone of the adjustment of the basic drug catalog. This news also made the entire traditional Chinese medicine sector feel like a spring breeze.

In other words, the marginal improvement of policy, the urgent need to repair the valuation bottom, and the catalyst of positive news jointly contributed to the rise of the pharmaceutical industry in September.

So, can this wave of medicine continue?

Can the pharmaceutical industry usher in a bottom inflection point?

02

Is it time for the medical dilemma to reverse?

Recently, I saw a research report by Tianfeng Securities, and there is a point of view that is quite suitable for the scene in the fourth quarter. The report states:

"It is not recommended to focus too much on U.S. Debt, and focus on low PB quantile factors at the core."

What do you mean?

That is to say, for the current position of A-shares, it is recommended to pay more attention to marginal changes rather than US bonds, and the investment opportunities brought by marginal changes may be real returns.

The report also points out several transaction directions, one of which is to look for some industries that have experienced the "Davis double kill" and may have industrial inflection points in the future, such as the innovative drug industry chain.

In fact, the pharmaceutical industry at the current point in time is quite in line with the investment scenario of "dilemma reversal".

On the one hand, pharmaceutical anti-corruption has become the "last decline" to accelerate the adjustment of the pharmaceutical sector, but from the actual impact, the impact on the performance of relevant listed companies is only short-term, and will not affect the growth of the industry in the long run, on the contrary, due to the reduction or even disappearance of improper sales activities, it is beneficial to the healthy development and industrial upgrading of the entire pharmaceutical industry.

It can be said that the worst time of the industry has passed, and the "policy bottom" and "emotional bottom" have appeared.

Second, from the valuation level, the historical bottom is already in sight.

After the rise in September, the valuation of the entire pharmaceutical sector has rebounded, but it is still below the historical 90% moment, and the valuation premium relative to the CSI 300 is also lower than the central level in four years.

It can be said that from a medium and long-term perspective, the entire pharmaceutical industry has little downward space, but the upward flexibility is worth looking forward to.

This is the "valuation bottom".

Third, in terms of performance, under the background of pharmaceutical anti-corruption, the third quarterly report of some pharmaceutical listed companies may not be very good, but in the case of marginal improvement of policies, the performance of the third quarter is no longer the focus of market attention.

Guosen Securities pointed out that

"The pharmaceutical industry is in a large cycle of basic orientation (stable and sustainable demand, emerging high-quality supply, continuous withdrawal of general supply, continuous improvement of independent and controllable capabilities), and a clear long-term development path (innovation, compliance, internationalization)",

"Judging from the data of H1 2023, the industry is about to usher in a R&D harvest period, and revenue growth and non-profit growth are expected to outperform R&D growth and release the dividends of transformation and upgrading."

In other words, the third quarter may also be the "bottom of performance" of the pharmaceutical industry.

Fourth, from the perspective of funds, one of the factors in the adjustment of the pharmaceutical industry in the past three years is that the transaction is overcrowded due to capital huddling, and this situation has also improved significantly.

According to data from BOCOM International, historically, the current institutional shareholding ratio and allocation ratio of the A-share pharmaceutical sector are lower than the historical level.

However, with the improvement of the cost performance of pharmaceutical investment, institutions have begun to return one after another, and public funds and foreign capital (Lu Stock Connect) are continuing to increase their positions in the pharmaceutical sector in the second quarter.

In addition, the public may also be paying attention to an announcement at the end of September, star fund manager Gülen will step down as CEIBS Research Select and CEIBS Alpha.

Previously, Gülen managed a total of five funds, and after stepping down from these two funds, he will continue to manage the three products of CEIBS Healthcare, CEIBS Healthcare Innovation and CEIBS Mingrui New Start.

This announcement also attracted a lot of attention, and many friends also sent messages in the background, asking whether Gülen would leave.

Actually, I don't think there's a need to panic.

There are generally several reasons for star fund managers to step down:

(1) For personal reasons, jump to a better platform, a more attractive position, or "run for selfishness".

(2) The elimination mechanism, due to poor performance, laid off, in recent years, there have been many cases that fund managers have returned to the furnace to become researchers.

(3) Take the initiative to "reduce the burden" and focus on a certain area.

From the announcement of the China Europe Fund, it can be seen that Gülen stepped down from two all-market funds. As of the end of the second quarter, the total scale of the five products managed by Gülen was 76.688 billion yuan, and after stepping down from CEIBS Research Select and CEIBS Alpha, the scale of the three products she continued to manage alone was still 66.901 billion yuan, including CEIBS Healthcare, which is more concerned.

At the same time, according to media reports, CEIBS Fund said that "Gülen will continue to serve as the company's investment director and continue to empower the investment research team".

According to this information analysis, Gülen's "resignation" may just want to focus on pharmaceutical investment, from another point of view, this is also evidence of the bottom of the pharmaceutical industry.

At the most lively and crowded time in the pharmaceutical industry, some pharmaceutical fund managers began to expand their circles in order to cope with the scale expansion and diversify the pressure caused by the overcrowding and concentration of pharmaceutical investment; And now, star pharmaceutical fund managers have begun to return to focus on the pharmaceutical industry, does it also mean that the pharmaceutical industry has no shortage of investment opportunities?

Historically, the pharmaceutical sector has always been a good track for A-share long slope and thick snow, after three years of adjustment, the current pharmaceutical industry has faced multiple bottoms of policy bottom, sentiment bottom, valuation bottom, performance bottom and capital bottom, from a medium and long-term perspective, has entered the position of good investment odds and win rate.

03

Conclusion: "Don't lose your position at the bottom"

For this wave of rising pharmaceutical industry, Guosheng Securities put forward a theory of "four-stage market".

The first stage: the main line of anti-corruption repair, and the establishment of the bottom of the pharmaceutical index;

The second stage: hot topics, creating money-making effects;

The third stage: the deduction of the bottom change, driving the filling position rotation to rise;

The fourth stage: change the structure and return to the core main line of medicine.

Guosheng Securities believes that the pharmaceutical industry is currently in the second and third stages, biased towards the third stage.

Perhaps, the sky of the pharmaceutical industry has already been clouded.

What should we do when dawn comes?

In the past two days, I saw a sentence and felt that it was quite suitable as an ending:

"Don't lose your position at the bottom because the risk is being adequately priced."

Investment is risky and you need to be cautious when entering the market