After three years of bear market, the vast majority of celebrity white horse stocks have fallen, either to undervalue, or have entered a reasonable range, even if it is as noble as Moutai, it once fell to 28 times PE, no longer so dazzling. However, there are also some different guys, such as Pien Tze Huang, who still maintain an absolutely high valuation in such a stormy environment, which has to make people feel that they are really strong.
As of the close of trading on January 15, 2024, the legendary Oriental Miracle Medicine Pien Tze Huang still has a PE value of up to 46.76 times, and has always maintained a valuation level comparable to that of technology stocks, far leaving behind Moutai, which is similar to its logic, so why can the company be so arrogant?
1. The company itself is not without declines, if you count from the highest 487.92 in July 2021 to 215.06 in January 2024, the maximum drawdown has also reached 55.92%. This decline is actually larger than that of Moutai (from 2476.24 to 1281.58, with a maximum drawdown of 48.24%), but because before the stock price collapsed, the valuation of pharmaceutical stocks was comparable to that of technology stocks, and Pien Tze Huang's PE value reached a maximum of 167.03 times, far exceeding that of consumer stocks, so that even after smashing the pit, it is still in an absolute state of high valuation. This is very obvious in the entire big pharmaceutical industry, such as Hengrui, Aier, and Tongce, which basically have such characteristics.
2. Even though the economic environment is not good, the company's performance has always been relatively strong, with operating income, net profit, and non-net profit deducted in 2021 increasing by 23.2%, 45.46%, and 51.4% respectively;Although it is weaker in 2022, the business, net profit, and non-net profit deducted still maintain positive growth of 8.38%, 1.66%, and 2.89% respectively;In 2023, with the complete liberalization of the epidemic, the three data in the first three quarters increased by 14.88% respectively, 17.16% and 18.39%, showing a strong cyclical attribute.
3. In May 2023, Zhangzhou Pien Tze Huang Pharmaceutical Co., Ltd. announced that in view of the rising main raw materials and labor costs of Pien Tze Huang products, the retail price of Pien Tze Huang lozenges in the domestic market will be raised from 590 yuan/tablet to 760 yuan/tablet, and the supply price will be increased by about 170 yuan/tablet, and the supply price in overseas markets will be increased by about 35 US dollars/tablet. Obviously, the new round of price increases has made people see better performance expectations, which has played a certain positive role in maintaining valuation.
4. The unique small-cap complex of the Chinese people is troublesome, although Pien Tze Huang is not logically similar to Moutai, but the market value is only more than 130 billion, even if it rises ten times, it will not reach the volume of Moutai. Compared with the two, in the eyes of many people, it is like a small fresh meat, and it is naturally easy to enjoy a higher valuation premium.
However, it is debatable whether the above reasons really fall into the category of existence as justification. In my opinion, first of all, in terms of performance resilience (weak cyclical attributes) and pricing power expectations, Moutai is as good as it gets, and the world says that Pien Tze Huang is Moutai's younger brother, and no one says that Pien Tze Huang is Moutai's elder brother, which fully shows that Pien Tze Huang's coffee position is obviously still weaker than Moutai, and it is obviously too much to enjoy a higher valuation than Moutai.
Secondly, there is the possibility of innovation and research and development in the pharmaceutical industry, and it is not impossible to forcibly compare with technology stocks, but pharmaceutical stocks like Pien Tze Huang are actually based on the old formula passed down from their ancestors, and there are not too many innovative genes at all.
Third, does a small plate necessarily have to enjoy a higher valuation premium, which is in fact contrary to the concept of value investment, and value does not depend on speculation in the final analysis, but depends on the future earning ability of the enterprise. From 2012 to 2022, Pien Tze Huang's net profit increased from 349 million to 2.472 billion, with an annualized growth rate of 21.62%.
To sum up, Pien Tze Huang's current price is still very ungrounded, if you are interested in the company's uniqueness, weak cyclicality and pricing power, then why not choose Moutai, which has harder logic and lower valuation than it?
(Risk Warning: The views mentioned in this article only represent personal opinions, and the subject matter involved is not recommended, and you buy and sell accordingly at your own risk.) ）