Zhitong Financial APP learned that Tianfeng Securities released a research report saying that the overall performance of the 2023H1 pharmaceutical circulation sector was eye-catching, with good growth in both the retail and distribution sectors. 1) Pharmaceutical distribution: upstream and downstream expand the second growth curve + valuation system with Chinese characteristics, the pharmaceutical distribution sector is expected to usher in valuation repair. 2) Retail drugstores: the concentration of the post-epidemic industry is expected to accelerate, and the outpatient policy promotes the outflow of prescriptions. The bank believes that the core logic of the pharmaceutical circulation industry comes from the valuation repair under policy optimization, and suggests to look at the changing trend of enterprises from the medium-term dimension, and to pay attention to: 1) pharmaceutical distribution; 2) retail drugstores.
The main points of Tianfeng Securities are as follows:
The overall performance of the 2023H1 pharmaceutical circulation sector is eye-catching, with good growth in both retail and distribution sectors.
There are a total of 25 listed companies in the pharmaceutical distribution sector (excluding ST/* St shares and two Hong Kong stock companies). The overall operating income of the 2023H1 sector increased by 13.58% compared with the same period last year; the return net profit decreased by 0.23% year-on-year; the non-home net profit increased by 0.49% compared with the same period last year; the leading enterprises continued to explore business transformation, and the second growth curve was eye-catching.
There are a total of 6 listed companies in the retail drugstore sector. the overall business income of 2023H1 increased by 21.43% compared with the same period last year; the net profit of returning home increased by 24.21%; and the net profit of deducting non-returning increased by 25.47% over the same period last year; mainly due to the optimization of 2022Q4 domestic epidemic prevention and control policies, and the strong demand for drugs at 2023H1 terminals led to a gradual rebound in passenger flow.
1) Pharmaceutical distribution: upstream and downstream expand the second growth curve + valuation system with Chinese characteristics, the pharmaceutical distribution sector is expected to usher in valuation repair.
The valuation of the distribution sector has been in a low position for a long time, and the bank believes that it is mainly due to the slow overall growth of the distribution business. at the same time, with the normalization of drug volume procurement, the industry's gross profit space has been compressed; in recent years, leading companies have actively explored new business type, with the help of channel advantages upstream and downstream, pharmaceutical industry, pharmaceutical retail and other more profitable new business growth is expected to improve the industry format and drive valuation repair.
2) Retail drugstores: the concentration of the post-epidemic industry is expected to accelerate, and the outpatient policy promotes the outflow of prescriptions.
In February 2023, National Healthcare Security Administration issued a notice on further integrating designated retail pharmacies into the overall management of outpatient clinics, actively supporting the opening of integrated outpatient services in designated retail pharmacies, which is expected to substantially promote the outflow of prescriptions. retail pharmacies, as an important terminal to undertake health insurance funds, are expected to further usher in prescription outflow dividends. At the same time, 2023H1 leading drugstores continue to accelerate store expansion, some enterprises have entered the scale of ten thousand stores, leading pharmacies are expected to further seize the opportunity to accelerate the concentration of the industry.
Investment advice:
Pharmaceutical distribution: it is recommended to pay attention to the national circulation enterprises with wide regional coverage and the regional leaders with greater improvement flexibility: China Resources Pharmaceutical (03320), Liu Pharmaceutical Group (603368.SH), Shanghai Pharmaceutical (601607.SH), heavy Pharmaceutical Holdings (000950.SZ).
Retail drugstores: it is recommended to pay attention to the leading outpatient pharmacies with good landing schedule: 603233.SH, 603939.SH, 002727.SZ, 605266.SH, 603883.SH and 301017.SZ.
Risk Tips:The risk of policy fluctuation, the performance of individual companies is lower than expected, the risk of market shock, and the progress of COVID-19 epidemic is uncertain.