Guotai Junan released a research report saying that the high base effect in COVID-related fields dissipated throughout the year, and the growth rate is expected to gradually return to its own path, but Q1, especially in January-February, was still affected by the base effect of the epidemic.
The Zhitong Finance App learned that Guotai Junan released a research report saying that the high base effect in COVID-related fields dissipated throughout the year, and the growth rate is expected to gradually return to its own trajectory, but Q1, especially in January-February, was still affected by the base effect of the epidemic. At present, the overall valuation level of the pharmaceutical sector has fallen back to 20 times 2024 (wind agrees), and most segmented valuations have also fallen back to 1-1.5 times PEG, which is expected to increase performance or increase in market capitalization driven by business progress in the future. From January to February 2024, we will gradually enter the 2023Q4 and 2024Q1 performance verification stages. Due to the intertwined influence of many factors, performance expectations face many uncertainties, and market risk appetite is low.
Guotai Junan's views are as follows:
Multiple impacts are intertwined, and the impact of the epidemic and industry rectification on 2024Q1 remains to be seen.
Looking at the high base effect in COVID-related fields throughout the year, the growth rate is expected to gradually return to its own trajectory, but Q1, especially in January-February, was still affected by the epidemic base effect: routine diagnosis and treatment, such as in-hospital prescription/surgical consumables, had a low base effect, while traditional Chinese medicine cold/tonic category/retail pharmacies, etc. directly related to the epidemic had a high base effect. At the same time, the pace of optional diagnosis/equipment bidding/new drug entry may be affected by industry rectification. Although the market has lowered its 2023-2024 performance expectations, the specific impact on Q1 performance remains to be seen.
Harvesting has been promoted for 5 years, and the scope of harvesting that can be collected will be further reduced in 2024.
The first half of 2024 is already in the implementation stage and possible policy implementation includes: procurement by the National Federation of Proprietary Chinese Medicine in 2023 will begin to be implemented in all provinces at the end of 2023; implementation of traditional Chinese medicine formula granules in 15 provinces will begin in late 2023; the 9th batch of drug collection will begin implementation in March 2024; and the “2023 Drug Catalogue”, including the latest national negotiation drug catalogue, will be officially implemented in January 2024. Chemiluminescence collection of in vitro diagnostic reagents in 25 provinces may be implemented one after another after the second quarter of 2024. Among them, since chemical drug collection started earlier and covered most major categories, the impact of financial reports was weak; proprietary Chinese medicines and formula granules only began to be collected in 2022 and 2023, respectively, and are in the early stages of the impact of the report; the increase in IVD domestic market share and changes in dealer strategies remain to be seen. ——They all need to track the specific impact on the company concerned.
The decline in valuations over the past three years is a major pain point for investment in the pharmaceutical sector.
Looking back at the 2021-2023 epidemic and collection, the impact on the sector's performance was significant: ① Among them, vaccines, diagnostic products, diagnostic services, CXO, protective consumables, etc. were driven positively by the epidemic, while the 2023 results showed a decline or slowdown in high base; ② collection affected the performance of chemical preparations and surgical consumables, which was also mainly reflected in a decline or slowdown in performance. However, judging from influencing factors, the decline in valuation is significantly higher than the decline in performance. Even in segments and companies with positive performance growth, market value will fall due to more falling valuations. At present, the overall valuation level of the pharmaceutical sector has fallen back to 20 times 2024 (wind agrees), and most segmented valuations have also fallen back to 1-1.5 times PEG, which is expected to increase performance or increase in market capitalization driven by business progress in the future.
Market risk appetite is at a low level, and high “cost performance” stocks with steady management can be selected.
From January to February 2024, we will gradually enter the 2023Q4 and 2024Q1 performance verification stages. Due to the intertwined influence of many factors, performance expectations face many uncertainties, and market risk appetite is low.
Risk warning: Industry collection and restructuring affected or exceeded expectations.